How UK prize competitions work and why they are not a lottery

Scroll any social feed for long enough and you will find someone offering a sports car, a holiday home or £10,000 in cash for the price of a coffee. These are prize competitions, and in Great Britain they sit in a narrow gap in gambling law. Once you understand that gap, it gets much easier to tell a well-run competition from a dodgy one.

Start with the definition of a lottery

Section 14 of the Gambling Act 2005 says an arrangement is a lottery when three things are present: people pay to take part, one or more prizes are given out, and those prizes are allocated by a process that relies wholly on chance. Remove any one of the three and you no longer have a lottery.

That matters because lotteries are tightly controlled. Apart from the National Lottery, they can only be run by licensed or registered good causes, small societies, workplaces, residents and a few other narrow groups. A commercial company cannot simply sell raffle tickets for a car and keep the profit. If it tried, it would be running an illegal lottery.

The two legal routes competition sites use

Commercial competition sites therefore break the definition on purpose. They do it in one of two ways, and most good sites use both at once.

A genuine element of skill, judgement or knowledge. If winning depends on more than pure chance, the prize is not allocated wholly by chance. This is why you are asked a question before you can check out.
A free entry route. If anyone can enter without paying (usually by post) and those entries are treated exactly the same as paid ones, the "payment to enter" element falls away under Schedule 2 to the Act. The arrangement becomes a free draw rather than a lottery.

Why the skill question has to be real

Section 14(5) closes the obvious loophole. A skill test is treated as if it were pure chance if it cannot reasonably be expected to stop a significant proportion of people from entering, or a significant proportion of entrants from winning. In other words, "What colour is a red bus?" does not count.

In practice many sites set an easy multiple-choice question and rely mainly on the free postal route to stay legal. That is why a missing or hidden free entry route is one of the biggest warning signs you will read about on this site.

Prize competitions are not "gambling" in law

Section 339 of the Act confirms that participating in a prize competition or a genuine free draw is not gambling for the purposes of the Act. The upshot is that the Gambling Commission does not license or supervise competition sites the way it does bookmakers or online casinos.

That does not mean there are no rules at all. Competition operators still have to follow consumer protection law (including the unfair commercial practices rules in the Digital Markets, Competition and Consumers Act 2024), advertising rules policed by the Advertising Standards Authority (the CAP Code has a whole section on promotional marketing), data protection law and, if they take card payments, the rules of their payment provider.

The voluntary code

Because the sector grew so quickly, the government reviewed it and in 2025 published a voluntary code of good practice for prize draw operators. It covers things such as clear terms, equal treatment of free and paid entries, showing the maximum number of entries and the odds, age checks, and tools to help people manage what they spend. The code is voluntary, so it is worth checking whether a site says it follows it, and whether its behaviour matches the claim.

What this means for you

There is no licence number to look for. Any site that claims to be "licensed by the Gambling Commission" for a prize competition is either confused or misleading you.
The free entry route is your strongest protection. If it is easy to find, cheap to use and treated equally, the site is taking the law seriously.
Terms and conditions do the heavy lifting. They should say how the draw is made, what happens if tickets do not sell out and how the winner is contacted.
You have normal consumer rights. If a prize is misdescribed or never awarded, you can complain to the operator, your card issuer and Trading Standards via the Citizens Advice consumer helpline.

This guide is general information about the law in Great Britain (England, Scotland and Wales). Northern Ireland has its own gambling legislation, and the details can differ. It is not legal advice.

General information only, not legal, tax or financial advice. Questions or corrections? [email protected]