Baroness Twycross Proposes Voluntary Code for Prize Draws Amid Calls for Stricter Oversight
The UK government is set to introduce a voluntary code for operators of prize draws and competitions (PDCs) later this year, a move that diverges from the growing calls for more stringent regulations in the sector.
In her address to the House of Commons, Baroness Fiona Twycross, the Minister of State for the Department for Culture, Media, and Sport, affirmed the government’s commitment to creating a cohesive framework for PDCs. She emphasized that the effectiveness of this voluntary code will determine whether further legislative action is warranted in the future.
Previously, the UK Lotteries Council championed the cause for tighter regulations, noting that PDCs currently evade regulation under the Lottery Act. However, the anticipated voluntary code will not mandate operators to secure a license from the Gambling Commission.
Understanding Prize Draws and Competitions
PDCs, characterized by their chance-based outcomes, allow players various entry options, including both paid and free routes. These competitions evade regulation under the Gambling Act 2005 primarily due to their provision of free entry paths. Common examples include games linked to TV shows, which can engage viewers by inviting them to answer trivia questions without being subjected to stringent gambling regulations. One notable operator in this realm is Omaze, known for offering high-stakes prizes like luxury homes and cars.
Baroness Twycross stated, “Our government is dedicated to ensuring that individuals partaking in prize draws can trust that effective safeguards are in place. This code will establish a consistent standard across the industry, bolstering player protections, enhancing transparency, and promoting accountability among PDC operators. Our department has collaborated closely with the industry over the last six months to lay the groundwork for this code.”
At present, the specific stipulations of the code remain unclear, as does the list of operators expected to participate.
Could Age Verification Become Compulsory?
Legal expert Richard Williams from Keystone Law remarked that while the contents of the voluntary code are still uncertain, the London Economics Report highlights potential areas for focus, suggesting alternatives to stricter legislation. He proposed that the code might include provisions for age verification, alongside enhanced player protection strategies such as self-exclusion schemes, responsible gambling messaging, spending limits, and restrictions on credit card usage for purchasing tickets.
He also speculated that operators might be required to contribute a minimum percentage of ticket sales to charitable causes, or at the very least, disclose what portion of these proceeds is dedicated to charity efforts.
The Ongoing Debate Surrounding Prize Draws
Andrew Rhodes, CEO of the Gambling Commission, has raised alarms about PDCs potentially undermining traditional lotteries. In a recent interview, Helmut Becker, CEO of lottery brokerage Zeal Network, argued that rather than fixating on PDCs, lottery operators should pivot towards innovating their own products.
Williams anticipates a monitoring phase lasting at least a year to evaluate the effectiveness of the voluntary code. He suggested that this initiative is largely aimed at staving off the need for more complex legislative measures, which the current government does not prioritize. He warned that the actions of a few unscrupulous operators could instigate significant upheaval within the industry, especially since many operators may resist incurring additional compliance costs related to age verification while competitors might evade these expenses.
Government Insights from Market Study
Baroness Twycross’s announcement followed the UK government’s release of a comprehensive market study on PDCs, which identified specific risks associated with gambling harm linked to these draw activities.
The research indicated that participants in PDCs are notably more susceptible to gambling-related issues compared to the general betting populace. In a study that encompassed 22 PDC operators and 764 players, around 12% exhibited negative gambling behaviors, as assessed through the Problem Gambling Severity Index. This contrasts sharply with the 3% of the general population and 5% of all gamblers categorized similarly in 2022.
Importantly, the report underscored that while interventions should be proportional, there was no conclusive evidence establishing a direct causative link between participation in PDCs and gambling harm. However, it did spotlight several critical areas where oversight could be improved.
Future Implications for Prize Draws
The government also posited the possibility of incorporating PDCs under the regulatory umbrella of the Gambling Commission, necessitating that operators enforce age limits and provide mechanisms for self-exclusion, among other regulations. Alternatively, they could focus on enforcing existing consumer protection laws more rigorously, with potential involvement from the Advertising Standards Authority, which has previously acted against some PDC operators.
The recommendation for a voluntary code emerged as a favored option among surveyed operators, indicating a shift towards collaborative self-regulation within the industry.