Prize Competition or Lottery?

On 01 September 2007 gambling in this country will be changed. This is when the Gambling Act 2005 comes in to play (literally). One of the main provisions of the act is to clarify the differences between a lottery and a prize competition.

The Act states that:

(1) For the purposes of this Act an arrangement is a lottery, irrespective of how it is described, if it satisfies one of the descriptions of lottery in subsections (2) and (3).Â

(2) An arrangement is a simple lottery if-

(a) persons are required to pay in order to participate in the arrangement,

(b) in the course of the arrangement one or more prizes are allocated to one or more members of a class, and

(c) the prizes are allocated by a process which relies wholly on chance.

(3) An arrangement is a complex lottery if-

(a) persons are required to pay in order to participate in the arrangement,

(b) in the course of the arrangement one or more prizes are allocated to one or more members of a class,

(c) the prizes are allocated by a series of processes, and

(d) the first of those processes relies wholly on chance.

(4) In this Act “prize” in relation to lotteries includes any money, articles or services-

(a) whether or not described as a prize, and

(b) whether or not consisting wholly or partly of money paid, or articles or services provided, by the members of the class among whom the prize is allocated.

(5) A process which requires persons to exercise skill or judgment or to display knowledge shall be treated for the purposes of this section as relying wholly on chance if-

(a) the requirement cannot reasonably be expected to prevent a significant proportion of persons who participate in the arrangement of which the process forms part from receiving a prize, and

(b) the requirement cannot reasonably be expected to prevent a significant proportion of persons who wish to participate in that arrangement from doing so.

(6) Schedule 2 makes further provision about when an arrangement is to be or not to be treated for the purposes of this section as requiring persons to pay.

(7) The Secretary of State may by regulations provide that an arrangement of a specified kind is to be or not to be treated as a lottery for the purposes of this Act and-

(a) the power in this subsection is not constrained by subsections (1) to (6) or Schedule 2, and

(b) regulations under this subsection may amend other provisions of this section or Schedule 2.

Prize competitions though are different, in order to be considered a prize competition the arrangement must depend to a substantial degree on the exercise of skill or have a free and simple entry route.

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