What Britain’s prize draw code might look like

In 2023, London Economics was tasked with undertaking research to help the government to better understand Britain’s PDC market and inform future policymaking.

Following the publication of the report in June, and amidst growing concerns about the rapid expansion of unregulated prize draw platforms and their potential to undermine charitable lotteries, the government confirmed its intention to keep PDCs outside the scope of regulation under the Gambling Act 2005 at this stage and instead plans to introduce a voluntary code of conduct later this year that operators of PDCs will be encouraged to sign up to.

The new code is expected to set out a suite of best practice standards aimed at improving transparency, safeguarding consumers, and preserving the integrity of the prize draw sector. We believe clues as to the likely contents of the new code are offered in the London Economics report and ministerial statements. Below, we explain what standards PDC operators could be held to under the forthcoming code.

Transparency and fairness 

Prize draw operators that sign up to the voluntary code can expect to have to clearly and prominently disclose entry methods – both paid and free – as well as eligibility criteria, prize details, odds of winning, and winner selection processes. 

Under the code, presentation of terms and conditions could be standardised, to avoid the potential for misleading consumers. 

Operators should be prepared for the code to distinguish between instant win and main draw products, with tailored disclosure requirements likely to apply in each case.

Operators are also likely to be prohibited from making retrospective changes to prizes or terms once the competition is open.

Adhering to the voluntary code is also likely to mean making a commitment to comply with UK advertising rules, as set out in the CAP and BCAP codes, compliance with which is overseen by the Advertising Standards Authority (ASA). Emphasis on rules on misleading advertising is likely.

Free entry route accessibility

The code is likely to provide some clarification on what will be considered to constitute ‘free entry’ to prize draws and competitions – an issue of major relevance to whether the operators’ offering falls within the scope of the voluntary code or, potentially, gambling regulation.

It is expected that operators will have to ensure free entry options are genuinely equivalent to paid routes. These will need to be clearly and prominently advertised alongside any paid route. 

In addition, operators should expect to have to keep draws open for a minimum period – potentially three clear days – to allow postal entries to be received. 

Player protection and gambling harm mitigation 

While the code will govern the operation of prize draws and competitions that fall outside the scope of gambling regulation, it is expected to prescribe some measures that apply to regulated gambling operators in Britain. These could include:

• mandatory age verification (18+), moving beyond self-certification by players; 
• spend limits, such as caps on entries or total spend per player;
• self-exclusion mechanisms, allowing users to opt out of future participation; 
• safe play messaging on websites and ads, such as the ‘play responsibly’ messaging; 
• signposting to gambling harm support charities; 
• moderation of instant win products, which may be more addictive. 

Charitable contributions 

As highlighted above, the forthcoming code will be relevant to PDC operators in scenarios where they offer both paid and free entry routes to consumers, not only where the draws and competitions they run are free to enter.

Currently, under the gambling regime, many lottery operators in Britain face a regulatory obligation to make minimum charitable contributions of around 20% from the proceeds of their sales. Amidst concern from lottery operators that this puts them at a disadvantage compared to unregulated PDC operators, it is possible that the new code could stipulate minimum charitable or ‘good cause’ contributions too.

If that happens, PDC operators can expect to face transparency obligations requiring them to disclose the percentage of proceeds donated per draw, as well as requirements to avoid vague or misleading claims about charitable benefit.

Complaints and redress

The new code could also contain stipulations around complaints handling and redress. For example, PDC operators might be expected to operate clear complaints procedures, and to respond promptly where complaints are raised. They might also be expected to provide guidance to players on how complaints could be escalated in the event they are not satisfied with the outcome, such as requirements to signpost complaints processes operated by independent bodies like the ASA. 

Compliance monitoring

To ensure PDC operators continue to adhere to the code after signing up, they could face code requirements to conduct periodic audits and publish public statements of compliance. 

Actions for operators

The government has signalled that the success of the code will influence whether statutory regulation follows. The onus is therefore on PDC operators to sign-up to the code and meet the standards it provides.

The good news for operators is that many of the anticipated provisions – such as around transparency, fair access and prominent display of free entry routes, and responsible marketing – are already embedded in existing frameworks like the CAP Code, the Gambling Act 2005, and broader consumer protection law. PDC operators that already act in good faith will already be doing many of the right things; the voluntary code may simply formalise and reinforce good practice across the sector which could, for some, be a welcome levelling of the playing field. 

PDC operators should now take stock of their current practices, benchmark against emerging expectations, and prepare to engage with the code’s development. Proactive compliance won’t just mitigate risk – it could become a competitive advantage in a maturing market.