Free draws and prize competitions
Free draws and prize competitions can be run for commercial or private gain and can be used when promoting a product or raffling a high value item such as a car.
Before organising your free draw or prize competition, make yourself aware of the rules so that your free draw or prize competition is within the law.
What is a free draw?
There are two types of free draw:
- the first type is where all entries are free.
Free is any method of communication charged at the normal rate, and specifically refers to the use of first or second class post.
Normal rate means that there can be no additional payment over what it normally costs to use a particular method of communication. For example, special delivery is not classed as free.
- the second type has both a paid and a free entry route.
If you run a free draw with a paid entry route, you must make sure that:
- people can choose to take part without paying
- the free entry route can be no more expensive and must be no less convenient than the paid route
- the free entry route must also be available at the normal rate. For example, you cannot use special delivery in the free route and First Class in the paid route
- the free entry route must be promoted and displayed at the same level as the paid for routes
- the choice between the free entry route and the paid entry route must be promoted so that people who want to participate can see it
- the system that determines prizes should not recognise the two routes as different.
What is a prize competition?
A prize competition is where the outcome is determined by the participants skill, judgement or knowledge.
The organisers of a prize competition must be able to show that the skill, knowledge or judgement required will:
- discourage people wishing to enter from doing so because it is too difficult
- prevent a proportion of those who enter from winning a prize
Multiple choice questions, or questions that allow a second chance if your first answer is wrong, rarely meet this criteria.
Do I need a licence to run a free draw or prize competition?
You do not need a licence or permission to run a free draw or prize competition as long as they are being ran in a way that meets the requirements of the Gambling Act 2005 (opens in a new tab).
What happens if my free draw or prize competition does not meet the requirements?
All lotteries are regulated under the Gambling Act 2005 and cannot be run for commercial or private gain.
If you do not meet the requirements then you may be running an illegal lottery.
The Gambling Commission prevents illegal gambling and may act when free draws or prize competitions are being ran as illegal lotteries.
If you are unsure about whether your free draw or prize competition is legal then you should seek legal advice.
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Last updated: 30 November 2021
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