If you've spent any time in the UK competition world, you've probably noticed that some are called "prize draws" and others are "prize competitions." And you might have wondered if there's actually a difference or if it's just marketing waffle.
Spoiler: there's a real legal difference, and it actually matters.
The Legal Bit (I'll Keep It Brief)
Under the Gambling Act 2005, there's a crucial distinction:
Prize Competition
A prize competition involves an element of skill, knowledge, or judgment. Think: answering a question, submitting a creative entry, or demonstrating some ability.
Prize Draw (or Free Draw)
A prize draw is pure luck – no skill involved. Winners are selected randomly.
Here's where it gets interesting: if you're charging money to enter a prize draw (pure luck, no skill), that's technically a lottery. And running a lottery without a licence is illegal.
How Companies Get Around This
Most "prize draw" competitions charge for tickets. So how are they legal? Two main methods:
1. The Skill Question
Add a question that requires some level of skill or knowledge to answer. "What's 15 + 7?" doesn't count (too easy). But "Name the capital of Burkina Faso" might work.
This technically makes it a prize competition, not a prize draw, so charging for entry is fine.
2. The Free Entry Route
Offer a genuine free entry method alongside the paid tickets. If people can enter without paying, it's not technically a lottery because payment isn't required to participate.
This is why you see "postal entry" or "free entry available" on competition terms.
Why Should You Care?
A few reasons:
Legal Protection
If a company is running an illegal lottery, you've got limited recourse if something goes wrong. They're already breaking the law – your complaint probably isn't their main concern.
Free Entry Opportunities
Understanding this distinction means you know to look for free entry routes. Many competitions legally must offer one, and plenty of winners have claimed prizes without spending a penny.
Legitimacy Indicator
Companies that properly structure their competitions (with genuine skill elements or proper free entry routes) are generally more legitimate. They've thought about compliance, which suggests they're in it for the long haul.
Red Flags
Watch out for:
- No skill element AND no free entry – This is potentially an illegal lottery
- Impossible free entry requirements – "Send a handwritten letter by carrier pigeon to our office in Antarctica" isn't a genuine free entry route
- Skill questions that are way too easy – "What colour is a red bus?" doesn't count as skill
Common Misconceptions
"Free draws are always free"
The term "free draw" refers to the legal structure, not the cost. A "free draw" might still have paid tickets – it just needs a free entry option available.
"Answering a question makes it skill-based"
Only if the question genuinely requires skill. Multiple choice questions where one answer is obviously correct don't count.
"Free entry gives you the same odds"
Legally, it should. Practically, some companies might make the free entry process deliberately tedious to discourage use. Whether they actually disadvantage free entries is hard to prove.
The Bottom Line
The difference between free draws and prize competitions isn't just legal technicality – it affects how you should approach entering them.
Look for competitions with genuine skill elements (your knowledge might give you an edge) or proper free entry routes (why pay if you don't have to?).
And if a competition seems to be neither... maybe give it a miss.
