Winner of £3m house competition winner collects prize – of £12,500

The competition was run by Malcolm and Maxine Cox through a website which had as its first prize a house that they said was worth in excess of £3 million.

As the housing market has cooled in recent years some owners who were unable to sell their houses for the prices they wanted on the open market have tried to sell them via competitions, selling thousands of tickets at up to £25 each.

Few have found success, though. According to gambling law expert Antoinette Jucker of Pinsent Masons, the law firm behind OUT-LAW.COM, some of the competitions that appeared were illegal lotteries because questions that were asked were too easy. The exercise of skill or judgment is required for something to qualify as a prize competition, which people are allowed to operate.

She said, though, that even those that complied with the Gambling Act, such as the Coxes' competition, found it hard to meet their targets.

"Even if you get a lawful competition these things don't work, they are so difficult," said Jucker. "Even the best run competitions find it hard to generate enough interest and raise substantial sums. It is not a viable route to sell a house, and the larger the price, the more difficult it is."

Lotteries cannot generally be operated for personal profit and can only be operated by those with a lotteries licence. Prize competitions are not regulated by the Gambling Act and are legal, but they are closely defined.

In order to be legal, competitions for houses or other high value items must comply with the conditions set out in the Gambling Act. It demands that unless the competition passes certain 'skill tests' it will be a lottery and will be regulated by the Act.

The competition being run by Malcolm and Maxine Cox through their website wina3millionpoundhome.com asked people to pay £25 per ticket, answer some questions correctly and locate where a key was hidden in a photograph of the house on offer.

The Coxes' website said that if they did not sell all 150,000 tickets to the competition the winner would be given the amount of money that they did raise minus their costs and some charity donations.

The site announced on 31 December 2010 that the winner would receive £12,575.35 instead of the house. It said that promised charity donations would be made and that household goods and a short holiday in Stratford Upon Avon would be awarded to runners up.

The site said that an account of entries and expenditure would be published once all winners had been contacted.

"It is encouraging that the Coxes are being so transparent," said Jucker. "There is always a risk with privately-run unregulated competitions that the participants are left in the dark as to the outcome and how the prize is calculated."