Do I need a licence to run a prize competition?

Lotteries, raffles, competitions, prize draws – they are all the same aren’t they? Not quite! 

The way in which lotteries, raffles, competitions and prize draws operate are very different and therefore each has its own different set of legal requirements. Online prize competitions have grown drastically in popularity over the last few years, and the number of prize competition sites is on the increase too. However, promoters of such competitions need to tread incredibly carefully and run their competitions in such a way as not to be considered an illegal lottery, whereby participants would actually be gambling.

Is my raffle or prize competition site really gambling and do I need a licence?

The Gambling Act 2005 regulates “gambling” which is defined as “gaming”, “betting” or “participating in a lottery”. These activities involve payment and the allocation of a prize which is entirely reliant on chance. Lotteries cannot be run for commercial gain, and most can only be run for good causes such as charities, sporting and cultural clubs, or other not-for-profit causes – all of which heavily rely on income from lotteries to support their work.

If your prize competition site falls outside the scope of gaming, betting or a lottery, you will not require a gambling licence. However, bear in mind that it is a criminal offence to run these activities without a licence, so it is vital that your raffle or prize competition site is run in a way which complies with the Gambling Commission’s specific requirements. 

The Gambling Commission licenses and regulates how people and businesses provide gambling in Great Britain.

How do I run my raffle or prize competition lawfully without requiring a licence?

There are two main ways to run your prize competition site lawfully. 

The first is to offer a free alternative route of entry, such as a postal route. The second way is to incorporate an element of skill, knowledge or judgment into the competition, to prevent a significant proportion of the public from winning the prize and participating in the competition. 

While this may sound very simple, the laws surrounding free entry and the skill-based element are quite complex, so you should seek expert legal advice before promoting your competition.

What skill, knowledge or judgment do I need to include in my raffle or prize competition?

How you incorporate the skill, knowledge or judgment element is ultimately up to you amd the way you want to run your competition, but it must prevent a significant proportion of the public from winning a prize and participating. 

Some prize competitions ask participants to answer different questions; while others request entrants to complete a ‘spot the difference’ exercise for example. While it may be fairly easy to add these questions or games to your prize competition website, the rules and laws surrounding the skill, knowledge or judgment element in the Gambling Act 2005 and the “significant proportion” requirement are incredibly difficult to navigate and you should always obtain specialist legal advice. 

If your question or “spot the difference” exercise or other such games are considered too easy, your prize competition site could still be unlawful.

Can I advertise my raffle or prize competition site on Facebook and Instagram?

Facebook and Instagram have very strict requirements when it comes to advertising prize competitions. Promoters must obtain Facebook’s permission to advertise their prize sites, which is requested by completing a Real Money Gaming (RMG) questionnaire. For prize competitions, Facebook requires a legal opinion from legal counsel (i.e. solicitor), that the prize competition is being run lawfully without the need of a gambling licence.

How do I legally raffle my house or car?   

You can only raffle your house or car in the case where the beneficiary (that is, the recipient of all lottery profits after expenses and prize costs are deducted), is a good cause and the organiser/promoter of the lottery is a non-commercial society or entity, such as a charity.

The only way in which you may raffle your house or car legally would be via a free draw or prize competition. If you are organising a prize competition or free draw,  it is your responsibility to make sure that you are entirely compliant with the law and regulations, so as to avoid being an illegal lottery. If in doubt, you should seek legal advice and that’s where Ellis Jones can help, get in touch with the team today.

Are there any other legal aspects to consider when running a raffle or prize competition site?

It is extremely important to note that we only advise promoters of raffles and prize competitions in Great Britain (England, Scotland and Wales), and therefore the guidance we’ve provided in this post, as well as the legal requirements outside of Great Britain, may well be different.

When running a raffle or prize competition, as well as being a legal requirement of the Gambling Act 2005 and the Gambling Commission, you will also have to consider data protection and your terms and conditions of entry. There are also very strict rules surrounding how you advertise your raffle or prize competition site which must comply with the Advertising Standards Authority’s guidelines.

How can Ellis Jones help me with my prize competition?

We can help give your prize competition site a real health check to make sure it completely complies with the requirements of the Gambling Act 2005, as well as the Gambling Commission. We will also make sure that your website is compliant with the Advertising Standards Authority’s guidance. 

Our team of specialist solicitors can assist by drafting your terms and conditions of entry and your website’s privacy policy. Finally, we can provide you with an expert legal opinion as required by Facebook or Instagram in order to advertise your prize competition site on these platforms.

The good news is, we can advise you on your prize competition site for a fixed fee. Please contact Victoria Simpkin at victoria.simpkin@ellisjones.co.uk to discuss your prize competition requirements.

Our regulatory team may also be able to assist you with applying for a gambling licence should you require one, and f you have been treated unfairly by a gambling company then our specialist betting, gambling and gaming dispute solicitors can help.