We all love a good raffle, don’t we? There’s something so exciting about the chance to win a big prize, especially if it’s for a good cause or run by a small business trying to get some attention. But – and it’s a big but – not all raffles and lotteries are above board. In fact, plenty of them can end up crossing into illegal territory without the organiser even realising it.
I’ve seen it happen time and again – well-meaning folks setting up house raffles, social media giveaways, or those “bonus ball” raffles, only to find out they’re running afoul of UK gambling laws. So, if you’ve ever thought about organising a raffle or you’ve been tempted to join one online, let’s take a moment to chat about how to avoid facilitating illegal raffles or lotteries. It’s easier to slip up than you might think!
Table of Contents
1. What’s the big deal with lotteries and raffles?
In the UK, raffles and lotteries are heavily regulated by the Gambling Act 2005. The reason for all the rules is simple: lotteries are a form of gambling. So, you can’t just set one up unless you follow the proper legal framework. Otherwise, you could end up facing fines, having your raffle shut down, or even worse – being charged under the Proceeds of Crime Act.
Lotteries are defined as any arrangement where:
- People pay to enter.
- Prizes are awarded to one or more participants.
- Winners are chosen purely by chance.
The tricky bit is that it can be hard to tell when your fun little prize draw crosses into the territory of an illegal lottery. If you’re charging for entry and there’s no skill element involved, you might need a lottery licence. If you don’t have one, then you could be running an illegal lottery, whether you meant to or not!
2. House raffles: A growing problem
One of the biggest areas where people unintentionally break the law is with house raffles. You’ve probably seen them pop up – homeowners raffling off their property to get a quicker sale or raise more than they’d get through a traditional sale. Sounds clever, right?
Well, back in 2017, the UK Gambling Commission noticed a big rise in these house raffles. They warned that the line between a prize competition (which doesn’t need regulation) and a lottery (which does) is incredibly thin. So, unless you’ve got a proper gambling licence, raffling off your home can easily tip into illegal territory.
Some people try to get around the rules by adding a simple skill element, like a quiz question. But here’s the catch – the question has to be sufficiently challenging to prevent a significant proportion of people from entering. If it’s something easy like, “What’s 2 + 2?”, that won’t cut it, and you could still end up breaking the law.
3. Social media raffles: A modern problem
It’s not just house raffles. Social media is full of informal raffles these days. You’ve probably seen them: “Buy a £5 ticket and win an iPhone!” They’re everywhere, but they’re also often illegal.
Many of these raffles don’t have a licence and aren’t following the strict UK gambling laws, which means they’re unregulated and don’t offer participants the protections they should. If something goes wrong, there’s no legal protection for your entry fee. The Gambling Commission has even identified social media lotteries as a growing threat to consumers.
Now, you don’t have to check whether every raffle you enter is licensed – that’s the organiser’s job. But if they aren’t playing by the rules, you’re taking a risk. And if you’re the one running it, you could be in a sticky situation if you don’t follow the legal requirements.
4. How to tell if your raffle is illegal
So, how can you tell if a raffle or lottery is legal or not? Well, the Gambling Commission has some guidelines to help you out.
Here are some of the key points:
- Free entry is a must for prize draws: If you’re running a prize draw (where winners are chosen by chance), you must offer a free way to enter. That could be as simple as letting people send in a postcard or enter online without paying.
- Skill-based competitions: If you’re running a competition that charges for entry, it has to be based on skill, not chance. And the skill test must be difficult enough to stop a significant number of people from entering or winning.
If your competition doesn’t meet one of these two criteria, it could be classified as a lottery, and that means you’ll need a licence. No licence? You’re in trouble.
For example, let’s say you’re raffling off a car and charging for tickets. If you don’t have a licence, there’s no free mode of entry and you’re not making the competition difficult enough to meet the skill requirements, you could be running an illegal lottery. And that’s where the Proceeds of Crime Act comes in – the profits from your raffle could be considered criminal property.
5. Common mistakes to avoid
One of the most common mistakes people make is thinking that adding a simple quiz question or challenge is enough to make their raffle a skill-based competition. It’s not. The challenge has to be genuinely difficult enough to prevent a significant proportion of people from entering or winning.
Here’s an example:
- Legal competition: You run a photography competition where participants have to submit a high-quality, creative photo, and only the best one wins.
- Illegal lottery: You run a raffle where participants answer, “What’s the capital of England?” before entering. Too easy! That’s not enough to make it a skill-based competition.
6. Raffles vs prize draws vs free draws: What’s the difference?
It can all get a bit confusing, right? So, let’s quickly break down the differences between raffles, lotteries, prize draws, and free draws.
- Raffle/Lottery: A raffle or lottery is where people pay to enter, and the winner is chosen by chance. These need to be licensed unless they’re being run for a charitable cause.
- Prize draw: In a prize draw, participants can win a prize based on luck, but there has to be a free entry option (e.g., postcard entry).
- Free draw: As the name suggests, a free draw is one where you don’t have to pay to enter, and the winner is picked randomly. These don’t need a licence.
7. What to do if you’re running or entering a raffle
If you’re thinking of running a raffle or competition, it’s always worth getting legal advice first. The Advertising Standards Authority (ASA) recommends this as well, as it’s all too easy to accidentally fall into illegal territory (you’ll also need it to advertise on Facebook).
If you’re just entering a raffle or lottery, try to stick to ones run by licensed operators or those with formal legal approval – or make sure they’ve got a free entry route. That way, you’re covered, and you can enjoy your chance to win without any worries!
Running or entering raffles and lotteries can be great fun, but it’s important to make sure you’re on the right side of the law. Whether you’re organising one or just buying a ticket, understanding the rules can save you a lot of trouble down the line!