Report
Understanding the consumer landscape in free draws and prize competitions
This short report explores consumer behaviour in relation to free draws and prize competitions
Definitions
What are free draws and prize competitions?
Free draws and prize competitions can be run for commercial or private gain and are often used to promote products or offer high-value prizes such as cars or houses. These formats are increasingly popular on digital platforms, which allow individuals to enter for a chance to win luxury goods.
These draws or competitions are sometimes used to raise funds for charitable causes, generate public interest, or incentivise purchases. It’s important to note that these types of schemes can closely resemble lotteries, however, free draws and prize competitions are not regulated forms of gambling as they meet the rules that exempt them being classed as a lottery draw outlined in the Gambling Act 2005 (opens new tab).
There are two types that this report covers:
Free Draws
Free draws are structured in one of two ways:
Completely free entry: Participants are not charged beyond the standard cost of communication, such as the price of a postage stamp when the free entry route is by post.
Dual-route entry: Both paid and free entry options are offered. In these cases, the free route must be:
- clearly promoted alongside the paid route
- no less convenient or accessible than the paid option
- available at no more than the standard rate of communication
- treated equally in the prize allocation process where the system must not favour paid entries.
Prize Competitions
Prize competitions differ in that they rely on an element of skill, knowledge, or judgment to determine the winner. To qualify as a genuine prize competition under UK law, the challenge must be sufficiently able to:
- deter a significant number of people from entering, or
- prevent a significant proportion from winning.
Simple multiple-choice questions typically do not meet this threshold. Prize competitions do not need to offer a free entry route and are exempt from being classed as a lottery because the outcome is not determined wholly by chance, meeting the criteria set out in the Gambling Act 2005.
Legal Considerations
Neither free draws nor prize competitions require a lottery licence, provided they are structured in a way that meets the rules set out in the Gambling Act 2005 that exempt them from being classed as a lottery (opens in new tab). For example, free draws having a free route of entry ensures it meets the exemption and does not require a license. Failure to meet these requirements may result in the activity being classified as an illegal lottery, which is subject to enforcement.
The Department for Culture, Media and Sport (DCMS), in collaboration with the prize draw industry, has developed and published a voluntary Code of Conduct (opens in new tab) for prize draw operators, which sets out a series of best practice principles aimed at improving transparency, accountability and consumer protections across the sector. While the Code does not introduce new legal requirements or replace existing consumer or advertising law, it reflects a broader focus on raising standards within free draws and prize competitions.
More details on the legal distinctions between lotteries, free draws, and prize competitions.
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Last updated: 22 January 2026
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