The Gambling Commission “positively engaged” with the daily after it launched a not entirely free-to-enter mixed skill and luck prize promotion. The discussions ended with the paper refunding entrants their entry costs. Stephen Groom explains why the Daily Star was not a happy camper.
Topic: Promotion marketing
Who: Express Newspapers and the Gambling Commission
When: February 2012
Where: London
Law stated as at: 5 March 2012
What happened:
In October 2011, the Daily Star announced a "Win a Campervan" competition.
The prize was a vintage 1972 Deluxe VW campervan worth £16,500.
All entrants had to do was complete the song lyric "Ground control to Major…." by choosing one from "Neil", "Tom" or "John."
Then they had to call in the answer to 0907 181 2816 or text DISCAMPER followed by the answer to 86660. Calls cost 77p per minute from a BT landline plus network extras and lasted 2 and a half minutes. Calls from any other networks and mobiles might cost more. Texts costed £2 plus usual network operator rate.
The lucky winner would be selected at random from all correct entries.
Gambling Commission takes an interest
The Gambling Commission took an interest because this appeared to come within the lottery provisions of the Gambling Act 2005 ("GA") and as Express Newspapers did not have the required licensing in place, operating and promoting this competition would be a breach of the GA.
How could this be? Because under s. 14 (2) of the GA an arrangement is a "simple lottery" if:
(a) persons are required to pay in order to participate
(b) In the course of the arrangement one or more prizes is allocated to one or members of a class, and
(c) the prizes are allocated by a process which relies wholly on chance.
Where was the payment in this case? Schedule 2 para 5 (1) states that for the purpose of s.14 a reference to paying does not include a reference to incurring the expense, at a normal rate, of:
- sending a letter by ordinary post,
- making a telephone call, or
- using any other method of communication.
The key words here are "at a normal rate" and it is clear from the Daily Star's description of the methods of communication available for entering that none of these qualified as "normal rate."
Because of this, Schedule 2 did not operate to prevent the cost of entering from qualifying as a payment in order to participate, so lottery ingredient (a) above was present.
Ingredient (b) was present because the prize was allocated to a member of a class, in this case being the first correct entry drawn at random from all correct entries.
Did skill question prevent winning from relying "wholly on chance"?
What about ingredient (c)? Surely having to answer the "Major Tom" skill question meant that winning did not depend "wholly on chance"?
Well no, because s. 14 (5) of the GA provides that "a process which requires persons to exercise skill or judgment or to display knowledge shall be treated as relying wholly on chance if:
(a) the requirement cannot reasonably be expected to prevent a significant proportion of persons who participate….from receiving a prize, and
(b) the requirement cannot reasonably be expected to prevent a significant proportion of persons who wish to participate ….from doing so."
Applying these tests, Express Newspapers was clearly going to struggle in arguing that the Major (Tom) question fell outside either of (a) or (b) above, with the end result that the prize would very likely be regarded as allocated wholly by chance.
So there we have it, all of ingredients (a)-(c) present and accordingly on the face of it, an illegal lottery.
The Gambling Commission has reported that following its "positive engagement" with Express Newspapers, the latter agreed to refund all entrants and add a free route of entry to similar competitions in the future. In light of this the Gambling Commission clearly determined that a prosecution was not called for.
Why this matters:
Express Newspapers was probably lucky to come away from this bearing only slight bruises, although having to refund all contestants cannot have been a piece of cake. In its release on the development, the Gambling Commission stated:
"Although the Commission has no regulatory responsibilities in respect of competitions and draws, we monitor the boundary between them and lotteries. We will take action where schemes are organised and promoted that, in our view, amount to unlicensed and therefore illegal public lotteries."
Although reports of enforcement action by the Gambling Commission in this area have to date been few and far between, this development serves as a timely reminder for promoters that they must be vigilant to keep on the right side of the legal line when operating prize promotions with mixed skill and luck mechanics.
