Running prize competitions in the UK

A prize competition can be a great way to excite existing customers, reach new customers and create a buzz around your brand. However, there are strict rules and legal requirements when running a competition in the UK. 

The prize experts at Another Way have compiled this guide to help you out. We’ll cover:

• What a prize competition is
• Prize draw competition rules
• Legal requirements for running a competition in the UK
• Rules about running a prize competition in Northern Ireland

 

What is a prize competition?

The outcome of a prize competition must be determined by the participant’s knowledge or skill. This might include successfully completing a crossword puzzle or answering a series of questions correctly. 

Prize competition vs prize draw

A prize competition is different from a free draw, raffle or lottery. A prize draw does not need to have a skill element. However, there are still strict rules around running prize draws in the UK.

 

What are the prize draw competition rules in the UK?

Businesses don’t need special permission or a licence to run a prize competition or prize draw in the UK, provided they meet the requirements of the 2005 Gambling Act. Running a competition that doesn’t meet these requirements means you are at risk of running an illegal lottery. 

 

Running a competition: Legal requirements in the UK

The Gambling Act 2005 governs all forms of gambling in the UK, which includes betting, gaming, and lotteries. If your competition falls within the Gambling Commission’s definitions, you must have the appropriate licence in place. Otherwise, you risk a fine and potential imprisonment. 

Prize competitions and prize draws aren’t included in the Gambling Act, provided they either meet the ‘skill test’ or are free to enter. 

The skill test

A prize competition must deter a significant number of participants from competing due to the difficulty or have a system for allocating prizes that prevents a significant proportion of participants from receiving a prize. The level of skill, knowledge or judgement required will depend on the target audience. This is known as the ‘skill test’. 

If the competition has multiple stages, only the first round needs to meet the skill test. For example, if participants correctly solve a puzzle, they’re then entered into a prize draw to win a prize. 

Tasks, puzzles or questions that are too easy might not meet the requirements for a prize competition. For example, naming the capital of the UK is unlikely to exclude enough participants from entering the competition. If a question is multiple-choice, there must be enough plausible answers so that the answer is not overtly apparent. 

Free entry route

If your competition doesn’t meet the skill test, you must ensure there is a free entry route so that you fulfil the legal requirements. This includes running a free prize draw where no payment is required or offering a free alternative entry route. 

The Gambling Act defines ‘payment’ as paying money and paying more for something to enter the competition, which includes premium rate telephone numbers, special delivery services, and more expensive promotional products. Importantly, paying a ‘normal’ rate for posting a letter (first or second class), sending a text or calling a standard rate number does not qualify as payment. 

If one entry route involves payment, the competition will still be treated as free if there is an alternative free entry. However, the free entry route must:

• Not be less convenient than the paid for route.
• Be advertised in the same way as the paid-for route.
• Not be treated differently for the purpose of winning a prize. 

Other legal considerations

In addition to the Gambling Act, the UK Code of Non-broadcast Advertising and Direct and Promotional Marketing (‘CAP Code’) must also be considered when running prize draws and competitions. This requires all advertising to be legal, decent, honest and truthful.

The CAP Code also outlines which information must be given to consumers before or at the time of entry. This includes clear information about how to participate, the start and closing dates of the competition, and how winners will be notified.

 

Rules about running prize competitions in Northern Ireland

Previously, there were different rules about running competitions in Northern Ireland, which meant it was illegal to run a competition when consumers were required to pay any money. This included money spent purchasing a product. There had to be a no-purchase route with completely free entry. 

When the 2022 Betting, Gaming, Lotteries and Amusements (Amendment) Act (Northern Ireland) came into force, Northern Ireland’s rules were consistent with England, Wales and Scotland. This change made it much simpler for businesses to run UK-wide promotions. 

 

Bespoke prize competitions and prize draws 

If you’re running a prize draw or competition, it’s essential that you follow the rules to ensure everything runs smoothly and you don’t risk your brands reputation. The prize experts at Another Way can help make it happen!

Our founder, Andrew, has been in the Promotional Marketing industry for over a decade. He’s worked with big names, like Airbnb and Ocado, sharing his knowledge and expertise to create prize competitions that drive real results for your brand. 

At Another Way, we’re experts at the legal requirements for running competitions, so you don’t have to be. You can rely on us to ensure everything runs seamlessly. We can create bespoke competitions and draws with unique prizes tailored to excite your audience, be shared on social media, and boost long-term customer loyalty!

From on-pack promotions to social media competitions, we combine our legal and technical know-how with our creative spark to develop promotional campaigns that are truly magical. Check out our campaign inspiration to see what we can achieve at any budget. 

We offer:

• Unique prizes and experiences 
• Prize promotional mechanics
• Pan-European and global prize fulfilment 
• Winner management, selection and entry judging 
• UK and multi-territory terms and conditions
• Loyalty reward schemes and consumer incentives 
• Complete campaign management

If you would like to take advantage of our expertise and knowledge when running your next prize competition, call us at 0778 948 5123 or email us at [email protected].

Or complete our online form, and a member of our team will be in touch with you as soon as possible.