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The Commission has set out some guiding principles when considering whether web entry is an adequate alternative route to entry. The alternative route for entry must be publicised in such a way that each intending participant is aware of the alternative.
Thus, the free route to entry must be given sufficient prominence by the promoter in any promotional material. Whilst this does not mean that the free route has to be given equal prominence to the paid route the appropriate wording should not be hidden away in any small print.
To encourage individuals to provide such details the promoter may offer entry into a prize draw. However, the Commission has cautioned that it may take a different view if the individual is required to provide a large amount of data as a pre-condition of entering the prize draw especially if that information is intended to be sold onto third parties.
Collecting information in this way may also raise separate issues under the Data Protection Act The use of the word prize in a promotion is not determinative of whether it is an unlawful lottery.
Schemes in which commissions, gifts and bonuses have been offered have been held to be unlawful lotteries albeit under the previous law — but the principle continues to apply.
In the past, promoters have tried to exclude their schemes from falling within the scope of illegal lotteries by attempting to remove the element of chance.
Thus a promoter would introduce a requirement for participants to exercise some form of skill in order to win a prize.
In some earlier schemes the level of skill required has been found by the courts to be insufficient such that, in reality, prize-winners were, in fact, determined by chance.
Under the previous law a winner of a competition was considered not to be determined by chance if winning depended to a substantial degree on the exercise of skill.
It was not the level of skill that was the key here but the extent to which the use of skill determined the outcome of the competition.
Section 14 5 of the Act seeks to clarify the level of skill required to take a scheme outside the scope of a lottery and provides that: Thus, the level of skill required in order to be able to win a prize must be sufficient to deter a significant proportion of potential participants from entering the scheme and must also be sufficient that a significant proportion of participants would submit an incorrect entry.
Competitions in which a participant is required to be creative, such as writing a jingle or explaining why he likes a particular product would in our view meet this skill test.
Competitions where participants are required to complete a number or word puzzle, such as a crossword puzzle, where skill is required and answers are either correct or not are likely to meet this test.
There is clearly a continuum along which the contribution of skill to the winning of a competition falls and it may be difficult to determine where any particular promotion lies.
The many cases decided under the previous law will be of limited value in assessing the nature of a promotional scheme since the test under the previous law differed from that under the Act and, in any event, any decision will be based on the particular facts of each case.
The Commission agrees that crossword puzzles, which involve a large number of clues and completed entries only may win, would be an example of where the outcome is not determined by chance, as would word and number problems of the type that appear in competition magazines.
The Commission recognises that it difficult to know where on the continuum between these two extremes any particular scheme or promotion will lie.
However, the Commission has stated that the test of skill could be met even where the answer can be found easily on the internet, is commonly or widely known by the general public, appears in accompanying text or is obvious within a television programme to which the question relates.
A competition addressed to, say, an average year old about the latest pop group may be widely known by people within that age group.
However, the public as a whole may not readily know the answer. In these circumstances it is possible that the required skill, judgment or knowledge to answer the question could reasonably be expected to deter a significant proportion of potential participants from entering the competition.
In many cases it will be clear that the skill element is sufficient to take the promotion outside the realms of a lottery.
However where this is not clear the Commission recommends that the test as set out in Section 14 5 should be considered to be a two-limb test.
First, did the requirement for skill, judgment or knowledge, in fact, deter a significant proportion from entering or winning a prize and, second, if, in fact, it did not, did the promoter reasonably expect that it would have done and, if so, on what basis.
It may be relatively straightforward to calculate the numbers of participants who have submitted a non-winning entry and compare this to the total number of entrants to determine the proportion of participants who, in fact, were prevented from winning a prize.
However, it is a far more difficult evidential task to demonstrate that a significant number of potential participants were deterred from entering the competition at all due to the level of skill, or knowledge required to enter.
The Commission has suggested that promoters may wish to conduct research on test questions with a panel of, for example, viewers or readers.
Based on the results, the promoter would have an idea of the degree of skill etc. If, subsequently, the legitimacy of the promotion were challenged, then such test results could be provided to the Commission to demonstrate that the promoter had a reasonable expectation that a significant number of potential participants would not enter.
The Commission has given an illustration of the type of evidence that would not be acceptable to establish that a significant proportion of potential participants was put off from entering the promotion.
Thus, the number of entrants to a magazine competition compared with the total number of readers would not be acceptable evidence to determine what proportion was deterred from entering.
Further evidence would be required relating to the propensity of the readership to enter such competitions. Thus it is not sufficient to show that a large proportion of the relative audience eg television viewers, radio listeners, supermarket customers did not enter.
The promoter has to be able to go further so that it is able to show that it could reasonably be expected that audience members or customers did not enter due to the level of skill, judgment or knowledge required.
However, the Commission has set out a few indicators that it will consider if reviewing the legality of a promotion or competition.
These include the number of plausible alternative answers offered in a multiple choice question, the number of questions required to be answered or the cost of entry as compared with the value of the prize.
The guidance clearly states that the Commission will never provide prior clearance for schemes and if there is any doubt about the legality of a proposed competition or prize draw then specialist legal advice should be sought.
Click here to see flow chart. As stated above, the Act defines two types of lottery. We have outlined above the elements of a simple lottery.
Section 14 3 of the Act provides that:. It can be seen that the first two elements are identical to those for a simple lottery, in that there needs to be payment and an allocation of prizes.
The final two elements of the definition are designed to cover promotions or competitions where there are a number of stages and the outcome of the first stage is determined wholly by chance.
Thus if a competition comprises two stages where participants for the second round are chosen by chance and in the second round participants are required to undertake a task requiring skill, judgment or knowledge this would be a complex lottery and unlawful.
For, example a competition where participants are selected from a larger group at random and then required to undertake a test of skill would be a complex lottery.
However, if a promoter runs a scheme in which participants are required to exercise skill, judgment or knowledge and then a winner is selected at random from the group of winning entries ie skill followed by chance this would not be a lottery and would be legitimate unless it fell to be considered an unlawful prize competition discussed below.
We have already considered above where the exercise of skill, judgment or knowledge will take a competition or promotion outside the scope of being an unlawful lottery.
Section 11 of the Act identifies certain activities and provisions which, if met, are considered to amount to betting under the Act. Thus under Section 11 of the Act an unlawful prize competition that is to say, betting will take place if a person:.
Similarly, payment does not include incurring, at the normal rate, the expense of sending a letter by ordinary post; making a telephone call, or using any other method of communication.
Thus, for example, if the opportunity to enter a prize competition is conditional upon buying a product this will not fall within the scope of the Act if the price of the product is not increased to take account of the entry to the prize competition.
Further, similar provisions and consequences that apply to prize draws providing a free route of entry where there is also a paid route also apply to prize competitions of this nature.
However, if some form of payment is required and there is no alternative acceptable free route for entry then a promoter should be careful to ensure that a prize competition does not fall within the limbs of Section 11 of the Act.
The important element here that distinguishes competitions falling under Section 11 of the Act is the requirement to guess.
In a competition some participants may use skill or knowledge to arrive at the answer, some participants may guess the answer. This would not amount to an unlawful prize competition because the participants are not required to guess the answer.
However, where the participant is required to make a prediction, whether by guessing or by using skill or judgment, this would amount to a prize competition falling within Section 11 of the Act.
The Act sets out a number of offences and sanctions in respect of gambling and related activities which are not permitted under the Act.
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