Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
What legislation applies to lotteries?
The Gambling Act 2005 came fully into effect on 1 September 2007. Apart from the National Lottery, the relevant law relating to the promotion and advertising of lotteries is contained in the Gambling Act. The regulation of the National Lottery is contained in the National Lottery etc. Act 1993.
The Gambling (Licensing and Advertising) Act 2014 took effect on the 1st November 2014 and made the advertisement of remote gambling to consumers in Great Britain unlawful if an operator does not hold the required licence from the Gambling Commission for the gambling to take place as advertised. We urge you to seek legal advice regarding the requirements of the Act if you are unsure.
Under section 16 of the CAP Code, marketers should not exploit the young or vulnerable, nor should they imply gambling can solve financial or personal problems, or that it is indispensable, a rite of passage or linked with sexual success. Since 1 September 2007, all gambling ads have needed to comply with the Code and the law. Specialist legal advice should be sought when considering advertising any gambling products in Northern Ireland or the Channel Islands.
What might count as an illegal lottery?
Unless a lottery is licensed by the Gambling Commission or is exempt from the licensing requirements because it is a small society lottery, an incidental non-commercial lottery, customer lottery, private lottery or part of the National Lottery, it is likely to be illegal. Promoters should contact a lawyer for advice under the Gambling Act.
Prize competitions and free draws are free of statutory regulatory control under the Gambling Act. Promoters of ‘free draws’ should ensure they do not require consumers to pay to enter. The Gambling Act does not require free draws used as product promotions to offer no-purchase entry routes. Prize competitions should ensure that the result is based on the knowledge, skill or judgement of participants rather than chance.
What counts as payment to enter?
We understand that the definition of “payment” to enter a lottery includes payment to claim or receive a prize, payment to discover whether a prize has been won or a payment that reflects a price increase for the opportunity to participate. For example, if the price of a promotional pack is higher than that of non-promotional packs, or if participants are required to pay over the “normal rate” to claim their prizes, this may count as “payment” under the Act.
However, “payment” does not include expenses incurred, at the normal rate, by participants making a phone call, sending a letter (by normal first-class or second-class post) or using any other method of communication).
Could personal information count as payment?
We understand that some personal data has a value and could constitute a “payment”. If so, some promotions requiring the submission of personal data might be illegal. The Gambling Commission has issued guidance that we understand states that “proportionate requests for data” are unlikely to constitute payment. But the guidance seems to suggest that large quantities of data requested before entry into a draw, or data that seems irrelevant to the promotion or its administration, might be considered differently - especially if that data is sold to third parties. Promoters requesting data might want to check with the Gambling Commission or take legal advice.
Further information on the distinction between lotteries, prize competitions and free draws can be found here.
Can consumers bet on lotteries?
Betting on the outcome of lotteries, except the National Lottery, is not prohibited under the Gambling Act. It is important that anyone offering betting on lotteries ensures that consumers are provided with sufficient and clear information to enable them to understand that they are participating in a betting promotion, with a betting operator, as opposed to a lottery.
Promoters should avoid using terms such as “draw”, “play now” or “jackpot”, which could mislead consumers about the nature of the promotion they are taking part in. This is particularly important because lotteries are not allowed to be run for private or commercial gain. The Gambling Commission’s publication on betting on lotteries provides useful guidance.
Does the above apply to promotions in Northern Ireland?
The Gambling Act does not apply to Northern Ireland. We understand that offering consumers no-purchase entry routes to avoid chance-based promotions being classified as illegal lotteries is likely to remain commonplace there. Promoters in Northern Ireland are probably subject to the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 and should seek legal advice before running promotions.
Unlicensed overseas lotteries may not be advertised in the Great Britain.
See other relevant Betting and Gaming, Sales Promotion and Database Practice entries, Code sections 8 and 17 and the Guidance on the marketing of promotions with prizes.