The Gambling Commission publishes guidance on free draws and prize competitions
Date: 29 June
The Gambling Commission today (29 June 2007) publishes
guidance under the Gambling Act 2005 on the distinction between
prize competitions and free draws on the one hand, and lotteries on
The Guidance covers the boundary between lotteries and a wide
range of prize competitions, free draws and product promotions
including TV quizzes and prize draws which accompany the purchase
of a good or service.
Following consultation the Commission remains concerned that
entry to TV quizzes through an alternative web-based free entry
route may not be considered to be as convenient as via the paid
route, and may not meet the statutory test to qualify as a free
draw; particularly where the need for immediate responses is
emphasised or the quiz is only run for a relatively short period.
The Commission intends to meet with the major operators prior to 1
September to discuss how such concerns can be addressed.
The guidance also sets out the Commission's concern that
competitions which ask just one simple question, the answer to
which is widely and commonly known or is obvious from the material
accompanying the question, will fail to meet the test in the Act
and will fall to be classed as lotteries because the simple
question fails to eliminate a significant proportion of actual or
The publication of
Prize competitions and free draws - The requirements of the
Gambling Act 2005 - December 2009sets out the
Commission's position so that those organising competitions and
draws have guidance available on what the Commission considers is
needed to avoid breaches of the Gambling Act 2005 when it comes
into effect on 1 September.
Although the Commission will have no regulatory responsibilities
in respect of prize competitions and free draws, it will be
expected to monitor the boundary between them and lotteries.
It will also have new duties in respect of pursuing and prosecuting
illegal gambling and to act where schemes are organised and
promoted which, in its view, amount to unlicensed and, therefore,
The Commission's Deputy Chief-Executive Tom Kavanagh said:
"Over the past ten months, the Commission has consulted
extensively on the provisions on free draws and prize competitions
in the new Act.
"Prize competitions and free draws remain free of statutory
control but operators who cross the boundary and operate a lottery
will be required to apply for an operating licence from the
Commission or cease to operate.
"Operators can use this guidance to help ensure they stay within
the law. The Commission will have powers to take action against
breaches of the Gambling Act when it comes into full effect on 1
Notes to editors
Free draws, prize competitions and
You can download the guidance, responses and copies of the
original issues paper and letter to respondents.
Under the Gambling Act 2005, public lotteries will remain the
preserve of good causes and must, unless they qualify in one of the
‘exempt' categories, continue to be licensed by the Gambling
Commission. In contrast, prize competitions and free draws are and
will remain, under the Gambling Act 2005, free of statutory
regulatory control. (They may however come under the control of
either Ofcom, where they use broadcast media, or ICSTIS where they
use premium rate telecommunications services.)
The current law is unclear on the distinctions between
lotteries, prize competitions and free draws.
In August 2006 the Commission published an Issues paper on the
distinctions and in April it sent a letter to all respondents to
the original issues paper seeking further views on the question of
what constitutes ‘payment to enter' in respect of TV Quiz
The Commission received 53 responses to its consultation paper
and a further 28 in reply to its subsequent letter on what
constitutes ‘payment to enter' a draw. A substantial majority of
responses were from those involved in the competitions and draws
sphere, whether as companies which offer them, those that produce
them or advisors to one or both. The remainder came from members of
the public, organisations involved in the gambling industry and a
The Commission has published a summary of the responses to the
consultations and its reactions to them and the non-confidential
responses are available to download from the Gambling Commission
From 1 September operators of larger lotteries will require an
operating licence from the Gambling Commission and will be required
to observe licence conditions and codes of practice on social
responsibility. These include requirements to ensure that at least
20% of the proceeds of any lottery are distributed to a
non-commercial beneficiary and to complete regular financial
returns to the Gambling Commission.
Licence conditions and codes of practice - consolidated May
2014 is available on
the Gambling Commission's website.
You can also download advice on the main principles and
requirements of lotteries law.
The Commission will continue to work closely with ICSTIS and
Ofcom in providing proportionate regulation in areas of joint
The Gambling Commission
The Gambling Commission regulates gambling in the public
interest. It does so by keeping crime out of gambling, by ensuring
that gambling is conducted fairly and openly, and by protecting
children and vulnerable people from being harmed or exploited by
The Commission will regulate all gambling other than the
National Lottery and spread betting, which will remain,
respectively, the responsibility of the National Lottery Commission
and the Financial Services Authority.
From 1 September 2007, British-based operators who wish to
provide gambling must have a licence from the Gambling Commission.
Licensed operators who fail to observe the Commission's licence
conditions and codes of practice will be at risk of unlimited
fines, prosecution and the removal of their licence.
For further information please contact us on (0121) 230 6700 or