Prize Competitions and Prize Draws
Prize competitions and prize draws have developed into a distinct and rapidly growing commercial sector in the UK.
There has been a significant increase in standalone prize competition businesses established specifically to operate paid entry prize competitions, online prize draws, and subscription based prize platforms, often at scale and as a core commercial activity rather than as a brand promotion or marketing tool.
Legal advice on prize competitions & prize draws
Prize competitions and prize draws have developed into a distinct and rapidly growing commercial sector in the UK. There has been a significant increase in standalone prize competition businesses established specifically to operate paid entry prize competitions, online prize draws and subscription-based prize platforms, often at scale and as a core commercial activity rather than as a brand promotion or marketing tool.
When properly structured, prize competitions and prize draws can operate outside the scope of licensed gambling. In particular, prize competitions that genuinely require the exercise of skill, knowledge or judgement, and prize draws that offer a genuine free entry route, may fall outside the Gambling Act 2005. However, these business models sit close to the regulatory boundary, and the Gambling Commission assesses structure and substance rather than labels or branding.
Where a prize competition business or prize draw business is incorrectly designed — including where participation requires payment and prizes are allocated by chance — the promotion is likely to be treated as an illegal lottery, exposing operators to criminal liability, regulatory scrutiny and enforcement action.
The Gambling Commission has been extremely active in tackling illegal lotteries on social media. In 2023 the Commission issued 161 cease and desist orders to Facebook requiring the closure of illegal lotteries advertised on the site. 133 of the sites were taken down. The Commission works with HMRC in its enforcement and each of the illegal sites closed was ordered to pay a £600,000 penalty by HMRC.
In 2024 the number of illegal lottery sites taken down from social media sites increased to 190 and in 2025 this almost doubled to 356.
Our advice to prize competition operators is closely aligned with broader obligations relating to advertising, fairness and consumer protection, particularly where promotions are operated online or marketed via digital and social media platforms.
We advise operators of prize competition businesses, subscription prize draw platforms and other standalone promotional models on structuring compliant operations and managing regulatory risk throughout the lifecycle of the business.
Prize draws
Prize draws are typically operated as random selections from a pool of entrants. In most cases, paid entry prize draws are unlawful unless they fall within a recognised statutory exemption.
There are two types of free draw:
1) Where all entries are free
“Free” is any method of communication charged at the normal rate, and specifically refers to the use of first or second class post.
Normal rate means that there can be no additional payment over what it normally costs to use a particular method of communication. For example, special delivery is not classed as free.
2) Both a paid and a free entry route
Where the second free entry route is relied upon, it must be genuine, advertised with equal prominence to the paid entry route and must not place participants at a disadvantage when compared with paid routes. The system for allocating prizes must not differentiate between those who participate by paying and those who participate by sending a communication.
Schedule 2 of the Gambling Act 2005 sets out the pre-conditions for the alternative free entry method, which require the “sending of a communication” at the normal rate – i.e. the cost of ordinary postage or a telephone call. Premium call and postage rates are not permitted.
As part of the implementation of the White Paper on gambling reforms DCMS commissioned a research paper on the structure of the Prize Draw and Competitions (PDC) industry.
Online prize draws and competitions market study, assessment of harm and review of potential interventions
This informed the government’s decision to introduce a Code of Good Practice for the Prize Draw Industry, which took effect on 20th May 2026.
Voluntary Code of Good Practice for Prize Draw Operators
Although the Code is “voluntary” the government has made clear that if the Code is not suitably implemented or complied with it will include all available options, including legislation to formally regulate the industry.
Prize competitions
Prize competitions can be lawful where entrants are required to demonstrate a sufficient level of skill, judgement or knowledge, such that success is not determined by chance.
The organisers of a prize competition must be able to show that the skill, knowledge or judgement required will:
- Discourage a significant proportion of people wishing to enter from doing so because it is too difficult
- Prevent a significant proportion of those who enter from winning a prize.
The skill requirement must therefore be meaningful. Superficial or token questions are unlikely to be sufficient to take the prize competition outside gambling regulation.
Regulatory framework
Prize competitions and prize draws sit at the intersection of multiple UK regulatory regimes, including:
- The Gambling Act 2005
- Advice issued by the Gambling Commission on the requirements of the Act
- Advertising regulation enforced by the ASA under the CAP Code
- Consumer protection legislation, including the Digital Markets Competition and Consumers Act 2024, which came into force in April 2025. Part 4 of the Act enhances protection from unfair trading and prohibits unfair commercial practices. Schedule 20 of the Act lists the commercial practices that are considered unfair in all circumstances. This includes “claiming to offer a competition or prize promotion without awarding the prize(s) described or a reasonable equivalent.” The Act also makes all the unfair commercial practices listed in Schedule 20 criminal offences.
Failure to comply with the relevant regulatory framework may result in:
- Regulatory investigation
- Criminal liability
- Advertising enforcement action
- Contractual disputes and reputational damage.
Regulatory scrutiny has increased significantly in relation to online and subscription-based prize competitions and prize draws, particularly where promotions adopt mechanics that resemble gambling products or raise concerns about consumer harm. The DCMS Code of Good Practice sets out the Social Responsibility Protections that should now be implemented, include age verification, monitoring customer spend, time outs and self-exclusion.
Our advice on prize competitions and prize draws
We regularly advise operators running large scale online prize competition platforms, subscription based prize draw businesses and hybrid models combining elements of competition, gaming and consumer promotions. We provide clear, pragmatic advice across the full lifecycle of prize competitions and prize draws, including:- Designing prize competitions and prize draws to avoid unlawful gambling
- Advising on skill thresholds and compliance with Gambling Commission guidance
- Structuring free entry routes and subscription models
- Reviewing promotional mechanics, payment structures and prize allocation.
Online, subscription and digital prize platforms
We have particular experience advising businesses operating:
- Online prize competitions and prize draws
- Membership based and subscription prize platforms
- Prize competition and prize draw mechanics integrated into digital apps and online services.
Our advice reflects evolving regulatory expectations, including the Gambling Commission’s focus on:
- Consumer harm
- Transparency and fairness
- AML and financial crime risk
- Marketing practices aimed at younger or vulnerable consumers.
Where appropriate, we also advise on whether alternative regulatory structures or licensing strategies should be considered.
Why choose Irwin Mitchell's solicitors?
Our team:
- Have a deep experience at the boundary between gambling regulation and consumer promotions
- Have a practical understanding of how regulators assess prize competition and prize draw risk
- Have an integrated advice covering regulatory, commercial and disputes issues
- Can support for UK based and internationally operating prize competition businesses.
We work with clients to protect brands, manage regulatory exposure and enable compliant innovation.
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