In 2017 the Gambling Commission warned the operators of ‘house raffles’ that they risked breaching gambling legislation by operating an illegal lottery. For publishers, competitions and prize draws can give a boost to circulation and maximise publicity. However falling foul of the laws and regulations governing competitions can lead to penalties and even criminal offences, so it pays to ensure you are compliant.
The legal and regulatory regime
Newspaper and magazine competitions can be operated under a variety of promotional mechanisms although, generally speaking, these are through prize competitions or free draws. Compared to lotteries, these are unregulated and unlicensed promotions which are not subject to any legislative control. It is paramount to understand the distinction and boundaries between the terms so as to not inadvertently stray into the realms of illegal lotteries, unlicensed betting or gaming.
Prize competitions and free draws will not be illegal lotteries as long as they adhere to the criteria specified in the Gambling Act 2005. Lotteries rely on chance and only exist where participants are required to pay to enter. Two definitions are further provided under the Act including that of a simple lottery (reliant wholly by chance) and a complex lottery (awarded through processes, the first of which relies wholly on chance).
- The skill test – prize competitions are those requiring some level of skill, judgement or knowledge, for example, a puzzle within a “games” segment which requires the unravelling of a number of clues. Competitions that pose one obvious question are unlikely to meet this definition. There is a further distinction between a prize and a gift and promoters must ensure that the number of prizes available is clear.
- No payment – free draws are those where at least one method of entry requires no payment other than the cost of that method of communication (for example the cost of using first or second class post). They must be open to all and the chances of winning must be the same for everyone.
- Is it unfair or misleading? – any promotional mechanism also needs to comply with data protection laws and the Consumer Protection from Unfair Trading Regulations 2008, which provides high level and general rules preventing traders from carrying out unfair practices.
- Is it ASA compliant? – the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code) is also applicable to newspapers and magazine publishers, specifically covering sales promotions and direct marketing communications. The CAP Code sets out a number of important rules divided into various sections, such as the protection of consumers, safety and suitability, children and availability. The ASA publish a list of non-compliant advertisements on their website, the juicer of which are often picked up by industry and national titles.
Social Media Competitions
Competitions on social media are equally subject to the rules and regulations. However, taking Twitter for example, adhering to the rules within 280 characters is challenging. Full terms and conditions must still be supplied (for example by providing a shortened URL to the full terms contained on your website) in addition to all key information, for example, the prize, the deadline for entry and age limits.
As it stands, prize promotions on Facebook may only be operated via Pages or within Apps, but social media platforms are every-changing landscapes so it is important to remain up to date with any company’s individual restrictions and prohibitions.
The consequences of failing to adhere to the legislation are extensive and range from bad publicity to the recall of advertising material and from referral to the regulators to fines, legal action and criminal prosecutions.
The guidance available for each piece of legislation is vast and if you are in any doubt about the legality of a competition or free draw, it is well worth obtaining legal advice prior to running a competition. The headline point however is that any competition may also appear to be an illegal lottery, unlicensed betting or gaming and thus, adhering to the above is crucial. Communicating clearly and transparently with your audiences will help to mitigate any risk as, ultimately, if a promotion is likely to mislead consumers, it will probably breach the rules.