In the digital era, online raffles have become a popular means for startups, small and medium-sized enterprises (SMEs), and charities to engage audiences, raise funds, or promote their brands. However, navigating the complexities of legal compliance and effective management can be challenging. This article provides a comprehensive guide to understanding, setting up, and running online raffles in England and Wales, ensuring your venture adheres to legal norms while maximizing its potential.
Table of Contents
- 1 1. Why Run a Raffle?
- 2 2. Raffles, Lotteries and the “Payment to Enter” Test
- 3 3. The Wider Regulatory Landscape
- 4 4. How a Lawyer Adds Value – Typical Engagement Roadmap
- 5 5. Drafting Bullet‑Proof Terms & Conditions
- 6 6. Step‑by‑Step Setup Guide for Founders
- 7 7. Marketing with Integrity
- 8 8. Operational Controls & Risk Management
- 9 9. Future Trends (2025‑2028)
- 10 10. Frequently Asked Questions
- 11 11. Conclusion & Next Steps
1. Why Run a Raffle?
A well‑designed online raffle can generate revenue, widen brand reach, and create a sense of community that traditional performance marketing rarely matches. Whether you are releasing a new craft‑brew flavour, testing demand for a fintech app, or raising CSR funds for a local charity partner, the mechanics of a raffle—low ticket cost, finite entry window, and the thrill of winning—drive high engagement at relatively modest cost. Crucially for early‑stage businesses, the real dividend is first‑party data: every entrant hands over an email address (and often more) with clear marketing consent if you structure the promotion properly. But with great data comes great regulatory responsibility.
This guide demystifies how to run a free‑to‑enter raffle that falls outside the Gambling Act 2005, outlines the legal perimeter tests, and walks through the practical steps a lawyer would take to de‑risk the project. We then drill down into the nuts‑and‑bolts of drafting bullet‑proof terms and conditions, before finishing with operational pointers, marketing do’s and don’ts, and a look over the horizon at emerging trends.
2. Raffles, Lotteries and the “Payment to Enter” Test
2.1 The statutory position
Under s.14–17 Gambling Act 2005, a lottery exists where—
- People pay to participate;
- One or more prizes are allocated wholly by chance; and
- A process determines the allocation of prizes.
If all three limbs are satisfied, you are inside the regulatory perimeter: remote lottery operating licence, PMLs for key personnel, monthly regulatory returns, and Gambling Commission enforcement risk. Most startups and SMEs quite rightly decide that route is disproportionate.
2.2 Free entry saves the day
The Act carves out a critical exemption at Schedule 2: a promotion is not a lottery if at least one method of entry is free, i.e. it costs the entrant no more than:
- The normal tariff for sending a 1st or 2nd class letter (postal route), or
- An online submission that uses only ordinary internet charges (no premium‑rate texts, no hidden micro‑payments).
The free route must be prominently advertised and genuinely equivalent—no burying the postal address in 6‑point font while splashing the £3 “donation” button. Get this right and your raffle becomes a free draw or prize promotion, regulated principally by consumer‑protection law, the CAP Code, and data‑protection legislation rather than gambling law.
2.3 Checklist: Is my raffle outside the Gambling Act?
| Test | Compliant? | Practical Tip |
|---|---|---|
| At least one free entry method? | ✅ | Offer both online form and postal card |
| Free route is equally prominent? | ✅ | Place both buttons side‑by‑side |
| No substantive difference in prize pools? | ✅ | State “all entries equal, regardless of route” |
| Entrants not required to make any purchase? | ✅ | Remove “Donate £5 to qualify” wording |
| Age gating where prize is age‑restricted? | ✅ | Use self‑certification + third‑party ID check for alcohol |
If you tick all the boxes, you have a compliant free draw. Miss one and you walk into the lottery regime—often unwittingly and expensively.
3. The Wider Regulatory Landscape
Even outside the Gambling Act, three legal pillars still loom large:
- Consumer Protection from Unfair Trading Regulations 2008 (CPRs) – prohibits misleading omissions (e.g. unstated odds) and aggressive practices.
- CAP Code (UK Advertising Standards Authority) – Section 8 governs prize promotions: closing dates, skill vs. chance disclosure, fair administration.
- UK GDPR + PECR – lawful basis for processing entrant data, consent for marketing emails or SMS, and cookie notices on the landing page.
Throw in Companies Act 2006 disclosure rules (displaying registered name and address), ASA influencer guidance, and the ICO’s “Age Appropriate Design Code” if your prize draws might attract under‑18s, and the compliance matrix starts to resemble a bad sudoku puzzle.
4. How a Lawyer Adds Value – Typical Engagement Roadmap
Most founders call their lawyer once the promo microsite is already in build, but the optimal point is concept sign‑off. Below is a typical end‑to‑end workflow your solicitor will follow. Knowing the stages helps you budget time and fees:
| Stage | Lawyer’s Tasks | Client Inputs | Key Deliverables |
| 1. Kick‑off & Fact‑Find | Obtain promo objectives, mechanics, timelines, target territories. | Briefing call; draft creative. | Engagement letter; fixed/ capped fee proposal. |
| 2. Perimeter Analysis | Decide if activity is lottery, free draw, prize competition (skill‑based) or “incidental lottery”. | Description of entry routes, pricing, chance vs. skill elements. | Written advice note categorising promotion + recommended structure changes. |
| 3. Risk Register & Mitigation Plan | Identify ASA, CPRs, data, IP, AML, sanctions touch‑points. | Existing policies; data flows; payment process. | Risk matrix with owner + mitigation deadline. |
| 4. Document Drafting | Promo T&Cs, privacy notice, on‑site copy, influencer contracts, social media Ts&Cs, call‑to‑action wording. | Company info; fulfilment details; privacy policy template. | Marked‑up docs, plain‑English consumer versions, and back‑end admin checklist. |
| 5. Regulatory Engagement (if needed) | Liaise with Gambling Commission or local authority for incidental lotteries. | Signed forms; promoter details. | Licence or comfort email; record of advice relied upon. |
| 6. Go‑Live Support | Final compliance check, real‑time copy tweaks during launch. | Access to CMS; marketing schedule. | “Green‑light” email, log of approvals. |
| 7. Draw & Post‑Draw Audit | Oversight of RNG or manual draw; winner verification; public‑winner list draft. | RNG export; draw video; winner IDs. | Draw certificate; audit memo; ASA evidence pack. |
| 8. Data & Doc Retention | Advise on 6‑year limitation periods, proof of consent, opt‑out handling. | CRM data structure. | Data‑retention schedule; archiving SOP. |
A lean engagement for a straightforward free‑to‑enter draw can be as little as 6–8 billable hours; complex national campaigns may stretch to 20+. Ask for capped or staged fees, and use your lawyer’s paralegal for data‑entry‑type tasks.
5. Drafting Bullet‑Proof Terms & Conditions
Your T&Cs are both shield and sword: they protect you from disputes and provide the evidence ASA will demand if a complaint lands. Below are the 18 core clauses every UK prize‑draw T&Cs should include (adapt or reorder to suit your brand voice):
- Promoter Details – full company name, registered number, and registered office (schedule 1 CAP Code).
- Eligibility – age, residency, employee exclusions, proof‑of‑identity requirements; note that alcohol prizes trigger minimum age 18.
- How to Enter – paid, free postal, and online routes described with equal prominence. Spell out any entry limits (e.g. one per email per draw date).
- Opening & Closing Dates – UK time (BST/GMT) with reference to “any entries received after this time will not be counted but may still be charged”.
- Prizes – clear description, number, approximate retail value, any restrictions (travel date windows, voucher expiry).
- Winner Selection – explain use of certified random number generator or independent adjudicator; link to third‑party audit certificate if available.
- Winner Notification – method (email, phone, social), time limit to claim, fallback redraw procedure.
- Publicity Rights – whether winner’s surname and county will be published (ASA expectation) and how to opt‑out of publicity (GDPR balancing test).
- Disqualification – fraudulent entries, bulk/ automated bots, incomplete postal entries.
- Liability Cap – exclude indirect losses, cap direct losses to the value of the prize or a stated sum, carve‑out for death/ personal injury.
- Data Protection – link to privacy notice; lawful basis for processing (contract/ consent); retention period.
- Viruses & IT Failures – your right to cancel/ amend if force majeure or technical fault arises.
- Promoter’s Right to Cancel/ Vary – reserved right with obligation to notify on website/ social.
- Third‑Party Fulfilment – where prize is supplied by partner, clarify who is responsible for quality/ delivery.
- Governing Law & Jurisdiction – England and Wales; consumer entrants retain mandatory protections of their home laws if outside UK.
- Accessibility Statement – alternative format available on request; Equality Act 2010 consideration.
- Complaints Procedure – email address, response time, link to ADR provider if unresolved.
- Version Control – T&Cs update log with date stamp so you can prove which version applied to which entrant cohort.
Pro‑tip: publish the T&Cs on a dedicated, link‑able URL (e.g. /promo‑terms/win‑a‑van‑june‑2025) and capture an HTML snapshot to PDF before launch for your audit file.
6. Step‑by‑Step Setup Guide for Founders
- Define Objectives – fundraising target, lead‑gen KPI, average order value uplift. Align prize value with objective.
- Choose Tech Stack – off‑the‑shelf raffle SaaS (Raffall, DojoLive) vs. custom Shopify app vs. headless Next.js microsite. Ensure platform can log free postal entries alongside paid.
- Design the Free Route – simplest is online form + checkbox + submit; also offer postal. Keep user journey near‑identical.
- Draft T&Cs & Privacy Notice – use template plus lawyer review. Build version control into CMS.
- Payment & Donation Flow – Stripe/PayPal/Apple Pay. Make clear payment is optional donation, not condition of entry.
- Age & Identity Checks – integrate GBG, LexisNexis, or Yoti for high‑value prizes or alcohol.
- RNG Selection – true RNG API (e.g. random.org) or cryptographic hash shuffle in serverless function. Store seed, timestamp, hash in immutable log.
- Launch Plan – press release, influencer content, email blast, partner cross‑posts. Schedule ASA‑compliant creative sign‑off.
- Monitor Entries Real‑Time – flag burst anomalies (>50 entries/second) that may signal bot attacks.
- Draw & Record – live‑stream or screen‑record draw, publish winners list within 28 days, maintain draw file for six years.
- Post‑Campaign Retargeting – send consolation discount code (if consent), survey entrants, calculate ROI.
7. Marketing with Integrity
- Be Transparent – always say “No purchase necessary. Donation entirely optional.” alongside the paid button.
- State the Odds (if known) – while not legally required, disclosing estimated odds builds trust.
- Influencers – ensure #Ad, #Gifted tags; provide them with a summary sheet of mandatory disclosures.
- Social Platforms – Facebook bans promotions that require share/tag for entry; use “comment + like” instead and capture names manually.
- Paid Ads – Google and Meta currently allow prize draws if not classed as gambling. Tick “No Gambling Content” in ad‑category selector.
- Emails & SMS – respect soft‑opt‑in rule under PECR for marketing similar products; otherwise gather explicit consent.
8. Operational Controls & Risk Management
| Risk | Mitigation |
| Bot or script entries | CAPTCHA v3; rate‑limiting; unique email + mobile verification |
| Money‑laundering (large donations) | Limit single transaction; monitor for structuring; file SAR if suspicious |
| Data breach | Use ISO 27001 hosts; encrypt data at rest; incident response plan within 72 hours |
| Winner disputes | Keep tamper‑proof audit trail; appoint independent adjudicator for draws >£50k in prizes |
| Tax implications | Confirm whether raffle proceeds are treated as income, VAT oustide scope, or donations; seek specialist advice |
| International entrants | Geo‑block or provide territory‑specific T&Cs; be mindful of US sweepstakes laws if you accept US traffic |
9. Future Trends (2025‑2028)
- Blockchain Transparency – smart‑contract raffles where ticket hashes and draw seed are on‑chain; regulators warming but still watchful.
- NFT Prizes – digital collectibles paired with real‑world perks; still consumer‑law obligations, especially on secondary‑market value claims.
- AI‑Driven Personalisation – dynamic prize bundles based on entrant profile; watch out for automated decision‑making rules under UK GDPR reforms.
- Regulatory Shake‑Up – the Government’s 2024 White Paper signalled intent to tighten “paid‑entry plus free route” promotions that function like lotteries; expect consultation late‑2025.
- Sustainability Claims – ASA clamping down on vague eco‑prize descriptions; ensure any carbon‑offset prize has verifiable certificates.
10. Frequently Asked Questions
Q : Can my company restrict the free postal route to one per household?
A : Yes, but apply the same cap to paid entries or you risk the promotion being deemed unfair.
Q : Do I need an independent solicitor to supervise the draw?
A : Not legally, but advisable for prizes >£10,000 or where winning odds <1:10,000. An independent person can be internal provided they are genuinely separate from the promo team.
Q : Must I publish the winner’s full name?
A : ASA expects surname and county; GDPR allows you to withhold on documented objection, provided you supply evidence to ASA on request.
Q : What happens if my website crashes at 11:58 pm two minutes before the closing time?
A : Your T&Cs should contain a force‑majeure clause allowing you to extend or cancel; communicate promptly on the same channels you used to advertise.
11. Conclusion & Next Steps
Free‑to‑enter online raffles offer a compelling growth lever for startups and SMEs, but the regulatory tightrope is narrower than many founders imagine. The payment‑to‑enter test is binary: get it wrong and you inherit the full weight of gambling regulation; get it right and you unlock a cost‑effective, data‑rich marketing channel.
Three action points to take away:
- Map your entry mechanics against the Schedule 2 criteria today.
- Invest in properly drafted T&Cs and a privacy notice—£2k now saves £20k in fines later.
- Run a dummy draw internally to stress‑test your tech and compliance before any customer sees it.
If in doubt, pick up the phone to a specialist lawyer early. The marginal cost of an hour’s preventative advice is trivial compared to a Gambling Commission penalty or a starred ASA adjudication on page one of Google search results for your brand.