Pay to enter competitions – are they gambling?
We’ve all seen ‘win a house’ competitions in the news – but in 2018 there’s been a worrying increase in the number of companies hosting ‘pay to enter’ competitions to win prizes ranging from toys to sports cars.
Websites like Super Competitions and Prize Ape give us the chance to buy one or more tickets to win prizes – ticket sales are limited – so for example a PS4 might be offered with 250 tickets available at £2 each. But a PS4 only costs £230, so the host will make a profit of £270. Easy money!
In some cases the website will use the cynical ploy that a percentage of ticket sales will go to charity – but the terms and conditions reveal that this is only a tiny percentage of the revenue, and usually the number of tickets sold is increased to cover these charitable donations.
These online ‘raffles’ can be expensive, addictive, and despite the advertising, they don’t offer great odds of winning at all.
Why aren’t they classed as gambling?
Let’s look at the difference between a lottery, a raffle and a competition.
Lotteries are strictly regulated in the UK. A licence is required to run one, and is only available to local authorities or non-commercial societies.
A raffle is a lottery that’s run at a non-profit event – tickets are only sold at the event and winners are announced at the event. No licence is required and they are exempt from regulation.
But if an element of skill is added to a lottery/raffle, it becomes a competition, and is no longer regulated under The Gambling Act. If more than one person gets the answer to the competition correct, all correct entries will go into a draw and the winner is chosen at random. The element of skill can be as simple as answering a multiple choice question – the example below from Raffall.com shows how ridiculous this is!
The element of skill may be more interesting – BOTB and BNGET use spot-the-ball, and new website Swiss500 asks entrants to estimate how many cogs are inside a cube. In these cases, the closest answer wins.
Free entry route
Some ‘pay to enter’ competitions do offer a free entry route. and it’s worth checking the T&Cs or FAQs for this. It’s usually an option to send an entry by post – the Gambling Commission considers that the cost of a stamp isn’t considered ‘payment’ to enter, so it’s classed as a ‘free entry’ alternative to buying a ticket or a premium rate phone call. You’ll find details of a postal entry route for most of the expensive text competitions advertised on ITV at www.itv.com/win/.
Entries submitted by the ‘free’ route must be treated in the same way as paid entries and all entries will be combined before the winner is drawn.
Many people run raffles on Facebook pages, or in groups – but it’s a criminal offence to run a pay-to-enter prize draw online with no element of skill or free entry route, and most of these are shut down fairly quickly.
Dragon’s Den feature
Below is a recent Dragon’s Den episode where Elite Competitions pitched, and were criticised by the Dragons as encouraging vulnerable people to spend money they can’t afford. Interestingly, Elite do have a free postal entry route in their T&Cs.
Personally, I’m not a fan of this type of competition and I wish the Gambling Commission would take action on the ones with a ridiculously simple question. I do pay to enter competitions – but on websites like www.omaze.com where the majority of the ticket price goes to charity, and the prizes are unique (who wouldn’t want to win the chance to eat cookies with Cookie Monster or get married at Magic Kingdom?). I also buy a lot of charity raffle tickets and occasionally text in for the Heart ‘Make Some Noise’ charity competitions. But you certainly won’t find me paying £5 for a 1-in-100 chance to win a pair of £250 headphones!
I like to promote comping as a free alternative to gambling, lottery tickets or bingo – but if you are happy to pay to enter a competition, then I recommend on-pack or ‘receipt necessary’ promotions – then you’re getting a product too, and usually a much better chance of winning than in an online raffle! You can find some in my Di’s Prize Buys category.
What’s your opinion on ‘pay to enter’ competitions – do you take part, or avoid at all costs?
To find out more about lotteries and competitions, visit the Gambling Commission – Fundraising and promotions page.