Prize draws and competitions in the spotlight: A voluntary code or future regulation?

The results of a report commissioned by the Department of Culture, Media and Sport (DCMS) into the prize draws and competitions (PDC) market were published on 26 June 2025. DCMS commissioned London Economics in August 2023 to conduct research to provide DCMS with a better understanding of the PDCs markets, with a view to considering whether any government intervention may be required in the sector and, if so, what form that intervention could take.

How are PDCs currently regulated?

PDCs, unlike lotteries, are not currently regulated under the Gambling Act 2005 in Great Britain. Whilst PDCs exhibit some similarities to lotteries – due to ticket sales and prizes often being allocated by chance – PDCs are exempt from regulation under the Gambling Act 2005 (Act) where they offer a free entry route or involve a skill element. Nevertheless, PDCs are subject to consumer protection laws and advertising rules overseen by the Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA).

What challenges do PDCs pose?

The London Economics report, commissioned in August 2023, identifies several potential issues associated with PDCs, including transparency concerns regarding the odds of winning and the prominence of free entry routes. Moreover, it highlights risks related to gambling harm, with a notable proportion of participants displaying high problem gambling severity scores, and the competitive threat PDCs pose to the more highly regulated lottery industry.

The report discusses three possible interventions to address these challenges:

1. Regulatory oversight by the GC: bringing PDCs under gambling regulation would likely mandate operators to obtain licences, implement gambling harm safeguards, and adhere to stringent promotional standards. The report acknowledges this as the most direct approach to addressing the concerns raised.
2. Enhanced consumer protection enforcement: strengthening enforcement of existing consumer laws, potentially through sector-specific compliance initiatives by the ASA, aiming to curb misleading practices and enhance market integrity.
3. Voluntary code of conduct: introducing an industry-led code of conduct could establish minimum standards for player protection and transparency in PDC operations, and potentially a minimum threshold for charity donations, but without legal enforcement or any limits on sales and prizes.

Light-touch or regulatory intervention?

The conclusion reached in the report is that the most proportionate response is to begin with a light touch approach such as a voluntary code of conduct, with an option to amend gambling regulation if such code proves problematic to develop or take up or adherence to the code is inadequate.

Whilst changes to gambling regulation would represent the most “comprehensive means” to enhance consumer protection in the industry, the report notes this could be cumbersome and time-consuming (not least because changes to primary legislation would be required) and is the approach most likely to lead to unintended consequences that may impact consumer choice and the viability of some PDC operators. Though enhancing consumer protection enforcement would help to prevent scams in the market and harmful practices by legitimate operators, the report emphasises that it does little to specifically tackle gambling related harms.

It is notable that the report notes that “[a]ny potential intervention into this market should be proportionate and acknowledge the fact that consumers clearly derive some enjoyment and satisfaction from participating in PDCs and that there is no direct evidence of a causal relationship between PDC participation and harmful gambling.”

The report also states that a voluntary code of conduct could offer a “less costly means of ensuring that fundamental transparency and player protection measures are in place for PDCs”. Indeed, a voluntary code of conduct could offer “a relatively low risk and straightforward means of assessing whether harm can be mitigated in the PDC industry through industry-led measures, rather than regulation”. This approach mirrors ongoing industry discussions on the regulation of loot boxes, where the government is monitoring the impact of industry-led protections introduced by UK Interactive Entertainment.

Alongside the publication of the report, gambling minister Baroness Fiona Twycross noted in a speech in the House of Commons that a voluntary code of conduct is forthcoming, emphasising that “This code will help provide a uniform approach across the sector to strengthen player protections, increase transparency and improve accountability of prize draw operators”. She stressed that the success of the initiative would inform future decisions regarding regulatory intervention.

It is expected that the code of conduct will be published later this year. This approach represents a lighter-touch position, balancing the issues in the report with recognising the evidence that consumers enjoy participating in PDCs.

What does this mean for PDC operators?

It will clearly be important for all PDC operators to engage and comply with the voluntary code, once in place, in order to reduce the threat of PDCs being brought within the scope of gambling regulation and PDC operators being required to hold a licence from the Gambling Commission in order to operate. 

In the meantime, there are some key themes coming out of the report that PDC operators should start considering now.  These measures are likely to be addressed as part of the development of the voluntary code but PDC operators would be advised to consider implementing the easier ones now and to assess the impact on their business of the others. These broadly fall under three categories, as follows:

• Measures to reduce the risk of gambling harm and player protection measures:
  • Implementing 18+ age restrictions and considering whether relying on self-certification of age alone is sufficient.
  • Implementing spend limits e.g. caps on entries or spend per player.
  • Offering a self-exclusion mechanism.
  • Introduction of safe play messaging on ads and websites, such as reminders to play responsibly.
  • Signposting to charities protecting against gambling harm.
  • Measures to moderate instant win products.
• Enhancing transparency:
  • Ensuring compliance with existing ASA guidance and the BCAP/CAP Codes.
  • Providing clear and transparent information about the odds of winning, the method for selecting winners and the amount that will be donated to charity.
  • Ensuring rules of play are clear, fair and not misleading.
  • Ensuring that the marketing and prominence of free entry routes complies with the Gambling Act 2005 requirements.
  • Ensuring that players can clearly distinguish between instant win products and main draws and which information on the website (e.g. about odds of winning, method of selecting winners, rules of play and free entry routes) applies to each type of product.
  • Ensuring that ads and promotional materials are clear about the nature of the prizes and any conditions of entry.
  • Avoiding retrospective changes to prizes.
• Protecting donations to charity:
  • Consider committing to a minimum donation to charity, noting that regulated society lotteries must donate at least 20% of their proceeds to charities and those PDC operators that already donate to charity on average donate around 10% of proceeds to charity.
  • Providing clear information about the amount donated to charity.

If you have any questions about the report or the regulation of the PDC sector, please don’t hesitate to contact one of our experts.