Navigating the changing landscape of prize competitions

It comes as no surprise to discover that according to a June 2025 report for the UK Department for Culture, Media and Sport (DCMS) by London Economics, the UK prize draws and competitions market had an estimated annual turnover of £1.3 billion.

This is growing year on year, and Companies House has reported a vast increase in businesses being newly incorporated. These statistics demonstrate a clear market need for prize draws and competitions, as the market share increases each year.

The consequence of this however, is that whilst most prize competition businesses fall outside of the regulatory scope of the Gambling Commission, the Government nevertheless wishes to work with the sector to ensure that there remains transparency and accountability. Baroness Twycross has previously acknowledged actions taken to date by the prize draw and competitions sector. However, further changes are likely to be brought in. The Government has acknowledged this sector needs to be monitored but recognises that the sector deserves the change to regulate itself.

In light of this, the legal and regulatory landscape needs to be carefully considered by existing prize competition businesses to understand whether changes needs to be made to their current practices and business model. Businesses need to demonstrate adherence to the current regulatory and legal landscapes whilst also adapting to changes on the horizon.

Regulatory landscape

At present, betting, lotteries, and raffles are all overseen by the Gambling Commission and involve strict regulatory measures and require promoters of such businesses to apply to the Gambling Commission for a gambling licence. The Gambling Commission has a duty to prevent illegal gambling.

The Gambling Act 2005 does however permit online prize competitions and free draws to proceed without a gambling licence, if they meet the appropriate exemptions including where the “skill” based test is satisfied, or where no payment is required to enter.

For now, the Government appears to have opted against legislative reform of the Gambling Act 2005 which is good news for prize competition businesses. It would seem that there is a clear recognition that consumers “enjoy participating in prize draws”.

To work around this however, a voluntary code of conduct proposed by the Government is expected to be published later this year, which will encourage prize competition businesses to sign up and adhere to. The voluntary code will ask businesses to focus on player protections, transparency and to demonstrate an ability to self-regulate and be accountable. This demonstrates a commitment to the Government that prize draws and competitions can still be outside the scope of regulation.

Legal landscape

In addition to the voluntary code which impacts self-regulation, businesses also need to take into consideration legislative changes. As of this year the Digital Markets, Competition and Consumer Act (DMCCA) applies and prohibits certain practices related to prize promotions that could mislead or harm consumers such as failing to award prizes or creating a false impression that an entrant has won. These provisions are part of a broader framework under the DMCCA 2024 that seeks to ensure fairness and transparency in commercial practices, including prize competitions.

The new Data (Use and Access) Act 2025 has also received royal assent and is being implemented in phases. It introduces provisions that will almost certainly impact prize competitions, particularly in the context of data protection and direct marketing. The new legislation will give additional powers to the ICO including the right to send notices by email to businesses directly, amongst others. Additional changes will be made to data subject access request rights and the ICO has updated its guidance in this respect.

The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code) continues to oversee unfair practices in prize draws and competitions. Businesses are therefore recommended to stay in touch with the overseeing of Advertising Standards by monitoring rulings, to ensure their model continues to be current and compliant.

How can Ellis Jones help?

The Gambling Commission will not offer any guidance on how your prize competition should be run. It is therefore advisable for you to seek legal advice on whether your prize competition is legally compliant.

Changes are on the horizon for prize competition businesses including adopting a best practice, setting player protection measures and spending caps, as well as the forthcoming voluntary code. Now would be a good time to review your current business model to see whether it meets the new requirements.

Get in touch with our experts

We can offer you an audit of your prize competition or prize draw to advise you on compliance and we regularly assist businesses in amending, revising their terms and conditions and privacy policy. We also provide legal opinion letters to advise on compliance.

Please contact Diane Pearce at diane.pearce@ellisjones.co.uk and Victoria Simpkin at victoria.simpkin@ellisjones.co.uk to discuss your prize competition requirements. Alternatively, you can email us at info@ellisjones.co.uk