We all love a good raffle, don’t we? There’s something so exciting about the chance to win a big prize, especially if it’s for a good cause or run by a small business trying to get some attention. But – and it’s a big but – not all raffles and lotteries are above board. In fact, plenty of them can end up crossing into illegal territory without the organiser even realising it.
I’ve seen it happen time and again – well-meaning folks setting up house raffles, social media giveaways, or those “bonus ball” raffles, only to find out they’re running afoul of gambling laws. So, if you’ve ever thought about organising a raffle or you’ve been tempted to join one online, let’s take a moment to chat about how to avoid facilitating illegal raffles or lotteries. It’s easier to slip up than you might think!
One quick note before we dive in: everything below is about the law in Great Britain – England, Wales and Scotland – which is where the Gambling Act 2005 applies. Northern Ireland has its own, quite different rules under the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985, so if you’re there, this isn’t your rulebook.
Table of Contents
1. What’s the big deal with lotteries and raffles?
In Great Britain, raffles and lotteries are heavily regulated by the Gambling Act 2005. The reason for all the rules is simple: lotteries are a form of gambling. So, you can’t just set one up unless you follow the proper legal framework. Otherwise, you could end up facing a criminal prosecution, having your raffle shut down, or even worse – trouble under the Proceeds of Crime Act.
Under section 14 of the Act, an arrangement is a lottery – whatever you choose to call it – if:
- People are required to pay in order to participate.
- One or more prizes are allocated to one or more members of a class.
- The prizes are allocated by a process that relies wholly on chance.
You can read more about the distinction in our guide to competitions, giveaways and prize draws. The Gambling Commission also distinguishes between simple and complex lotteries in its guidance (Gambling Commission).
That last one has a second version worth knowing about. The Act also catches what it calls a “complex lottery”, where prizes are allocated by a series of processes and only the first of them relies wholly on chance. So dressing a draw up with extra stages doesn’t help if the initial sift is random.
There’s one more rule that surprises a lot of people, and it’s the most important one of all: lotteries can only be run for good causes. As the Gambling Commission explains, they cannot be run for private or commercial gain. A lottery operating licence can only be issued to a non-commercial society, a local authority, or someone acting as an external lottery manager on behalf of one of those. There is no licence you can apply for that lets you run a lottery to enrich yourself or your business (Gambling Commission).
The tricky bit is that it can be hard to tell when your fun little prize draw crosses into the territory of an illegal lottery. If you’re charging for entry, there’s no skill element and the money isn’t going to a good cause through a properly licensed or registered scheme, you may well be running an illegal lottery.
And the consequences are real. Promoting a non-exempt lottery without a licence under section 258, or facilitating one under section 259, is a criminal offence carrying up to 51 weeks’ imprisonment – six months in Scotland – and/or a level 5 fine, which since 2015 has been unlimited in England and Wales. On top of that, the National Crime Agency and the Commission have both flagged that profits from an illegal lottery may count as criminal property under the Proceeds of Crime Act 2002, which means the organiser may also have committed a money laundering offence (National Crime Agency, 2021).
Now, the law isn’t completely unforgiving about honest mistakes. Section 258(4) gives you a defence if you can show you reasonably believed the arrangement wasn’t a lottery, or that it was exempt. But note the burden – that’s on you to demonstrate, and “I didn’t realise” on its own won’t do it. Which is exactly why it’s worth understanding the rules before you start.
2. House raffles: a growing problem
One of the biggest areas where people unintentionally break the law is with house raffles. You’ve probably seen them pop up – homeowners raffling off their property to get a quicker sale or raise more than they’d get through a traditional sale. Sounds clever, right?
Well, back in August 2017, the Gambling Commission published a warning called Don’t take a gamble raffling your home, noting a rise in popularity of these house raffles. Its concern was blunt: “we are seeing instances where organisers are breaking the law as their scheme has been set up in a way that means it is an illegal lottery.” The line between a prize competition, which the Commission doesn’t regulate, and a lottery, which it does, is incredibly thin (Gambling Commission, 2017).
Here’s the part that trips people up, though. You cannot solve this by getting a licence. As we saw above, a lottery has to be for a good cause, and a private homeowner can’t hold a lottery operating licence. So if your scheme is a lottery, it isn’t a licensing problem you can fix – it’s simply not something you’re allowed to do for your own benefit.
That’s why the house schemes that can lawfully operate for private gain are structured as free draws or prize competitions, which are not regulated as gambling where they genuinely meet the statutory requirements (Gambling Commission).
Some people try to get there by adding a simple skill element, like a quiz question. But here’s the catch – the question has to be genuinely demanding. Under section 14(5), a skill or knowledge requirement is treated as pure chance anyway unless it can reasonably be expected either to stop a significant proportion of participants from winning a prize, or to stop a significant proportion of people who want to enter from doing so. Satisfying either limb is enough, but a question like “What’s 2 + 2?” satisfies neither, and you could still end up breaking the law. The Gambling Commission warns that simple multiple-choice questions rarely meet the required threshold (Gambling Commission).
3. Social media raffles: a modern problem
It’s not just house raffles. Social media is full of informal raffles these days. You’ve probably seen them: “Buy a £5 ticket and win an iPhone!” They’re everywhere, but they’re also often illegal – and typically doubly so, because they usually have no licence and the money is going to the organiser rather than a good cause.
This isn’t a fringe concern. The Gambling Commission has identified social media as a major route for suspected illegal lotteries. Its 2026 research into individual-led online raffles describes paid chance-based draws run by individuals, influencers and small businesses across social platforms, and says online lotteries require the appropriate licence or local-authority registration and must raise money for good causes (Gambling Commission, 2026).
The Commission and UK Financial Intelligence Unit have also previously reported that the majority of illegal lotteries they were seeing were promoted through social media, and introduced a dedicated reporting code to help identify them (National Crime Agency, 2021).
These raffles are unregulated, which means they don’t offer participants the protections they should. If something goes wrong, there’s no gambling regulator standing behind your entry fee.
Now, here’s the good news if you’re just an entrant: it is not an offence to participate in an illegal lottery. You don’t have to audit every raffle you enter – that’s the organiser’s job. But if they aren’t playing by the rules, you’re taking a financial risk with no recourse.
Where you do need to be careful is if you get more involved than just buying a ticket. Section 259 makes it an offence to facilitate a non-exempt lottery – so selling tickets on someone else’s behalf, or otherwise helping run an unlicensed raffle, can put you on the wrong side of the law even though you’re not the one promoting it. If a mate asks you to shift a few tickets for their online raffle, it’s worth knowing what you’re being drawn into.
4. How to tell if your raffle is illegal
So, how can you tell if a raffle or lottery is legal or not? Well, the Gambling Commission has some guidelines to help you out. The essential question is whether your arrangement escapes the definition of a lottery altogether – and there are only two ways to do that.
Route one: nobody has to pay. If winners are chosen by chance, then entry has to be free. That can mean genuinely free for everyone, or it can mean offering a free alternative alongside a paid route – but the Act sets conditions on that free route. Every eligible person must have a real choice between paying and sending a communication; that communication has to be a letter by ordinary post, or another method that is neither more expensive nor less convenient than paying; the choice must be publicised so it’s likely to come to the attention of everyone thinking of entering; and the system for allocating prizes must not differentiate between paying and free entrants. A postcard route buried in the small print doesn’t cut it (Gambling Commission).
Watch out for the traps around what counts as “paying”, too. Ordinary first- or second-class postage at the normal rate isn’t payment – but a premium-rate call or text is, because the rate reflects the opportunity to enter. Making people pay to find out whether they’ve won, or to claim a prize they’ve been allocated, can also count as requiring payment to participate.
Route two: a genuine skill element. If you’re charging for entry, the outcome has to turn on the exercise of skill, knowledge or judgement – and that requirement has to be tough enough to satisfy at least one limb of the section 14(5) test above. Our guide to skill in prize draws and competitions looks at that distinction in more detail.
Worth being precise here, because it’s often stated too strictly: this doesn’t mean chance can play no part at all. Because a complex lottery is one where the first process relies wholly on chance, a competition that starts with a real skill question and then draws at random among those who answered correctly can be perfectly lawful. What kills it is a first stage that’s random in substance – including a “skill” question so easy that nobody is filtered out by it.
If your competition doesn’t clear one of these two routes, it’s a lottery. And that means you’ll need to be licensed or fall within one of the exempt categories – and you’ll need the proceeds to be going to a good cause.
For example, let’s say you’re raffling off a car and charging for tickets. If there’s no free mode of entry, no meaningful skill requirement, and the money is coming to you, you could be running an illegal lottery. And that’s where the Proceeds of Crime Act comes in – the profits from your raffle could be treated as criminal property.
5. Common mistakes to avoid
One of the most common mistakes people make is thinking that adding a simple quiz question or challenge is enough to make their raffle a skill-based competition. It’s not. The challenge has to be genuinely capable of preventing a significant proportion of people from entering or from winning.
The other big one, as we’ve covered, is assuming a licence is available to fix the problem. For a private raffle run for your own gain, it isn’t.
Here’s an example:
- Legal competition: You run a photography competition where participants have to submit a high-quality, creative photo, and only the best one wins. Even then, the CAP Code’s rules on promotional marketing still apply to how you advertise and run it.
- Illegal lottery: You run a raffle where participants answer, “What’s the capital of England?” before entering. Too easy! That’s not enough to make it a skill-based competition.
If you’re planning on running a competition, it is worth deciding which legal structure you’re actually relying on before you advertise it, rather than trying to retrofit a free route or skill question afterwards.
6. Raffles vs prize competitions vs free draws: what’s the difference?
It can all get a bit confusing, right? And a lot of the confusion comes from loose use of the phrase “prize draw”, which isn’t a legal category in itself. The Gambling Commission instead distinguishes regulated lotteries from free draws and genuine prize competitions (Gambling Commission).
Raffle/lottery: People pay to enter and the winner is chosen by chance. This is gambling. It must be run for a good cause – never for private or commercial gain – and it needs either a Gambling Commission operating licence or registration with a local authority, unless it falls into one of the specific exempt categories. The main categories include:
- Small society lotteries – run by a non-commercial society, with proceeds of £20,000 or less per draw and no more than £250,000 in a calendar year. No Commission licence is required, but the society must register with the local authority where its principal office is. At least 20% of proceeds must go to the society’s purposes, and no single prize may be worth more than £25,000 (Gambling Commission).
- Incidental lotteries – held at an event such as a fete or charity dinner, where the lottery is incidental to the event. No more than £100 of proceeds may be used for expenses, no more than £500 may be spent from proceeds on prizes, donated prizes are unlimited, there are no rollovers, and tickets can only be sold at the event (Gambling Commission).
- Private lotteries – work, residents’ or private society lotteries, where tickets cannot be sold to the general public.
- Customer lotteries – run by a business for its customers, with tight restrictions and no profit. They cannot simply be run online as a normal commercial raffle (Gambling Commission).
The Gambling Commission lists the different permitted and exempt forms of lottery and the rules that apply to each (Gambling Commission).
Prize competition: Entrants pay, but the result turns on a genuine element of skill, knowledge or judgement that meets the section 14(5) threshold. This isn’t gambling, isn’t regulated by the Commission, and doesn’t need a licence – and, unlike a lottery, it can be run for profit. That’s precisely why it’s one of the routes used by commercial “win a house” schemes.
Free draw: Winners are picked at random, but nobody is required to pay – either because entry is free for everyone, or because there’s a compliant free-entry route alongside a paid one. Also not gambling, also unregulated by the Gambling Commission, no licence needed, and also allowed to be run for profit.
So the honest summary is that “prize draw” is often used as a marketing term. Legally, a chance-based promotion needs to qualify as a free draw if it is not to fall within the lottery regime.
7. What to do if you’re running or entering a raffle
If you’re thinking of running a raffle or competition, it’s always worth getting legal advice first. Both the regulator and the advertising rules point the same way: the Gambling Commission advises organisers who are unsure whether a free draw or prize competition is lawful to seek legal advice, and the CAP Code advises promoters to take legal advice before embarking on promotions with prizes to ensure that the mechanisms involved do not make them unlawful lotteries (Gambling Commission; ASA/CAP).
If you’re planning to advertise on Facebook or Instagram, that’s a separate hurdle with its own requirements. Meta treats online gambling and gaming where money or something of monetary value forms part of both entry and prize as restricted advertising, requiring prior authorisation and compliance with applicable law, and such advertising must not target under-18s (Meta Advertising Standards). So it isn’t a solicitor’s letter that makes an unlawful raffle advertisable: the underlying activity itself has to be lawful, as well as complying with the platform’s advertising requirements.
If you’re just entering a raffle or lottery, try to stick to ones run by licensed operators, or by societies registered with their local authority, or ones that clearly offer a proper free entry route. You won’t be committing an offence merely by participating in an illegal lottery, but with a licensed or registered operator there are actual rules protecting how the draw is run and where the money goes, and you’ve got somewhere to complain if things go wrong.
Running or entering raffles and lotteries can be great fun, but it’s important to make sure you’re on the right side of the law. Whether you’re organising one or just buying a ticket, understanding the rules can save you a lot of trouble down the line!