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Skill with prizes (SWPs)

Skill with prizes (SWPs) are not classed as gaming machines and therefore can be sited anywhere.

Published: 8 July 2021

Last updated: 5 December 2023

This version was printed or saved on: 13 June 2024

Online version: https://www.gamblingcommission.gov.uk/licensees-and-businesses/guide/skill-with-prizes-swps

Overview: Skill with prizes (SWPs) are not classed as gaming machines under the Gambling Act 2005 (opens in new tab) and therefore can be sited anywhere. For example, you might see them located in a cinema foyer or shopping centre.

You do not need a licence for skill with prize machines. However, you do need one for a machine if it is classed as a gaming machine.

SWPs do not count towards the machine allowance in an alcohol licensed premises, or a members' club. They also do not count towards machine numbers in:

Skill with prize machines may be liable for Machine Games Duty and may need to be registered with HMRC. Read more about Machine Games Duty on GOV.UK (opens in new tab).

Skill with prize machine or gaming machine

The main difference is whether any of the games offered on the machine amount to ‘gaming’ as defined in section 6 of the Gambling Act 2005 (opens in new tab). In the Gambling Act 2005, ‘gaming’ means playing a game of chance for a prize.

If just one game from a group of skill games is a game of chance, then the machine as a whole is classed as a gaming machine.

When a game is a game of chance

Consider all four of the following questions to help you decide.

Does the outcome of the game depend entirely on chance?

If yes, then the game is clearly a game of chance and, if played by means of a machine, that machine is a gaming machine.

An example of a game whose outcome is determined entirely by chance is roulette.

Does the game contain an element of chance as well as an element of skill?

A game in which the result can be influenced by chance is a game of chance for the purposes of the Gambling Act 2005. Therefore the machine on which the game is played is a gaming machine. It does not matter for these purposes whether the element of chance is greater than the element of skill. Nor does it matter whether the element of chance can be eliminated by great skill.

An example of a game which contains both an element of chance and skill is poker.

Is the element of chance involved in the game significant enough to make a difference?

There comes a point where the element of chance is so small that it should be disregarded.

An example of a game where the element of chance should be disregarded is chess, where the element of chance introduced by determining who is to play as white and black is so small as to be likely to be considered irrelevant.

Is the game presented as involving an element of chance?

Where the game does not involve an element of chance it may still be considered to be presented as involving an element of chance. We'll take into account the following:

Any one of these factors by itself may not be enough to classify a machine as a gaming machine. For example, a picture of dice in a game by itself doesn’t necessarily make it a gaming machine.

Is it really a skill-based game?

If you have answered the previous questions and you think the machine is an SWP then you should ask these further questions.

Games with any of the following factors are likely to contain a significant enough element of chance that the machine would be a gaming machine, even if the game claims to test a player’s skill in order for them to win a prize.

It doesn’t matter whether the factors are present at all times, or whether they are introduced by means of a compensation mechanism.

The factors are:

Finally, if it is not possible for all of the advertised prizes to be won, then the game may be a fraud, in which case we would draw it to the attention of other agencies.

When you need a licence

You do not need a licence for skill with prize machines.

However, if the answers to the previous questions indicate that the game in question is ‘gaming’ then you need an appropriate gaming machine licence.

You'll need a licence not only to make the machine available for use, but also to:

Maximum stake or prize

As you do not need a licence or permit, there is no legal limit for stake or prizes.

However, it would be very difficult to manufacture a genuine SWP machine that is economically viable and offers prizes over £50 (the prize limit set by the industry trade body following discussion with us).

We would be likely to raise questions about machines with prizes above this range.

Compensation mechanisms

Some SWPs have a compensation mechanism. In broad terms ‘compensation’ affects payout. It can alter the chances of winning depending on the circumstances. For example, the amount of money a machine has already taken or paid out.

Compensation can also result in the outcome of a game, which may be presented as dependant on skill, being in fact predetermined.

There are many different types of compensation mechanism. It is not possible to generalise as to their legal effect. Each case needs to be considered on its individual facts. However, the operation of compensation is clearly a relevant factor when considering the questions mentioned previously.

Where a compensation mechanism introduces a random element into the game, this may result in the game being one of chance, but it does not necessarily follow in every case.

Not every random or unpredictable element in a game necessarily leads to the conclusion that the game is a game of chance. There will be cases where the unpredictable or random element is present for the very purpose of testing the skill or knowledge of the player. For example, to challenge the player’s use of skill, whether that be manual dexterity or knowledge.

It follows that compensators that vary the degree of skill required to win a prize, without introducing an appreciable element of chance, will not necessarily, in and of themselves, make a game a game of chance, provided that compensation does not prevent a suitably skilful player from being able to win any of the published prizes. The interpretation of the Gambling Act is ultimately a matter for the courts.