Recap
In April 2023, the Gambling Commission published its advice to the Government on the White Paper. Paragraphs 4.45 to 4.54 of that advice addressed illegal lotteries, prize competitions and free draws. In summary, the Commission was concerned about the proliferation of these activities, which in the latter two cases are unregulated and so outside their control. Their concerns centred around unfair competition with licensed lotteries and consumer protection. In many cases, they considered prize competitions and free draws to be flouting the exemptions under Section 14, paragraph 5 and Schedule 2 of the Gambling Act. However, due to the subjective nature of these provisions, they found it difficult to bring prosecutions.
The Gambling Commission’s intelligence indicates that from January 2019 to April 2023, there were 549 reports concerning 386 entities. The most frequently mentioned entities were Raffall, Elite Competitions, Bounty Competitions, Raffle House, and Omaze. While some of these entities adjusted their products to comply with Gambling Commission interventions, others were able to justify their operations under the existing Gambling Act.
The Gambling Commission recommended changes to primary legislation, making it clearer what constitutes an illegal lottery, free draw or prize competition. At the same time, they clarified that they have discretionary powers within the Gambling Act to change what is regarded as a lottery as per Section 14(7).
Recent Activity from the Gambling Commission
Andrew Rhodes (Gambling Commission CEO), in his speech at the Betting and Gaming Council (BGC) Annual General Meeting on Thursday, 27 February 2025, addressed large-scale prize draws, reiterating the concerns set out in the Commission’s April 2023 Advice on the White Paper.
Furthermore, there have been regular updates to the Commission’s guidance in this area, following a significant volume of complaints and subsequent bad press generated from poor customer experiences.
UK Government Study and Policy
London Economics were commissioned by the Department for Media, Culture and Sport (DCMS) in August 2023 to conduct research to provide DCMS with a better understanding of the prize draws and competitions industry (PDCs). The report was published in June 2025 and details the nature and scale of the PDC industry, estimating a total annual spend of GBP1.3 billion. This creates significant competition with the regulated lottery industry, which the report highlights, may in turn reduce donations to charity – a condition of the regulated industry. However, it’s the consumer-based dangers created by non-regulation that are the focus of the report. These centre around a lack of transparency, particularly when it comes to information on free entry routes as an alternative to paid entry, and an increased likelihood of gambling harm amongst PDC players.
The most drastic proposed solution is to bring the PDC sector under the direct oversight of the Gambling Commission. This would provide a robust regulatory framework, similar to that governing traditional gambling. However, such a move would necessitate changes in primary legislation, a complex and time-consuming process. The report also acknowledges that this drastic step could cause major negative disruption to the existing PDC industry, potentially stifling innovation and growth.
The alternative proposal is to pursue a more assertive enforcement of existing consumer protection rules. Such an intervention could include a piece of sector compliance work by consumer protection bodies such as the Advertising Standards Authority (ASA). The ASA’s sector compliance efforts typically involve monitoring of advertising in the sector and, potentially, issuance of an ‘Enforcement Notice’ effectively banning offending adverts from further use. According to the ASA, compliance rates with its enforcement action are above 90%.
To date, the ASA has taken an active role in protecting consumers against opaque or unfair terms in prize draws. Their guidance note, published in May 2025, sets out their areas of concern, being that promotions were found to be in breach of the rules by failing to:
- award the prize described or a reasonable equivalent;
- include or adhere to closing dates;
- communicate all significant conditions;
- administer promotions correctly and fairly;
- consider the suitability of the promotion;
- accurately describe gifts and prizes; and,
- avoid unlawful lotteries by providing a ‘pay to enter’ route.
The final intervention option considered in the report is the introduction of a voluntary code of conduct. Such a code of conduct would likely include many of the measures in the context of changes to gambling regulation, including a potential minimum threshold for charity donations, but without enforcement from a legal perspective.
This recommendation was followed on 26 June 2025 by a statement by the Minister for DCMS:
“I am therefore pleased to announce that we will be introducing a Voluntary Code for prize draw operators later this year. This code will help provide a uniform approach across the sector to strengthen player protections, increase transparency and improve accountability of prize draw operators. My department has worked closely with the sector over the past six months to start to develop this code.”
As this code is in the development phase only, it’s not possible to predict the scope and enforcement (if any) around it. At most, it could seek to implement an equivalent lottery-style regulation in the form of:
- minimum age for participation;
- provision of self-exclusion mechanisms and participation in industry-wide self-exclusion schemes;
- safer gambling messaging on websites;
- links to charities protecting against gambling harm on websites;
- charitable donations (20%);
- caps on entries and/or spend per player;
- limits on promotional offers (e.g. discounts encouraging bulk purchases); and,
- ban on accepting payment by credit card
However, this is unlikely to be implemented in full, given the free entry nature of the PDC industry, with lower margins and challenging liquidity conditions for market entrants. Instead, a dilution and reduction in the number of the above measures is more likely. It will be difficult to see how the scheme will be enforced as it’s voluntary. However, it’s possible that there will be some form of accreditation with an associated seal/logo that will benefit compliant members, especially when it comes to customer confidence and reputation.
Conclusion
The evolving landscape of illegal lotteries and prize draws in the UK continues to be a central focus of regulatory attention. While the Gambling Commission has highlighted the challenges in prosecuting operations leveraging legal loopholes, a recent government-commissioned report by London Economics underscores the significant scale of the PDC industry. This report also points to its potential for consumer harm and unfair competition with regulated lotteries.
Proposed solutions have varied, ranging from direct Gambling Commission oversight, which would require complex legislative changes, to more assertive enforcement of existing consumer protection rules by bodies such as the ASA. Most recently, the government’s announcement of a voluntary code of conduct for prize draw operators, currently under development, signals a move towards industry self-regulation.
The effectiveness of this voluntary approach, particularly regarding comprehensive player protections and charitable contributions, remains to be seen. However, it represents a key step in fostering a more transparent and accountable environment for consumers.
