The Gambling Commission has said that such competitions do not
fall within its remit, despite one gambling law expert telling
OUT-LAW.COM that the competition is likely to be an illegal
lottery.
The operators of the competition and their lawyers claim that it
is a legal prize competition and not an illegal lottery.
The Wilshaw family was unable to sell its house and started an
online competition in which 46,000 tickets were sold for £25 each,
one of which would win the house.
The competition has reached its target of 46,000 sold tickets.
The competition website now reads: "The competition is now closed.
A huge thank you to all who took part. The ongoing process of
sending out entry numbers will continue for those not yet in
receipt of them". The part of the website which counted the number
of tickets sold now reads '46,000'.
Antoinette Jucker is a gambling law expert with Pinsent Masons,
the law firm behind OUT-LAW.COM. She believes that the competition
is in fact an illegal lottery.
"I think this is an illegal lottery. The Gambling Commission
should take an interest in this," she said. "If they don't do
anything, others will do the same thing, raffling houses or cars or
anything else that they're struggling to sell."
Jucker said that the completion of the Wilshaws' competition
will encourage many others to run their own competitions.
"I think this will result in more competitions. The terms and
conditions are there on the website, there is a template there and
there isn't a huge amount needed to set a competition up," she
said.
The operation of a lottery is illegal without a licence.
Licences are not given unless the lottery is in aid of a good
cause, and they cannot be run for private profit, nor can they
offer a prize as valuable as the Wilshaws'.
Prize competitions can be run for private profit, but to
qualify, a prize competition must involve the exercise of skill or
judgment to a degree that would put off many people from entering
in the first place and would disqualify most of those who did
enter.
The Wilshaws asked a question about the price of a fishing
permit which would have been hard for most people to answer on
their own but was very easy to answer with the use of basic
internet search tools. Anyone entering the wrong answer on the
website was told to try again. No money was taken until the correct
answer was submitted.
The Gambling Commission regulates lotteries and has the power to
prosecute anyone it believes is operating an illegal lottery or
raffle. It has published guidance to the Gambling Act which the
Wilshaws are relying on to demonstrate that their competition is
legal.
Steve Kuncewicz, a solicitor with law firm Ralli who is acting
for the Wilshaws, told OUT-LAW.COM that the area is one of little
legal certainty and that the following passage in the
Commission's guidance (8-page / 86KB PDF) makes their
competition legal:
"The Commission does not think a particular question or clue
fails to qualify as involving skill or knowledge just because the
answer can be discovered by basic research, whether on the internet
or elsewhere".
Jucker disagrees, claiming that the kind of question used by the
Wilshaws is not what legislators had in mind.
Jucker also said that the competitions would certainly appear to
ticket buyers to be effectively a lottery, and that this perception
was key to their willingness to pay £25 for a ticket.
"I think the perception of the public is that it is a lottery –
they don't have to risk any money until they know they have the
right answer. There is no doubt in my mind that the perception is
that this is a raffle," she said.
The Gambling Commission has not publicly clarified whether or
not questions which are easily answered by online searches can be
said to involve skill or judgment. Despite having a remit to police
illegal lotteries it told OUT-LAW.COM that it did not comment on
individual cases and that anyone considering such a competition
should consult the guidance.
"The guidance says that the Commission doesn't think that a
particular question [that is answerable with online research] being
chosen fails to qualify it as a competition. The flipside is that
neither does it automatically qualify it," said a Commission
spokesman.
He did say, though, that if in doubt the operator of a
competition should apply the test in section 14(5) of the Gambling
Act. "Where it is not self evident that there is sufficient skill,
judgment or knowledge required, the test that should be applied is
the one in 14(5) of the Act," he said.
"This question falls foul of section 14(5) [of the Gambling
Act]," said Jucker. "It has two tests and this competition fails
both of them. A significant proportion of entrants will 'win' and
the question won't deter people from participating. The prize is
being awarded wholly by chance because the overwhelming majority of
entrants will get the answer right."
"How do you choose a winner when almost everyone gets the answer
right? You take their name out of a hat. That makes it a game of
chance, and therefore an illegal lottery," she said.
However, OUT-LAW.COM has seen correspondence from the Commission
to a member of the public on the issue which appears to suggest
that the Commission thinks such questions do qualify quizzes as
prize competitions.
"It does not matter that the answer can be found from basic
research on the internet," the Commission's James Cook wrote in the
correspondence. "If this was the case then it would rule out
virtually every question and answer skill competition. It is clear
that a person is not eligible to enter the draw without answering
the question properly, which stops it being a lottery."
A number of similar competitions have sprung up in the wake of
the publicity received by the Wilshaws' competition. At least five
online competitions are live or being planned, including: www.winadevonmanor.co.uk,
www.propertycompetition.com,
www.winaludlowchapel.com,
www.winmyhouse.info and
www.winthecheltenhamhouse.com.
