At last the confusing and ramshackle collection of laws making legal prize promotions a nightmare for UK promoters is recognised as such.
Topic: Games of chance and skill
Who: HM Government
When: July 2001
The UK Government published its long-awaited gambling review report, considering the wide range of legal controls on gambling in Great Britain. One of the areas on which it focuses is the controls affecting prize draws and competitions. Here it makes radical proposals after reaching some refreshingly frank conclusions about the current realities of prize event law compliance and enforcement. For example, it reminds us that under current law, providing a “no purchase necessary” entry route for a prize draw is not enough to make it free (and therefore legally compliant) if in reality nobody uses the free entry route. It also suggests that an entry cost of anything up to a pound might be regarded as de minimis and not preventing a prize draw from being free entry.
Having said this, the report states that although “a great deal of time and ingenuity is devoted to inventing competitions which are not defined as lotteries,…. there is currently no appetite to prosecute those who run what seem to be lotteries masquerading as prize competitions.”
It also describes as “questionable” the legal status of prize draws using premium rate telephone lines. It mentions one scam in which calls costing £9 had to be made for the chance to win a BMW or one of several thousand mobile phones. The catch (apart from the £9 entry cost) was that the “lucky” phone winners had to sign up to an expensive tariff to enjoy their prize. Indeed, it reports that according to the telephone services watchdog ICSTIS, telephone competitions (forming currently about a third of the UK’s £280million a year premium rate telephone industry) have been the subject of a significant proportion of all complaints received over the last four years.
By way of fixes to the current shambles, the report recommends (1) a new, statutory definition of what is a “lottery” (2) making a distinction between promotional prize events run to help shift products or services on the one hand and, on the other, “commercial lotteries” using premium lines which are run only for the profit of the operator. The latter type of event, the report suggests, should quite simply be banned (3) where a premium rate telephone competition escapes the “commercial lotteries” ban, there should still be a limit on the cost of the call, suggested as twice the price of a first class stamp (4) following the example set by New Zealand, legalising prize draws where a purchase has to be made in order to enter. This, as in New Zealand, would be on the condition that no more is being paid for the product than would be without the promotion (5) allowing the currently illegal combination of a part luck, part skill prize event. In other words, it should be quite legal to have a two stage prize promotion in which a low level of skill is required to get through to the second, “names out of a hat” stage and (6) doing away with the specific provision in the 1976 Lotteries and Amusements Act disallowing prize competitions in which the winner must predict the outcome of a future event.
Why this matters:
What chance these refreshingly radical proposals have of reaching the statute books remains to be seen. Anyone wanting to express their views has an opportunity: responses to the proposals are requested by 31 October 2001. It is also interesting that amidst a years-long review at EU level of the different restrictions affecting promotional prize events across the various EU states, no attempt is made to put this purely UK review in that context. The UK government may have sensibly concluded, however, that if an outcome to the Brussels initiative is awaited before any change to UK law is made, we could be in for a very long wait!