Homeowners urged to be aware of rules on 'house competitions'
Date: 10 October
The Gambling Commission has moved to warn homeowners that
attempts to sell homes using prize competition schemes could
potentially fall foul of the Gambling Act 2005.
In response to the downturn in the housing market a small but
growing number of homeowners have recently opted to use a prize
competition as a method of realising the value of their homes. The
Commission has been keeping a close eye on the recent developments
with such house competitions and warns potential organisers to take
note of its guidance and to take independent legal advice before
Prize competitions are free of statutory control under the Act
provided they require sufficient skill, judgment or knowledge to
either deter a significant proportion of potential entrants from
participating or eliminate a significant proportion who do enter.
Schemes that do not meet the test of skill, judgment or knowledge
set out in Section 14 (5) of the Act (see note 6 below) would be
classed as lotteries.
"Lotteries are the preserve of good causes and cannot be
operated for private gain," said the Commission’s Deputy
Chief-Executive Tom Kavanagh.
"Prize competitions are free of statutory control under the
Gambling Act and can be run for profit but homeowners considering
such schemes as an alternative to selling their house risk
committing a criminal offence if they cross the boundary and stray
into offering an illegal lottery.
"We already have questions over the legality of a small number
of existing schemes and are in contact with the organisers."
The Commission has become aware of a number of schemes that are
intended to operate as prize competitions in line with the Gambling
Act 2005. Where the schemes are causing concern, we have taken the
step of writing to the scheme operators in order to question
whether the skill, judgment or knowledge element of their schemes
to win a house is sufficient to meet the requirements of the Act,
in particular the test at section 14(5).
The letters request information from the operators in order to
assess whether the scheme does amount to a genuine prize
competition, or whether it fails to meet the requirements of the
Act and is, in reality, a lottery. We have also advised such
operators to seek legal advice before commencing or continuing and
where they cannot assure themselves of the legality of what they
are doing; to cease activity and return monies already taken.
Other homeowners considering such schemes are warned that
promoting a lottery without an operating licence is an offence
under the Gambling Act 2005. The Commission advises individuals
considering or operating a scheme to consider the guidance
published on our website and to take independent legal advice
We monitor the boundary between prize competitions, free draws
and lotteries in order to ensure that those operating lotteries are
properly licensed to do so.
Prize competitions and free draws - The requirements of the
Gambling Act 2005 - December 2009
Advice note on prize competitions and free draws: house
competitions - May 2009
Notes to editors
The Gambling Commission
- The Gambling Commission (the 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 gambling. The Commission also provides independent
advice to government on gambling in Britain.
- The Commission is responsible for licensing and regulating all
gambling in Great Britain other than the National Lottery and
spread betting, which are the responsibility of the National
Lottery Commission and the Financial Services Authority (FSA)
- The Commission does not comment on individual cases. This
release is intended to ensure organisers are properly informed of
the law not to seek to ban the operation of such competitions.
- The Commission is based in Birmingham and has powers to
undertake prosecutions under the Gambling Act 2005.
- Homeowners running legitimate prize competitions whilst not
covered by the Gambling Act should also note the requirements of
- Section 14 (5) of the Gambling Act 2005 says:
A process which requires persons to exercise skill or judgment or
to display knowledge shall be treated for the purposes of this
section as relying wholly on chance if:
1. the requirement cannot reasonably be expected to prevent a
significant proportion of persons who participate in the
arrangement of which the process forms part from receiving a prize,
2. the requirement cannot reasonably be expected to prevent a
significant proportion of persons who wish to participate in that
arrangement from doing so.
See the whole of
Section 14 online, and HMRC’s
guidance to lottery duty.
Further information is available from the Commission’s
Telephone John Travers on (0121) 230 6700, (07852) 124624 or