UK: Prize Competitions And Free Prize Draws – New Guidance

Gambling law has been seen as a minefield as there are several pieces of different legislation for different types of gambling. It was hoped that the Gambling Act 2005 would finally provide promoters with some clarity as to what is and is not legal. However, when the Gambling Act 2005 comes into force on 1st September 2007, promoters will still need to take care to ensure that they are not unwittingly involved with consumer competitions which fall foul of the new law. The borderline between legal prize competitions and free prize draws on the one hand and illegal lotteries on the other remains unclear in a number of respects. Essentially, to avoid a lottery, either there must be no payment by participants to enter or there must be a sufficient degree of skill required. However, the Act will change the interpretation of both of these concepts considerably.

As a result of industry concern regarding the ambiguity as to what these two concepts require, the Gambling Commission ("GC") conducted a consultation exercise and has now published revised guidance in advance of the coming into force of the Gambling Act 2005. This guidance provides some useful information as to how promoters can design schemes so as to avoid falling within the definition of an illegal lottery.

The guidance can be found at the following link.

In addition, the GC has just announced the findings from its consultation into gambling advertisements. One of the main points considered was whether advertisements should include mandatory social responsibility messages. The GC has decided that advertisements should include a reference to the website www.gambleaware.co.uk. An industry advertising code of practice will also be developed and that should be put in place prior to 1 September 2007 to include all of its recommendations as to social responsibility. It is intended that this will be a voluntary code of practice.

For the full consultation document click here

To view the article in full, please see below:


Full Article

Gambling law has been seen as a minefield as there are several pieces of different legislation for different types of gambling. It was hoped that the Gambling Act 2005 would finally provide promoters with some clarity as to what is and is not legal. However, when the Gambling Act 2005 comes into force on 1st September 2007, promoters will still need to take care to ensure that they are not unwittingly involved with consumer competitions which fall foul of the new law. The borderline between legal prize competitions and free prize draws on the one hand and illegal lotteries on the other remains unclear in a number of respects. Essentially, to avoid a lottery, either there must be no payment by participants to enter or there must be a sufficient degree of skill required. However, the Act will change the interpretation of both of these concepts considerably.

As a result of industry concern regarding the ambiguity as to what these two concepts require, the Gambling Commission ("GC") conducted a consultation exercise and has now published revised guidance in advance of the coming into force of the Gambling Act 2005. This guidance provides some useful information as to how promoters can design schemes so as to avoid falling within the definition of an illegal lottery.

In addition, the GC has just announced the findings from its consultation into gambling advertisements. One of the main points considered was whether advertisements should include mandatory social responsibility messages. The GC has decided that advertisements should include a reference to the website www.gambleaware.co.uk . An industry advertising code of practice will also be developed and that should be put in place prior to 1 September 2007 to include all of its recommendations as to social responsibility. It is intended that this will be a voluntary code of practice.

In more detail.

When the Gambling Act 2005 comes into force on 1st September 2007, promoters will need to ensure that their consumer competitions are legal. Some lotteries will be legal, for example, if a licence has been granted by the Gambling Commission ("GC"). However, without a licence most lotteries (especially those conducted for commercial purposes) will remain illegal and subject to criminal law prosecution. Essentially, to avoid being a lottery, either there must be no payment by participants to enter or there must be a sufficient degree of skill required.

As a result of industry concern as to a lack of clarity concerning some aspects of the interpretation of what constitutes "payment" and what is a sufficient degree of "skill" under the new Act, the GC conducted a consultation exercise, and has now published revised guidance, including the following main points:

1. The Act requires that to avoid being a lottery, a prize competition must contain a requirement to exercise skill or judgement or display knowledge, to a level where it can reasonably be expected that the requirement will either: a) prevent a significant proportion of people who wish to participate from doing so, or b) prevent a significant proportion of people who participate from receiving a prize. If this test cannot be met, the promotion will be treated as relying wholly on chance. The GC has now acknowledged that gathering evidence to prove that these tests are satisfied will be difficult. The guidance states that in some circumstances it will be obvious whether the skill is of the required standard, e.g. crossword puzzles, where it is clear an element of skill is required, and promotions which involve a single very simple question, which will not. However, the middle ground between these two extremes remains uncertain. In circumstances where it is not obvious, the GC has indicated that the test will be satisfied where organisers can produce material which demonstrates that they have taken steps to estimate the likely proportion of potential or actual participants who are, or will be, eliminated by the skill element. There are no plans to define what a "significant proportion" means.

The GC considers that it will not be sufficient to compare numbers of entrants with, for example, the audience figures for TV programmes or the readership figures for newspapers. Some evidence will be required as to the propensity of that audience to enter such competitions. Further the GC has acknowledged that it will be willing to accept, where steps have genuinely been taken to estimate the numbers accurately, that misjudgements may occur on the first occasion that a particular type of competition is organised. This should provide some comfort for competition organisers.

2. The GC provides much needed guidance as to what will constitute a "free" method of communication (and therefore avoid being an illegal lottery). It has indicated that "free" includes any method of communication (post, telephone or other) at a "normal rate". A normal rate is defined as "a rate which does not reflect the opportunity to enter into a lottery".

3. In the event that there is a choice of entry, whereby the participant has a choice either to pay or to send a "free" communication, the "free" communication can either be a letter sent by ordinary post or another method which is neither more expensive nor less convenient than entering via the paid route. This choice must be publicised so that it is likely to come to the attention of all those intending to participate and the system for allocating prizes must not distinguish between those using either route. The GC accepts that its previous view that a free entry route must be as well publicised as the paid route was wrong.

4. The GC has acknowledged that communications may now be via mobile phone, text service, emails or other web based systems. It confirms that the circumstances in which these do or do not involve payment to enter a competition will inevitably depend on the context and facts of each case. It did, however, provide several principles to be considered, including the following:

(i)The alternative route must be no less convenient than the paid route. Because many people do not have ready access to the internet at home, a competition which offers an alternative free route via the web, may not therefore be as convenient as the paid route. It suggests that this will be particularly true in cases where there is a need for an immediate response or competitions are run only for relatively short periods of time. The GC therefore remains concerned that competitions such as TV quiz shows will not escape regulation under the Act by offering the internet as an alternative method of "free" entry. It proposes to meet industry to discuss this problem further.

(ii)The GC has confirmed that it does not think that provision of data by individuals amounts to payment as intended by the Act. The GC will, therefore, not seek to argue that proportionate requests for data amounts to "transferring money’s worth". However, the GC does suggest that the position may be different where large quantities of data are requested before entry to the promotion has taken place, particularly where data is obtained in circumstances where it is intended to be sold to third parties (even with permission of participants).

(iii)The GC has also confirmed that where winners are required to pay to collect their prize, this would be considered as payment to enter. This does not include payment for normal delivery or other usual costs associated with the prize, for example, being required to pay road tax on winning a car.

5. Finally, the GC has confirmed that draws tied to product promotions which involve a purchase will not be treated as requiring payment to enter and, as such, will not be regarded as illegal lotteries. This is, of course, provided that entry involves no cost beyond the cost of the product itself. As a result, it is likely that an explosion in these types of competitions will begin from 1 September 2007.

The Gambling Act 2005 will introduce major changes to the way in which consumer promotions and competitions are run. In some ways the law will be liberalised, allowing for more flexibility. However, in other aspects (particularly the assessment of skill) the law is being tightened. The GC has a mandate to enforce and it can be expected to take a tougher line than previous enforcement authorities.

The full GC guidance can be found at the following link.

In addition, the GC has just announced its findings from the consultation into gambling advertisements. One of the main points considered was whether advertisements should include mandatory social responsibility messages. The GC has announced that advertisements should include a reference to the website www.gambleaware.co.uk which offers a range of information about responsible gambling and directs them to sources of help. An industry advertising code of practice will be developed and put in place prior to 1 September 2007 to include all of its recommendations as to social responsibility. It is intended that this will be a voluntary code of practice. In addition, the GC has decided not to require advertisements to display an operator’s licensed status.

Following concern as to sponsorship of events by gambling operators, whereby children’s replica strips would include advertising of those gambling operators, the GC has decided that it will not impose any requirements to ban this form of sponsorship but that operators should demonstrate social responsibility through their sponsorship deals. The GC has put the onus onto the industry to consider whether a self-denying ban on replica children’s shirts would be appropriate.

For the full consultation document click here

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 12/07/2007.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions