Categories of lotteries
There are different types of lotteries set out by the Gambling Commission, each with different rules and requirements about how they are run and how/where you can sell tickets and use them for fundraising. Some of the lotteries can be run without a licence, but for others you will need one.
What is a lottery?
A lottery is a game where people buy a chance to win a prize. Most often this will be a lottery ticket, bought for a set price (e.g, £1), where each ticket has an equal chance of winning.
What is a raffle?
A raffle is a type of lottery, with again people buying a chance to win a prize. Raffles tend to have a range of prizes available and the ticket sales and raffle draw tend to happen as part of the same event, whereas a lottery tends to have a cash prize based on ticket sales.
Firstly, think about what kind of activity you want to do and work out what kind of lottery it would be. The three questions to start with are:
- Who will you sell tickets to?
- Where will you sell the tickets?
- When will you sell the tickets?
In answering these questions you should be able to determine which type of lottery you are organising. Some of the most commons types are:
- Small society lotteries
- Incidental lotteries
- Private lotteries
- Customer lotteries
- Large society lotteries
Check the Gambling Commission guidance on fundraising for the rules on different types of lotteries and games and how they can be used for fundraising.
If you do need to obtain a licence to run the lottery, you will need to contact your local council.
Prize competitions and free draws are not regulated in terms of gambling and therefore you do not need a licence to organise these activities.
Prize competitions are those which are not based wholly on chance. To qualify as a prize competition there needs to be a sufficient level of skill involved that will:
- Prevent a proportion of people from entering
- Prevent a proportion of people who have entered from winning
The outcome of a prize competition is determined by the application of skill, knowledge or judgment; not chance.
A free prize draw is a competition where all entries are free or entries can be made by paying. In this case, free can mean any method of communication charged at a normal rate such as a first or second class stamp.
If organising a prize competition or free prize draw it is important to make sure that they qualify as these and you do not inadvertently organise an illegal lottery.
The Gambling Commission has more guidance for organisations thinking of running prize competitions and free draws.
Although not falling under gambling law, you still need to be aware of consumer legislation such as those for unfair commercial practices.
Remote gambling is when people participate by remote communication, for example via the Internet, telephone, television or radio. This term only applies to arrangements where participants obtain their lottery tickets electronically (a lottery in which tickets are sold at kiosks, but in which the results are available only via the Internet, is not a form of remote gambling).
For some types of lotteries, remote gambling requires an additional licence from the Gambling Commission.
For some charities, running the lottery themselves and holding the operating licence can be complicated and burdensome. An external lottery manager can operate the licence and manage the lottery on behalf of a charity.
For more information on how External Lottery Managers work, take a look at the Gambling Commission guidance.