Levelling the playing field? Government launches voluntary Code for prize draw operators

Why the Code was introduced

Prize draws, also known as “free draws”, have become a booming industry in the UK, worth an estimated £1.3 billion annually and attracting over 7.4 million adult participants. Unlike society lotteries, which are tightly regulated by the Gambling Commission under the Gambling Act 2005 and must comply with various requirements such as maximum prize limits and a minimum donation to good causes, prize draws avoid these regulatory requirements by offering a free entry route. This regulatory gap has long been a concern for society lottery operators, who argue that unregulated prize draws create an uneven playing field.

The Government’s recent Gambling Act review acknowledged these concerns and committed to exploring interventions. Research commissioned by the Department for Culture, Media and Sport (DCMS) highlighted that prize draws compete directly with society lotteries, often offering high-value prizes without the same restrictions or charitable obligations. The legal difficulty with trying to introduce binding regulation on prize draw operators is that the definition of a free prize draw is set out in the Gambling Act 2005, and the Act says that having a first-class postal route of entry is sufficient to make a draw a “free” prize draw and therefore outside of society lottery regulation. In today’s world, an online paid entry is far more convenient and accessible than a postal entry (and in some cases a “free” postal route which requires a first-class letter for each individual entry, can actually end up costing more than paying for a bulk of entries online!).

In response, DCMS has launched the Voluntary Code of Good Practice for Prize Draw Operators, aiming to improve transparency and player protections without imposing full regulatory oversight. While this is a welcome step, its voluntary nature means its impact will depend on industry uptake. Currently over 20 signatories have agreed to implement the Code within 6 months, including industry leaders, such as Omaze.

Summary of key provisions

The Code, published on 20 November 2025, sets out standards across three areas: Player Protections, Transparency, and Accountability. Signatories must implement these measures by May 2026.

Player Protections

• Age restrictions: Participation limited to 18+, with “reasonable” age verification.
• Spending controls:
  • Monthly credit card payments capped at £250 per player.
  • Credit card use banned for instant-win draws.
  • Operators must allow players to set personal spending limits, including £0.
• Self-exclusion tools: Players should be able to suspend accounts for at least six months or close them permanently.
• Harm monitoring: Operators should monitor activity for signs of harm and intervene proportionately.
• Responsible marketing: Advertising must comply with the CAP and BCAP Codes and avoid targeting under-18s.

Transparency

• Clear rules and odds: Operators should publish how draws work and, where possible, the likelihood of winning.
• Free entry route: Must be prominently displayed, genuinely equivalent to paid entry, and convenient (e.g., ordinary post).
• Prize integrity: Advertised prizes, or a fair cash alternative, must be awarded, even if ticket sales are low.
• Charitable contributions: Where donations are promised, operators must disclose amounts and frequency.

Accountability

Operators must monitor compliance, publish their measures online, and cooperate with DCMS reviews. Breaches are not legally enforceable, and should the Code fail to deliver, DCMS will consider all available options.

Impact on the society lottery sector

The Government has acknowledged the competitive imbalance and consumer harm risks posed by prize draws. Elements of the new Code, such as the transparency requirements, could help to curb some of the most aggressive practices.

Compliance, however, is not mandatory, and enforcement mechanisms are absent. Operators who choose not to sign up can continue business as usual. Charities that operate free prize draws from time to time may want to have regard to the Code as a matter of good practice albeit that there is no legal obligation to comply with it.

Society lotteries remain bound by statutory caps on ticket sales and prize values, while prize draw operators can still offer multimillion-pound prizes.

The Code does not override or add to the CAP Code, which already governs advertising standards for prize promotions (CAP Code Section 17).

Ultimately, while the Code is welcomed as a step toward greater fairness, its voluntary status means its real-world impact will be hard to measure. For now, society lotteries must continue to operate within strict regulatory limits, even as prize draw operators enjoy greater flexibility.

In summary, the Voluntary Code is a significant policy development, but not a game-changer for the charity lottery sector. It signals Government recognition of the issues but leaves the competitive imbalance largely intact.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further advice or information about management training which we offer.