UK government urged to regulate prize draw and competition market
Calls to review gambling regulations as £117m of entries into prize draws and competitions spent on credit card
The UK Gambling Commission (UKGC) is being called upon to review current gambling regulations as new research shows that £117m worth of entries into ‘big ticket’ prize draws and competitions were paid for on credit card.
Research conducted by Australian lottery firm Jumbo Interactive, which also owns and manages lotteries in the UK, has shown that nearly one in 10 entrants paid for entry into prize draws and competitions via credit card and have ended up in debt as a result.
Prize draws and competitions often see people enter to win ‘big ticket’ items such as a car or a house. Prize draws are classed as ‘free to enter’ as a result of having an option to enter for ‘free’, usually via post. Prize competitions introduce an element of skill, such as answering a question or spot the ball. Having the ‘free to enter’ or competitive element enables companies to circumvent the necessity to obtain a lottery licence.
April 2020 saw the UKGC introduce a blanket ban on gambling with credit cards covering gambling and lotteries, however this does not cover the paid entries into prize draws and competitions, which totalled £860m, primarily via phone or online.
The research also concluded that 45% of participants are more likely to take part if the draw or competition promises a charitable donation. Despite that, 57% of participants admit to not checking how much of their entry goes to charity. Society lotteries operate under much stricter legislation with a minimum of 20% of gross ticket sales donated to good causes.
Tony Vick, chair of The Lotteries Council, said: “The Lotteries Council is increasingly concerned about the use of prize draws operated by commercial gambling companies which are marketing themselves in a similar way to charity lotteries. Lotteries face a series of legislative hurdles that restrict our ability to grow and raise funds for good causes while prize draws face no limits on how many tickets they can sell, what prizes they can offer, and choose whether and how much to give to any charity. We hope the government looks at this to ensure a fairer playing field.”
Nigel Atkinson, UK general manager of Jumbo Interactive, added: “A huge amount is being spent on credit cards on prize draws, pushing people into debt – despite the free entry option being the reason they are exempt from oversight. With so much money changing hands, the government needs to look at the proper regulation of prize draws and competitions to better protect consumers.”
Jumbo Interactive secured its software operating licence from the UKGC in November 2020.