Over the last few years, prize competitions have become increasingly popular with prizes varying from houses to holidays, techology products, cars and alcohol.
Whilst some competitions operate legally, we have found that many organisers fall foul of the law through a lack of appreciation of the law that separates prize competitions from lotteries and other gambling activities.
Most ‘gambling’ activities require some form of licence or permit but prize competitions can be exempted providing that the legal requirements are met.
One way to escape the need for a licence and to operate legally is to design a competition that involves an element of chance but also first requires a sufficient level of skill, judgment or knowledge to deter a significant proportion of potential entrants from participating or eliminate a significant proportion of actual entrants from receiving a prize. The usual method is to organise a competition which is a game of skill but often there is a draw at the end of the process where there is more than one winner. Some competitions are organised as a lottery, raffle or straightforward draw and this causes a fundamental problem as lotteries are the preserve of charities and cannot therefore be used if the main purpose is for private gain.
It is also important to ensure that the Terms and Conditions of the competition provide adequate protection, covering such circumstances as what should happen if there are insufficient entries or the competition is stopped for some reason.
Planning a competition requires considerable forethought and if you are intending to do so, you need to be prepared for all eventualities. Not all competitions end in the disposal of the main prize and a cash prize is normally offered if there are insufficient entries. You need to ensure that you have a reliable method of accepting payment as not all on-line payment merchants will wish to do business with you and several competitions have been stopped mid-way because banking facilities have been withdrawn.
We advise anyone contemplating a house sale or other similar competition to seek expert legal assistance first. Our solicitors have expertise in his area, having been involved in a number of competitions, and can advise on how to undertake the competition within the law. We are able to draft terms and conditions, review any publicity material and supervise the draw at the end, if one is needed. Our team are also able to undertake the conveyancing of the property to the winner if that is needed.