The UK Gambling Commission (UKGC) has clarified its regulatory oversight on ‘Free Draws’ and ‘Prize Competitions’, following an increase in public enquires related to ‘win a house’ or ‘win a cash prize’ competitions.
Free Draws and Prize Competitions are not regulated by the 2005 Gambling Act. However, the Act provides a distinction in how Free Draws and Prize Competitions should be structured to not be classified as a lottery service.
As such, the Commission does not govern or licence companies promoting Free Draws or Prize Competitions.
Existing rules allow for Free Draws to be run for commercial and private gain. However, organisers must provide participants with clear free entry rules and disclose any additional requirements needed by participants to compete for prizes.
Prize Competition are determined by a participants ‘skill, judgement or knowledge’. Organisers cannot discourage participants from entry or ‘prevent a portion of those who enter from winning prizes’.
Organisers that do not meet specific requirements are in danger of operating an illegal lottery. The Commission underscored that it monitors competition organisers and will take direct action on those that are not compliant with rules set by the 2005 Gambling Act.
The public is warned that companies promoting free prizes “may not be subject to the same oversight as regulated providers of gambling products and may not offer the same level of consumer protection against gambling-related harm”.
Furthermore, where such competitions are said to be run for the benefit of good causes, there may be no independent oversight to ensure that the proceeds reach the intended recipient.