Definition of a prize competition
Prize competitions are where success depends to a substantial degree on the exercise of skill. Such competitions usually involve the answering of questions, solving of puzzles, tie-breakers etc.
The relevant legislation
The law on prize competitions is contained in section 14 of the Lotteries and Amusements Act 1976. The Act is available from the Stationery Office.
Types of competition that are prohibited under the 1976 Act:
- Competitions in which prizes are offered for forecasts of the result of a future event
- Competitions in which prizes are offered for forecasts of the result of a past event, the result of which is not yet ascertained or not yet generally known
- Any other competition in which success does not depend to a substantial degree on the exercise of skill
Skill level required
If a competition does not involve skill, it may be considered a lottery. To be exempt from the controls on lotteries, the law requires that success in competitions must depend to a "substantial degree" on the exercise of skill.
There is no statutory definition of what constitutes "skill". We would advise anyone who plans to promote such a competition to seek legal advice.
Ability to run a prize competition
There are no restrictions on who can run a prize competition.
There are no statutory rules on ticket requirements for prize competitions. The rules are solely the responsibility of the promoter. Competitions are, of course, subject to the more general law on theft, and deception.
There are no registration requirements for prize competitions. Those seeking to promote them are, however, advised to seek their own independent legal advice, before proceeding, to satisfy themselves that a scheme is not in breach of section 14 of the Lotteries and Amusements Act as amended.
The legal position if I have a prize competition and then enter all the correct entries of a prize competition into a draw
It is not possible to say how the law would apply in particular cases. It is possible, however, that a court could decide that the chance element contained in the draw would qualify that part of the competition as an illegal lottery.
The most recent cases of relevance in this area are R v Interactive Telephone services (the telemillion case) and Strong v Adair. These cases and others are described in some detail in the Law on Betting and Gaming by Smith and Monkham.
Care has to be exercised where a competition requires participants to answer one or more questions which most of the applicants will get right and where the names are then put in a draw to decide the winner. A court may well decide that this is an illegal competition and an illegal lottery.
Future changes to the law
Tessa Jowell announced on 12 June 2003 plans to ensure that there is a clear distinction between lotteries and prize competitions. The key aim will be to protect lotteries that collect money for good causes, such as the National Lottery and charity lotteries. Where it is clear that payment is required for entry and the result depends completely on chance, good cause lotteries alone will be allowed. Purely commercial lotteries will be deemed unlawful.
If a competition is run for gain then it must involve a degree of skill or knowledge to secure a prize, or offer a genuine free entry route to participants. Many prize competitions and prize draws currently employ so-called free entry routes. But in reality they do not involve the exercise of genuine skill and require the participant to make a payment, such as by a premium rate telephone call.
Ministers in DCMS remain committed to the introduction of a Gambling Bill as early as possible during 2004. The exact timing of that introduction will depend on the availability of Parliamentary time.
Last updated 23 April 2004