Out-Law / Your Daily Need-To-Know

House prize draw postponed as Gambling Commission investigates

Out-Law News | 01 Jan 2000 | 12:00 am | 3 min. read

The family behind a high profile scheme to sell a house via 46,000 tickets costing £25 each has postponed tomorrow's planned draw for the winning ticket. The scheme is being probed by gambling regulator The Gambling Commission.

Advert: free OUT-LAW Breakfast Seminars - 1. Making your contract work: pitfalls and best practices; 2. Transferring data: the information security issuesThe Wilshaws claim that the Gambling Commission previously gave them the go-ahead for their plan.

The Commission did not respond to an OUT-LAW request for comment before publication. It has rejected every previous OUT-LAW request for comment on the Wilshaws' case.

"We are so sorry to have to tell all of our entrants that the Draw has been postponed," said a statement published by the Wilshaws on their MySpace page. "The Gambling Commission have begun looking into the concept of House Competitions generally and as part of that process we have contacted and are in discussions with them to confirm that the competition meets their requirements."

The Wilshaw family sold £25 tickets to what they claim is a prize competition, with their house as a prize. They sold 46,000 tickets to the scheme. Questions have been raised, though, about whether or not the scheme is an illegal lottery.

Antoinette Jucker, a gambling law expert at Pinsent Masons, the law firm behind OUT-LAW.COM, has said that the scheme is likely to be an illegal lottery.

It is illegal to run a lottery without a licence, and licences are only given to schemes which operate in aid of a good cause. They cannot be run for private profit and even lotteries for good causes are barred from offering prizes as valuable as the Wilshaws' house.

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 single question of entrants before they paid for their ticket. The answer to the question could be found easily online, and no ticket had to be bought prior to the question being answered correctly. That means that all 46,000 ticket holders answered the question correctly and all have an equal chance of winning a draw.

The Gambling Act says that a prize competition involving an element of skill or judgment will be treated as a lotter if the skill or judgement can't reasonably be expected to exclude people from entering in the first place or to prevent a significant proportion of those who do enter from winning.

The Wilshaws claim that their scheme was cleared by the Commission months ago. "At this late stage of proceedings, the Gambling Commission have asked for more information on the Competition question, despite the fact that we approached them for guidance before the start of the competition in March of this year, only to be told that they had no issues with our conduct or the running of the competition," said their statement.

The Commission did not respond to a request for comment about whether or not it cleared the scheme earlier this year.

The Gambling Commission has made no clear public statement about whether such competitions are illegal lotteries or not. Earlier this week, though, it warned house sellers that such competitions might not be legal.

It is the Commission's responsibility to regulate lotteries under the Gambling Act and therefore to monitor the line between lotteries and prize competitions.

The Wilshaws appeared on television promoting their competition and are participating in the making of a documentary about their competition. That publicity has led to a number of similar competitions being run.

Steve Kuncewicz, a solicitor with law firm Ralli who is acting for the Wilshaws, previously told OUT-LAW.COM 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.

"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," said the guidance.

Pinsent Masons' Jucker, though, said that the test is section 14(5) of the Gambling Act, not the Commission's guidance. She said that the law says that anything which does not deter people from entering and does not exclude entrants from winning because of the exercise of skill or judgment cannot qualify.

A Gambling Commission spokesman told OUT-LAW that if there was any doubt about whether a scheme involved the exercise of skill or judgment, the two tests listed in section 14(5) of the Gambling Act should decide the matter.

The Wilshaws said in their MySpace statement that if the Commission prevents them from making the draw at all they will return all of entrants' money.

"We are continuing our discussions with the Commission and can reassure all of you that the entry fund is still in place and still safe," it said. "The worst case scenario is that all of our entrants will be issued with a full refund if the draw does not go ahead."