Prize competitions vs lotteries: staying on the right side of the law

What counts as a lottery

Section 14 of the Act describes a lottery as an arrangement where:

1. people are required to pay to take part;
2. one or more prizes are allocated; and
3. the prizes are allocated by chance.

In a simple lottery, prizes are allocated wholly by chance. In a complex lottery, they are allocated by a series of processes, and the first of those relies wholly on chance. Take away any one of the three elements and the arrangement is not a lottery. Comp sites deal with “chance” by adding skill, or with “payment” by offering free entry.

Route 1: a genuine test of skill

Section 14(5) says a process that requires skill, judgement or knowledge is not treated as relying wholly on chance, but only if the requirement is hard enough. The test is whether it can “reasonably be expected to prevent a significant proportion” of people who want to take part from doing so, or a significant proportion of entrants from receiving a prize.

The Gambling Commission's guidance is blunt about common shortcuts: “Multiple choice questions, or questions that allow a second chance if your first answer is wrong, rarely meet this criteria.” If most entrants get through your question, the draw that follows probably makes the scheme a lottery.

Section 339 confirms that a prize competition is not gambling unless it amounts to gaming, a lottery or betting. A genuine prize competition does not need a free entry route under the Act.

Route 2: a free entry route

Schedule 2 to the Act explains what counts as “payment”. Paragraph 8 says the payment element is not met if each person can choose between paying and entering by sending a communication instead, provided that:

• the free communication can be sent by ordinary post, or by another method that is neither more expensive nor less convenient than entering by paying;
• the choice is publicised in a way likely to come to the attention of each person who wants to take part; and
• the system for allocating prizes does not distinguish between people who paid and people who entered for free.

Paragraph 5 treats sending a letter by ordinary post at a normal rate as not being a payment. Paragraphs 6 and 7 work the other way: making people pay to find out whether they have won, or to claim a prize, counts as payment to take part.

The DCMS Code (clause 2.4) adds practical expectations: show the free entry option clearly and prominently before the point of purchase, and give people enough time to use it so their entry can be received. It also warns that a free route that offers no genuine choice is very likely to mean people are in practice required to pay.

Designing a free route that works

• Put the free entry instructions on every competition page and in the rules, not just in a footer link.
• Give a postal address and say exactly what a postal entry must include. Close postal entries late enough for normal post to arrive before the draw.
• Enter valid free entries into the same draw, with the same chance as paid entries. Keep records showing you did.
• Do not add hoops that make free entry harder than paying, such as extra questions, unreasonable limits or proof of postage that paid entrants don't need.
• If you also use a question, apply it to free and paid entrants alike.

Instant wins and complex lotteries

Instant win games, where a ticket immediately reveals whether it has won, are allocations by chance like any other draw. They need the same lawful structure. The DCMS Code (1.10) expects free and paid routes to be equivalent for instant wins. It also says instant win draws should not form the majority of an operator's competitions at any time. CAP rule 8.25 requires that people know straight away what they have won and how to claim it without delay, cost or administrative barriers.

What happens if you get it wrong

If a scheme fails both routes, it is a lottery, and unless it falls within one of the permitted categories, such as a licensed society lottery, it is an unlawful one. The Gambling Commission explains which lotteries do not need a licence or registration; commercial comp sites are not among them. The Commission does not pre-approve competitions, so get advice from a solicitor experienced in prize promotions and keep a written record of how your scheme meets the Act.

Northern Ireland

The lottery provisions of the Gambling Act 2005 discussed here apply in England, Wales and Scotland. Northern Ireland is covered by the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985. Its rules differ, so take specific advice before accepting entries from Northern Ireland.

Frequently asked questions

Sources

• Gambling Act 2005, section 14 (lottery; skill test)
• Gambling Act 2005, section 339 (prize competitions)
• Gambling Act 2005, Schedule 2 (payment and free entry)
• Gambling Commission: free draws and prize competitions
• Gambling Commission: lotteries that do not require a licence or registration
• DCMS: Voluntary Code of Good Practice for Prize Draw Operators
• CAP Code, section 8: promotional marketing

Sources checked 29 October 2026.