It might be the increase in working remotely, or the pandemic causing more day dreaming, but once again prize competitions and lotteries are on everyone’s mind.
A lottery requires a licence if there is a requirement to pay to enter and the prizes are awarded wholly on chance. This describes a simple lottery, a complex lottery can follow a series of processes to allocate prizes, with just the first step relying wholly on chance.
If you remove the element of chance, it becomes a prize competition.
Prize competitions require an element of skill and knowledge in order to be exempt from the requirement to hold a licence. The biggest question is therefore what qualifies as skill and knowledge. In order to qualify, it must require enough skill or knowledge so as to prevent a significant portion of those entered from winning a prize, or simply prevent a significant portion of people from entering.
As a rule of thumb anything which is widely known, can be found on the same page as the question or is easily searched won’t qualify. Similarly if it is a multiple choice question for which you can have multiple attempts, that won’t cut it either.
But in an age of google in your pocket, surely anything can be easily searched? The Gambling Commission gives an example of a crossword puzzle on the back of a newspaper as being a good example of a prize competition. On the face of it this is understandable, it requires time and effort to complete a number of difficult questions. But what if the questions are not complicated?
It is clear that the validity of a prize competition will turn on the facts of each individual case. For example a maths questions seems like a good option, but a simple maths question follows the same as the above. If it does not require skill and knowledge which a significant portion of those entering will not possess, it will not qualify.
In the event a prize competition is deemed to be a lottery, it will require a licence and the competition will be halted.
Now, to confuse things, you might be thinking “I’ve definitely seen prize competitions which couldn’t possible qualify!”. Chances are such competitions are actually using the free entry route. If the competition question asks the reader to decide whether 2+2 is a) 3, b) 4, or c) 5… this is clearly not a question of skill or knowledge. However you must next look at how the entry is made. Remember; the requirements for a lottery are that it relies wholly on chance AND there is a requirement to pay. If you have not paid, it is not a lottery.
Such questions frequently have an entry route which costs, for example £5, and entry can be made by text, online or over the phone. However you can also enter by first class post and no further cost will be needed. This qualifies as a free entry route.
There are some intricacies of the free entry route- it must be clearly visible and on a par with the paid entry route, it must still be convenient and the costs must be at a normal rate (first class post- not special delivery). The most important point to note is that people must be able to choose to take part without paying and the prizes must not be allocated with any reliance on how entries were made.
A free entry route can be utilised for commercial purposes.
If any of the above interests or alarms you please feel free to contact Amanda Usher at amanda@woodswhur.co.uk or Andrew Woods at andrew@woodswhur.co.uk for more information or to discuss a situation.