Indeed they are not even raffles.
They skirt around the rules for genuine lotteries, raffles, charity auctions etc. by supposedly requiring some skill, answering a few obvious questions, even providing a free entry route. Wherever they buy the prizes from, then keeping it running until the "lucky" people have paid more than enough into the pot to more than cover their costs.
Still, to be credible, not just a scam, some "prizes" or "winners" have to be seen to succeed, to much fanfare.
They are "Prize Competitions", under the rules of the Gambling Commission. Actually I suspect that what e.g. LuckyHunter is doing, with it's pitiful multiple choice skills test, whilst also purporting to be a Free Draw, is skating on the edge.
But good for them, an interesting business plan, which, on the face of it, ought to be profitable. And at least some people appear to have "won" some prizes. And provide some entertainment for those who are inclined to gamble.
Free draws and prize competitions
What is a free draw?
There are two types of free draw:
the first type is where all entries are free.
Free is any method of communication charged at the normal rate, and specifically refers to the use of first or second class post.
Normal rate means that there can be no additional payment over what it normally costs to use a particular method of communication. For example, special delivery is not classed as free.
the second type has both a paid and a free entry route.
If you run a free draw with a paid entry route, you must make sure that:
people can choose to take part without paying
the free entry route can be no more expensive and must be no less convenient than the paid route
the free entry route must also be available at the normal rate. For example, you cannot use special delivery in the free route and First Class in the paid route
the free entry route must be promoted and displayed at the same level as the paid for routes
the choice between the free entry route and the paid entry route must be promoted so that people who want to participate can see it
the system that determines prizes should not recognise the two routes as different.
What is a prize competition?
A prize competition is where the outcome is determined by the participants skill, judgement or knowledge.
The organisers of a prize competition must be able to show that the skill, knowledge or judgement required will:
discourage people wishing to enter from doing so because it is too difficult
prevent a proportion of those who enter from winning a prize
Multiple choice questions, or questions that allow a second chance if your first answer is wrong, rarely meet this criteria.
Do I need a licence to run a free draw or prize competition?
You do not need a licence or permission to run a free draw or prize competition as long as they are being ran in a way that meets the requirements of the Gambling Act 2005 (opens in a new tab).
