in the UK
Introduction to free competitions
Running a free competition can be an effective way to engage audiences, promote products, and build brand awareness. Unlike lotteries, which are regulated and restricted to non-commercial purposes under the Gambling Act 2005, free draws and prize competitions are not subject to the same level of statutory control. This guide will help you navigate the nuances of organising a legal and compliant free competition.
U nderstanding the key distinctions
A competition’s classification under the Gambling Act is crucial. Misclassifying your competition could lead to it being deemed an illegal lottery. Here are the main categories:
Lotteries: Involve a payment to participate and prizes allocated wholly or primarily by chance. They must be operated under a licence unless exempt.
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This guide includes detailed points and practical advice to help organisers navigate the requirements of free competitions and avoid legal pitfalls.
Prize competitions: Depend on skill, judgment, or knowledge. The outcome is influenced by these factors rather than chance.
Free draws: Participants are not required to pay to enter, making them exempt from statutory control.
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The role of skill in prize competitions
The defining feature of a prize competition is that success must be influenced by skill or knowledge. To meet legal requirements:
Sufficient challenge: The competition should include tasks or questions that are difficult enough to prevent a significant proportion of participants from succeeding effortlessly. For instance, complex puzzles, crosswords with numerous clues, or knowledge- based challenges are acceptable.
Avoid overly simple questions: Competitions that use simple or widely known answers (e.g., a question with an answer easily found online or in the competition materials) are likely to be considered lotteries.
“Section 14(5) of the Act stipulates that a prize competition must deter a significant proportion of participants either by preventing them from entering due to the challenge or by preventing many from winning. If the requirement is easily met by most, it risks being classified as a lottery.”
Ensuring free entry compliance
A key characteristic of a free draw is that no payment is required to enter. Payment includes anything above the ‘normal rate’ for communication methods. Follow these guidelines to ensure compliance:
Genuine free route: Offer an entry route that is entirely free (e.g., sending an email or letter via ordinary post) and ensure it is just as accessible and advertised as any paid routes.
Organising online entries
Transparency in communication: Display all entry routes equally, ensuring participants know they have a free choice.
For web-based competitions, it is important to address potential barriers to entry and the convenience of different methods:
Web access timing: Ensure that participants can enter online at any time during the promotion period. For televised competitions or limited- time promotions, web access should be available while other methods (e.g., SMS) are open.
“Free entry routes should be just as accessible and advertised as paid routes.”
No hidden costs: Ensure participants do not need to pay to learn if they have won or to collect their prize
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Organising
online entries (continued…)
Adequate publicising: Make sure that the availability of the free web-based entry is made known through appropriate channels and not overshadowed by paid methods.
Practical steps for organisers
Reasonable response time: Allow participants sufficient time to find and use web access, ideally at least three working days, ensuring fairness in participation.
If you are using skill-based entry rather than a free entry route, these steps are essential:
o Develop challenging content: The questions or tasks should not have answers that can be easily obtained or are well-known. Use multi- step logic problems, word puzzles, or in-depth knowledge questions.
o Document your processes: Keep records showing that your competition genuinely requires skill. This might include data from previous competitions, test results, or participant feedback to demonstrate that the skill requirement prevents easy success.
o Assess skill barriers: Be prepared to show how the competition reasonably prevents a significant proportion of entrants from winning due to the skill element. This can involve pre-testing the challenge on sample audiences and recording the results.
If you provide both paid and unpaid entry options:
Equal prominence: Ensure both options are equally visible and convenient. The unpaid method should not be harder to find or use than the paid one.
Product linked promotions
A competition tied to a product purchase must ensure that the product’s cost does not reflect a participation fee. This means:
· Maintaining standard pricing: The price of a product linked to a promotion must not be artificially inflated during the competition period.
Impartial prize allocation: Prizes must be distributed without favouring paid entries.
· Transparent promotions: Clearly show that any entry related to purchasing a product is truly free of charge beyond the usual product cost.
“Ensure
no part of the entry process indirectly involves a payment, including costs linked to discovering results or claiming prizes.”
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