Unregulated prize draws and competitions leading to huge debt

New research has revealed that nearly one in 10 people who have entered ‘big ticket’ prize draws and competitions, which offer luxury prizes like cars and houses, have ended up in debt as a result.

A study by Jumbo Interactive found consumers spent £653 million entering paid-entry prize draws and competitions in the last year – and a shocking £117 million of this was spent using credit cards.

Why aren’t raffle websites regulated?

Although using credit cards for gambling has been banned in the UK since 2020, these ‘raffle’ type websites are not considered to be gambling. They exploit a loophole in the law – if the promoter adds a ‘free entry’ option or introduce an element of skill (a question to answer, or a spot-the-ball challenge, for example), they are considered to be prize draws or competitions. As a result, no lottery licence is required and the Gambling Act does not apply.

Many of these ‘raffle’ type sites advertise charitable donations, and almost half of the participants said this made them more likely to take part. However, the charitable donation is usually very small, and ticket prices are hiked up to cover it.

Examples of unregulated prize draw and competition websites where you pay to enter include: BOTB, Elite Competitions, Bounty Competitions, Froghopping, Odurn, Raffolux, Daymade, Aspire Competitions, Storm Competitions, Goodlife, Gas Monkey Competitions, Click Competitions, McKinney Competitions, Opulent Competitions, Rev Comps, Better Chances, Redline Competitions, The Giveaway Guys, Top Marque, XClusive Competitions, Ticket Me, Prize Paradise, Cloverhut, Jammy… but there are many more!

Statistics from Jumbo Interactive’s research (conducted among a nationally representative sample of 4,000 UK adults by Opinium in October 2021):

• 22% of adults in the UK have participated in prize draws within the past three months, spending £18.70 each on average in this time period
• 72% of those who enter lotteries, draws or competitions think prize competitions and prize draws should be regulated in the same way as gambling

I’ve previously written about my own concerns about raffle websites in my post ‘Pay to enter competitions – are they gambling?’ but I find these statistics about credit card debt really concerning. It’s definitely time for the government to regulate pay-to-enter prize draws and competitions properly, to ensure transparency and protect consumers from going into debt.

I contacted Jumbo Interactive’s General Manager Nigel Atkinson to ask about their research. He informed me that they have already made a submission to the Government’s Department for Digital, Culture, Media & Sport (DCMS) as part of the consultation on the imminent Gambling Act review. The Lotteries Council have also been in contact with DCMS and voiced their concerns.

The Government were due to publish an outline of proposals for the Gambling Act changes this year – Covid-19 has delayed this, but hopefully we should expect it soon.

Why are ‘free entries’ not actually free?

‘Free’ entry routes for this type of prize draw or competition involve sending off your entry by post, either on a stamped postcard or in a stamped envelope. A free entry should be treated exactly like a paid entry and the instructions for sending one are usually overly complex, and hidden away within the terms and conditions. However, some raffle sites state that if the number of paid entries reaches the limit before a free entry is received in the post, that free entry will not be entered into the draw.

The Gambling Act considers a postal entry to be ‘free’ despite the cost of a second class stamp now being 68p (46p more than when the Act was last updated in 2005), and it really needs updating to reflect the true ‘free’ entry available to consumers in 2021 – which would be via email or website.

Are there limits to entries?

Most raffle websites will state a limit to the number of entries you can purchase per prize draw or competition. BTOB allow 75 entries per person for each of their Dream Car competitions. Cloverhut have capped it at a ridiculous 5,000 tickets per person, per competition!

The limit for free entries should be the same as for paid entries – as an ASA ruling from March 2021 demonstrates.

Raffle site Team HARD Racing breached the CAP Code because their prize draw limited free postal entries to just one per person, whereas paid entries were unlimited. The ASA stated: “We considered that this gave participants who had paid to enter multiple times an unfair advantage by giving them a greater chance of winning than participants who could only enter once through the free entry route. We therefore concluded that the promotion had not been conducted equitably and breached the Code.”

However, raffle sites continue to restrict the number of free entries – and I do urge you, if you see a limit of one free entry in their T&Cs, to lodge a complaint with the ASA. State that it is a breach of CAP Code 8.2 – “promoters must conduct their promotions equitably”.

What happens if all tickets aren’t sold?

It’s important to check T&Cs carefully for each prize draw or competition. Some raffle websites guarantee the prize will be won even if all available tickets are not sold. Most sites keep extending the closing date if ticket sales are slow. For bigger prizes like houses, if the tickets aren’t sold they will usually award a cash prize equivalent to around 60-70% of the ticket sales (the remainder of the money is taken by the promoter for administration and advertising costs).

You don’t need to pay to enter competitions

Entering competitions and prize draws can be a completely FREE hobby, and I feel frustrated that so many people believe the only way to win prizes is via buying tickets for raffle websites, or sending £2 text messages to ITV or Heart FM.

Here at SuperLucky I choose to share free entry prize draws and competitions – or I share purchase necessary prize promotions where you buy a product at the usual price, and then get a chance to win a prize (such as the promos on my Compers Shopping List).

In addition I share details of standard rate text competitions (costing a maximum of 15p) such as those run by Tesco – but I avoid publicising premium rate text competitions, and instead I’ll share details of a cheaper postal (or free online) entry route if it exists.

I consider gambling to be a dangerous addiction and do what I can to steer new compers away from it, by showing them alternative and fun ways to win prizes or money that are free or minimal cost!

I’m regularly contacted by raffle sites who want to pay me to promote their businesses, and I always refuse. Many of them run a free entry online prize draw to get people to sign up, then they bombard new members with emails offering deals on the tickets. It’s easy to get addicted and the spending limits are set too high.

Expensive TV & Radio prize promotions

Media companies have jumped on the bandwagon too, although their prize promotions don’t put a cap on the number of entries/tickets available, like the raffle sites do.

Global have a ‘Win Plus’ platform, with the paid entry draws tricky to distinguish from the free entry draws on the Heart and Capital competitions pages. Each entry costs £2 (with discounts for more entries – spend £10 for 15 entries). There’s an easy question or puzzle to solve as the required ‘skill’ element, rather than a free entry route. The spending limit on Win Plus is £30 per person per day.

Bauer radio stations run premium rate text entry competitions for big cash prizes (Cash Register, Make Me a Winner, etc.), but usually offer a free entry online rather than by post – I share details of these comps in my Win cash prizes in free online competitions post.

And let’s not forget ITV and Channel 5 premium rate text entry competitions, which have the free postal entry option rather than asking a skill question. There are certainly plenty of media companies taking advantage of the loophole in the law!

Enter the big ticket draws by post

Unfortunately unregulated raffle websites are popping up everywhere, with more and more companies hoping to lure consumers with low ticket prices and dubious charity partnerships.

For some new sites you actually have a decent chance of winning a prize if you send off a postal entry, as they rarely sell the full quota of tickets, so if you’re happy to spend the cost of a stamp on entering, then you could give it a go. It’s obviously better value if you send postal entries off for draws where the online ticket prices are high, and you’ll have a better chance of winning when entry numbers are very low. I recommend you set yourself a limit for your spending on stamps.

Be careful though – for most sites you will need to register with the site even to make a postal entry, and your inbox will soon be full of cheap ticket offers to try and get you to part with your money. Not all sites are genuine, either – read T&Cs and search Google for reviews before you get involved. SuperLucky readers have told me they’ve had problems with sites based in Northern Ireland acknowledging their postal entries.

Have you spent money on these pay-to enter sites, or sent off a postal entry? Have you ever won a prize? Let me know in the comments what you think about raffle websites, and if you think they should be properly regulated.

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Related posts:

• How to enter Omaze prize draws for free – postal entry details for current comps
• How to enter ITV competitions for free – postal entry details for current comps
• Win cash prizes in free online competitions – featuring free entry radio comps
• How to enter ‘Win a House’ competitions without buying a ticket (unfortunately most current house comps don’t have a free entry route!)