The Big Debate: Are the rules regulating online raffles in the UK fit for purpose?

YES

Richard Bradley, associate solicitor, gambling team, Poppleston Allen

Yes, but only if the correct rules are followed and enforced. The Gambling Act 2005, albeit complex, provides a framework of what is permitted. If an activity is purely based on chance rather like pulling a ticket out of a hat, then it is essentially a lottery (raffle). Lotteries are a form of gambling and are essentially only allowed to be run for good causes and not commercial/private gain. Many of the ‘win a house/car’ competitions operate for commercial gain and achieve this legally by ensuring they don’t fall under the definition of ‘gambling’ and the licensing regime. Typically, they do this by operating free draws or prize competitions. Although these activities fall outside the Gambling Commission’s (UKGC) remit, it can and will step in if operators aren’t acting within the legal framework. Examples of this would be where a free-draw operator wasn’t making the free entry as prominent to players as the paid-entry route, or where a prize competition fails to require a sufficient level of skill or judgement to win a prize.

The difficulty with these activities is that the UKGC is unlikely to have the resources to police every competition. Many activities are run on social media platforms, and they have a part to play. Some platforms often request a legal opinion as to whether an activity is gambling and appropriately licensed or whether it falls outside of the gambling regime.

Even if an activity is not classed as gambling, this doesn’t mean its terms and conditions are fair. For example, there have been a number of cases where players have won ‘house raffles’ but have not won the house because organisers didn’t sell enough tickets. If players are not made aware of possible prize substitutions, this is fundamentally unfair and a potential breach of contractual rules. The Advertising Standards Authority provides advice and guidance on this topic and has the power to intervene. Unfair terms and conditions could also result in contractual claims and disputes.

NO

Audrey Ferrie, licensing and gambling lawyer, Pinsent Masons

In my opinion, the current regulations for online raffles are not fit for purpose or, to put it another way, the current legislation does not properly regulate online raffles. I say this for a few reasons. Firstly, there’s been an explosion of online gambling since the Gambling Act 2005 was enacted but there are no specific rules for online ‘raffles’. Indeed, there are no specific rules for ‘raffles’ in general. The UK Gambling Commission counts a ‘raffle’ as a ‘lottery’ or, possibly, a ‘free draw’ or ‘prize competition’ if certain criteria are met.

Unlicensed ‘raffles’ are permitted at non-commercial events, but the prize limits are low by today’s standards.

Lotteries-for-profit are not permitted, so ‘prize competitions’ are devised to take advantage of the exemptions in the Gambling Act 2005, which is where ‘skill’ comes into play.

The current rules were not drafted with online lotteries or competitions in mind. Rather, the 2005 act seeks to address issues with magazine and newspaper competitions and competitions/lotteries which customers enter by non-digital means, for example, by purchasing a ticket or making a premium-rate telephone call. While these types of competitions still take place, they are less frequent. Phones are more likely to be used to access competitions via Facebook, Instagram or YouTube than a call, premium or otherwise. The result is that promoters and their advisers need to make the lotteries/competitions fit the existing rules, and this involves a considerable degree of creativity.

The rules themselves are unhappily drafted from any view and are unnecessarily complex. They lead to considerable confusion, and not even the UKGC guidance provides much clarity.

It is often assumed, wrongly, that the Gambling Act 2005 applies to the whole of the UK. It doesn’t. Northern Ireland is a separate jurisdiction for the purposes of gambling legislation and lotteries there are illegal, just as they are in France, for example. In addition, online raffles can be entered by competitors from many jurisdictions, making them much more difficult to regulate.