Proposed changes to prize competitions and lotteries law

United Kingdom

The Department for Culture, Media and Sport has announced the Government's proposals for changes to the law on prize competitions and lotteries, arising out of the consultation which followed the publication of the independent Gambling Review in 2001.

The proposals, to be implemented in the new Gambling Bill, include some major changes to the law which will be welcomed by those involved in planning and operating sales promotions.  A summary of the proposed changes is as follows:

  • The basic position that "lotteries" are illegal, with certain limited exceptions, will remain.  The Bill will clarify the meaning of the term "lottery" - as a scheme requiring payment to enter in which the distribution of prizes is determined entirely by chance, thereby broadly adopting the definition which had been established by case law. 
  • The Bill will also clarify what is meant by "payment to enter".  It will remain the case that the costs of a normal telephone call or first class postage will not be classed as "payment".  A promotion will also be lawful if there is a free entry route which is no less convenient or less likely to win a prize than other means, and the details of which are displayed equally as prominently as other means of entry in all material explaining or promoting the scheme. 
  • Subject to the outcome of discussions on the EU Regulation on Sales Promotions, the Bill will also provide that prize draws for which the only payment is the purchase of a product at its usual price will be lawful – thereby removing the need for a "free entry route" for this type of promotion. 
  • Section 14 of the Lotteries and Amusements Act 1976 will be repealed.  Currently, section 14 makes it unlawful to conduct a competition in which prizes are offered for the forecasts of the result of past or future events.  In future this will be dealt with under betting law.  Section 14 also deems unlawful any other competition in which success does not "depend to a substantial degree on the exercise of skill".  It is unclear whether section 14 will be replaced, or whether the requirements as to skill will be dealt with in the new definition of "lottery".
  • The Bill will create offences relating to the operation of chain gifting schemes (such as the "Hearts" and "Women Empowering Women" schemes), including offences relating to inciting others to take part in such schemes and receiving benefits from them.
  • A new Gambling Commission will be established with the remit and resources to enforce the law against illegal lotteries, and to provide guidance to advertisers and marketers on prize competitions. 

It is expected that the Gambling Bill will be laid for

pre-legislation scrutiny in the Autumn, although it is unlikely that the Bill will pass into law before 2004 or even later.

 

Contact point

 

Stephen Whybrow
CMS Cameron McKenna
T: +44 (0)207 367 2175
stephen.whybrow@cms-cmck.com

Victoria Baker
CMS Cameron McKenna
T: +44 (0)207 367 3451
victoria.baker@cms-cmck.com