House competition draw to go ahead after Gambling Commission probe

Out-Law News | 13 May 2009 | 3:16 pm | 3 min. read

A controversial competition to win a house that was halted by the Gambling Commission has been allowed to proceed.

The Wilshaw family has announced that a draw will take place for the house in "the next couple of weeks" and the Gambling Commission said that its guidance on such competitions would be the subject of consultation and revision this summer.

The competition was investigated by the Gambling Commission, which is the regulatory body given the power to prosecute offences under the Gambling Act. The Commission would not comment on what decision it had made in the Wilshaws' case or the reasoning behind it.

"We are very pleased to announce that our competition will conclude as planned and the draw will be going ahead," said Brian and Wendy Wilshaw on their MySpace page. "Having considered all the correspondence between the barrister, our solicitor and ourselves, the Gambling Commission have now deemed the matter closed."

The Wilshaws could not sell their Devon house so sold 46,000 tickets to a competition to win it at £25 each. They claimed that the scheme was a prize competition, a legal mechanism as long as it required the exercise of skill or judgment to a degree that would put off many people from entering in the first place or would disqualify many of those who did enter.

The element of skill in the Wilshaws' competition was the answering of a single question, the answer to which was easy to find through an internet search engine.

As a matter of public policy, lotteries are the preserve of good causes. It is illegal to operate a lottery for commercial profit without a licence (even if a percentage of that profit is given to charity). Licences are available only to charities and local authorities, and those running lotteries on their behalf. Even then, such licensed lotteries are subject to an overall financial limit on the value of the prize that can be won, a figure which is currently £400,000.

A prize competition is not so constrained. The Wilshaws claimed that their competition and methods had been cleared by the Gambling Commission before they ran it.

In September last year, the Commission also sent a response to the operator of an auction site, Asmat Monaghan, in relation to the Wilshaws' compettion in which the Commission's James Cook said that: "it does not matter that the answer can be found from basic research on the internet. 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".

The Commission later retracted that advice and apologised for it to Monaghan. OUT-LAW.COM asked the Commission if it offered the same or similar advice to the Wilshaws, but it has never publicly explained its attitude to such competitions except to say that they might be illegal.

Gambling law expert Antoinette Jucker said that it is vital that the Commission explain its actions.

"We don't know why it is that the Gambling Commission has indicated that the Wilshaws can proceed with impunity," said Jucker, who has previously said that she believes the Wilshaws' competition to be a lottery and not a prize competition.

"The fundamental question that other people will be asking is: if they follow the same model will they be permitted to go ahead too?" she said. "The Gambling Commission are the people primarily responsible for enforcement, which makes it doubly important that people know what is permitted and what is not."

Jucker has said that she does not believe the Wilshaws' competition involved enough skill or judgment to qualify as a prize competition. She said, though, that any initial Gambling Commission advice to them may have damaged their chances of a successful prosecution.

"If the Wilshaws received similar advice to Asmat Monaghan, the Commission didn't apply any legal rigour in their initial responses to how competitions work," she said. "I think they have stymied themselves by not actually applying Section 14 [of the Act] to the facts."

OUT-LAW.COM asked the Gambling Commission if this was the case, but the Commission declined to comment.

A Commission spokesman did say, though, that it will consult on revised guidance on prize competitions this summer.

Steve Kuncewicz, a solicitor with law firm Ralli who acted for the Wilshaws, previously told OUT-LAW.COM that he believed that the scheme was legal because of Gambling Commission guidance which he said permitted questions that were answerable online to qualify as tests of skill or judgment.

Jucker said, though, that it is the Act which establishes what is legal or not, not guidance from the Commission.