House raffle is probably illegal, says gambling law expert

Out-Law News | 27 Aug 2008 | 4:00 pm | 6 min. read

UPDATED: The Gambling Commission should investigate the couple selling their £1 million house through a £25-a-ticket lottery, a gambling law expert has said. The Commission refused to comment on the case.

Brian and Wendy Wilshaw are selling their Devon house and grounds, which they say is worth £1m, in a £25-per-entry competition. They have said that their legal advisors have cleared the competition, but one gambling law expert has raised questions about the legality of the plan.

Antoinette Jucker is a gambling law expert with Pinsent Masons, the law firm behind OUT-LAW.COM, and she thinks the competition is against the law.

"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."

Competitions and lotteries are tightly controlled by law. It is against the law to run a lottery for personal profit, and only small numbers of lotteries gain licences to operate. Competitions can be run for profit but they must involve an element of skill.

The Wilshaws are asking a question which is intended to satisfy the condition that the competition involves skill. It is "what is the cost of an adult full season coarse fishing licence for 2008/2009?".

The Gambling Act says that to avoid being a lottery, a competition's skill element must be failed by a "significant proportion" of the people who enter. The answer to the Wilshaws' question can be found on an internet search engine within seconds.

"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. When the Gambling Act was going through Parliament, the clear intention was that the only legal lotteries would be those that operated for good causes, not those that operate for personal gain. This competition is side-stepping that intention," she said.

The Wilshaws did not respond to a request for comment, but they have said that they believe the competition to be legal. "We know by the legal advice that we've had that the competition meets all the rules and regulations," Wendy Wilshaw told BBC News.

The competition raises a fundamental question about gambling law: is it possible to have a simple question competition in the age of ubiquitous internet access?

"The current guidance from the Gambling Commission fails to reflect the fact that any Trivial Pursuit-type question can be answered by Google," said Jucker. "With most people in the country having access to the internet, asking a single question that is answered correctly without any effort whatsoever cannot be an exercise of skill."

The Gambling Commission said that it did not comment on individual cases and at the time of going to press could not comment on the broader issue of what kind of question would be permissable as the basis of a legitimate competiton.

Jucker said that it might be possible to frame questions so that they demand more time, skill or knowledge to answer and cannot be answered by a simple web enquiry. "They could have added an element of skill – for example by asking the price of a permit in 1808, or something that isn't answered right away by putting the question into Google. I presume they haven't done that because they wouldn't get enough participants," she said.

The question of what is a competition and what is a lottery has been a controversial one in the past. The Gambling Act, which came into force last year, clamped down on competitions with too-easy questions that were designed only to get around restrictions on the operation of lotteries.

Many television competitions have come under intense scrutiny and been found wanting in the last two years and broadcasters and production companies have been fined millions of pounds because their competitions were badly or dishonestly run.

Editor's note, 28/08/2008

Steve Kuncewicz, a solicitor with law firm Ralli who is acting for the Wilshaws, was contacted by OUT-LAW for comment. He said today that the Wilshaws have made every effort to comply with the Gambling Act’s provisions.

He points to the Gambling Commission's own guidance (8-page / 86KB PDF) on prize competitions, which discusses the level of skill required to avoid a competition being classed as an illegal lottery.

The guidance states: "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."

Mr Kuncewicz argues that, in an area of law with little certainty, this makes the Wilshaws' competition compliant wiht the Act.

Our own view is that section 14(5) of the legislation contradicts that interpretation. We also consider that when the Commission's statement is read in the context of the rest of its guidance on the level of skill required, a competition like the Wilshaw's is not what the Commission had in mind.

We respectfully disagree with Mr Kuncewicz's interpretation though we acknowledge that this is an untested area of law and that the Commission's Guidance is the only current authority on this area. Only a court can decide whether or not a particular competition meets the level of skill required and therefore whether that competition is legal or illegal. The Wilshaws are not guilty of a criminal offence unless there is a prosecution and a court finds them guilty.

The main Commission guidance on the level of skill required and the wording of section 14(5) are reproduced in full below.

From the Commission guidance

3.5 First the intention of the law is clear: competitions which genuinely rely on skill, judgement or knowledge are to be permitted to operate free of any regulatory control under the Act. In many cases, it will be obvious that such competitions meet that test. A crossword puzzle, where entrants have to solve a large number of clues and where only fully completed entries are submitted, is an obvious example. Other types of word and number puzzles, such as those that feature in competition magazines, are further examples. The law makes it clear that these qualify as prize competitions even if those who successfully complete the puzzle are subsequently entered into a draw to pick the winner.

3.6 At the other extreme, there are many competitions that ask just one simple question, the answer to which is widely and commonly known or is blatantly obvious from the material accompanying the competition. The Commission considers that these do not meet the test in the Act. It is not easy to say where the dividing line between the two extremes lies. But the more questions or clues which have to be solved, the more likely it is that application of the statutory test leads to the conclusion the competition is not a lottery. And 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.

3.7 In cases where it is not self-evident that the competition involves sufficient skill, judgement or knowledge, the test which must be applied is that in section 14(5) of the Act. In other words the test is whether there can have been a reasonable expectation that the skill, judgement or knowledge requirement would either deter a significant proportion from entering or prevent a significant proportion from receiving a prize. In the Commission’s view, in practical terms, there are two elements to this test. Did the skill, judgement or knowledge requirement in fact eliminate a significant proportion and, if it did not, on what basis did the organisers conclude it was reasonable to expect that it would have done so?

Section 14(5) of the Gambling Act

A process which requires persons to exercise skill or judgment or to display knowledge shall be treated for the purposes of this section as relying wholly on chance if—

(a) the requirement cannot reasonably be expected to prevent a significant proportion of persons who participate in the arrangement of which the process forms part from receiving a prize, and

(b) the requirement cannot reasonably be expected to prevent a significant proportion of persons who wish to participate in that arrangement from doing so.