Prizepot › Prize draw vs prize competition vs lottery
Prize draw vs prize competition vs lottery
UK law treats chance, skill and payment differently. Knowing which one you are entering helps you judge whether an operator is following the rules.
The short version
| Type | How the winner is decided | Payment |
|---|---|---|
| Prize competition | Skill, judgement or knowledge | May charge an entry fee |
| Free draw | Chance | Entry must be possible for free; a paid route may be offered too |
| Lottery | Chance | Payment required to enter |
This table summarises the Gambling Commission's public guidance. It is a general summary, not legal advice.
Lotteries
The Gambling Commission says all lotteries are regulated under the Gambling Act 2005 and "cannot be run for commercial or private gain". If a commercial company runs a draw where you must pay and the winner is chosen by chance, with no free alternative, that is likely to be an illegal lottery.
Free draws
In a free draw, winners are chosen by chance, and entry can be free or offered alongside a paid route. The Commission says free draws can be run for commercial or private gain. The condition is that people must be able to take part without paying. The details are in the free entry route.
Prize competitions
A prize competition depends on skill, judgement or knowledge. According to the Commission, these can also be run for commercial or private gain. But the skill test must be real. Organisers must be able to show the test would discourage some people from entering because it is too difficult and prevent some entrants from winning a prize. The Commission says multiple choice questions, or questions that allow a second attempt after a wrong answer, rarely meet these criteria.
That is why you will see competition questions that are easy for most people, such as "What is the capital of France?" Those are not always a valid skill test. If a competition asks for payment and the "skill" question is trivial, treat it with caution.
What happens if the rules are not followed?
If a free draw or prize competition does not meet the requirements, the Commission says it may be an illegal lottery, and the Commission may act against it. As an entrant, this matters because an operator that breaks the rules may be less reliable in paying prizes. The Commission suggests organisers who are unsure should seek legal advice.
Why the labels get mixed up
Operators sometimes call a chance-based draw a "competition" because it sounds safer, or call a skill contest a "raffle". The name on the page does not decide the legal category. What matters is how the winner is chosen and whether payment is needed. If an operator calls something a competition but the winner is picked at random, ask what the free route is.
How to tell which you are entering
- Read the terms. Do they say "free entry route" or give a postal address or form for free entries?
- Ask what decides the winner: a random draw, or a judged question or task?
- Check whether it is a registered charity lottery or a business promotion.
If you cannot find the terms, treat that as a red flag; see spotting scam competitions.
Advertising rules also apply
Whatever type it is, the promotion must follow the advertising rules; read about the CAP Code. For community raffles, see raffles and small society lotteries.
This page is general information, not legal advice.
Frequently asked questions
What makes something a lottery?
Chance decides the winner and entry requires payment. Lotteries are regulated under the Gambling Act 2005 and cannot be run for commercial or private gain.
Can a company charge an entry fee for a competition?
A prize competition that depends on skill, judgement or knowledge can be run for commercial gain, but the skill test must be genuine. A chance-based draw with payment and no free route is likely to be an illegal lottery.
Are multiple-choice questions a valid skill test?
The Gambling Commission says multiple choice questions, or questions allowing a second attempt after a wrong answer, rarely meet the criteria.