Richard Williams, Partner at Keystone Law, Analyzes UK Government's Proposals to Regulate Competitions and Prize Draws
Richard Williams, Partner at Keystone Law, provides key insights into the UK Government's proposals to regulate competitions and prize draws, outlining potential impacts for operators and charities
When the Government’s White Paper “High Stakes: Gambling Reform for the Digital Age” was issued in April 2023, the focus was on proposed measures to reduce harm caused by the growth of online gambling since the Gambling Act 2005 came into force. However, there were many other proposals buried in the text of the 256 page document, including proposals[1] to consider whether certain draws and competitions, which currently fall outside the licensed sector, should in future be regulated.
The White Paper outlined that certain types of competition and prize draw did not currently fall under the definition of a lottery under the Gambling Act 2005, due to either skill or the availability of a free (postal) entry route, so that payment was not required to participate. The Government stated that it was aware of concerns about the recent growth of large scale competitions, involving significant prizes, such as a luxury home or car. Concerns raised about these draws included lack of protection for players from gambling related harms, no limits on size, annual proceeds or prizes, and there being no requirement to contribute money to good causes. The Government stated that it would “consult on the potential for regulating large scale prize draws (…) options will be focussed on those prize draws whose scale resembles that of a large society lottery and may be confused with them”. It said it would seek data and evidence to assess the proportionality and impact of different regulatory approaches to the sector.
Whilst it initially appeared that the proposals would only impact larger free draw/competition operators, regulating draws similar in scale to large society lotteries would catch all but the very smallest operators.
Prize draws have certainly become more and more common in Great Britain over the last 5 years, with particular expansion during Covid. Most people will have seen press or TV adverts for private companies operating these draws, often on a large scale. Whilst charitable donations are often made voluntarily, the legal requirement for regulated lotteries is that they must contribute 20% of proceeds (ticket sales) to the good cause. Private companies generally won’t contribute anything like this amount to charity. Charities argue that this distinction is unfair and that they are losing income to private companies operating in the same space.
In December 2023, DCMS sent out a survey to some larger competition/draw operators asking for their views on proposals to regulate the sector. Questions asked in the survey related to the size of the business, number of employees, contributions to charity and whether any self-exclusion, spending limits or other safer gambling measures were in place. Respondents were asked to give their views on proposals to regulate draws, limit ticket sales and prizes, pay gambling duty and/or give 20% of ticket sales to charity. Alternative proposals included a voluntary code of practice, including player protections, transparency requirements and charity donations. The consultation closed just before Christmas and the Government’s next steps are now awaited.
[1] See s.141 https://assets.publishing.service.gov.uk/media/644923b5814c6600128d0723/1286-HH-E02769112-Gambling_White_Paper_Book_Accessible1.pdf