In a recent opinion piece featured on the EGR site, Kirsty Caldwell argued free-to-play games should be brought into the regulatory system, highlighting what she described as “lottery-style games”, including Raffle House.
While she acknowledged the existence of casino/slots-style games that offered no real prizes and skill-based games where players had to answer a question, she saw this business model as the most problematic.
Similarly, when last year’s white paper outlined concerns about the growth in prize competitions, the government focused on larger competitions offering houses and cars as prizes. It planned to hold a consultation to explore the potential for regulating these.
As the head of a company providing such competitions, it probably comes as no surprise that I’m not in favour of more regulation.
The idea we are akin to, or should be subject to, the same regulations as lotteries seems a bit misguided, in my humble opinion. Lotteries typically award prizes based on number draws and there’s no option to enter for free, as there is with draws such as those we operate.
It is also worth noting that many of today’s lotteries offer instant-win prizes with similarly high event frequencies to online casinos, whereas our event frequency is so low that entries can be sent by post. Indeed, our property competitions are bi-monthly, which hardly offers the instant gratification of a near-term chance to win.
Critics say companies like ours are exploiting a “loophole” in legislation, but we are fully compliant with the Gambling Act 2005. While Caldwell describes her suggestion as a “flippant comment”, any company really could adapt their offering to fall outside the Act’s definition of gambling by offering a free entry route. One assumes they don’t because they then couldn’t offer the higher-volatility products they make more money from.
It seems that complaints on free draws being unfair competition are really complaints about competition more generally. All types of entertainment companies face increasing competition from a variety of business models, but this should not be a consideration for regulators or governments.
Bad actors
What policymakers should focus on is companies at the smaller, rather than the larger, end of the prize competition sector. We often see ‘amateur’ companies pop up in this space, some pooling cash illegally. They then disappear and there is little recourse for consumers.
Over the past six years, I’ve witnessed more than 100 operations come and go. Whether any of them were illegal lotteries is not for me to judge, but I was left wondering. Only a fraction of these is likely to ever come to the attention of either the Advertising Standards Authority or Gambling Commission.
On the other hand, any company of significant scale is far less likely to get away with not operating in line with the many marketing and consumer protection requirements we are subject to in the UK without being reported.
We also see some dubious skill-based games – a multiple-choice question that everyone knows the answer to or can easily Google hardly seems robust enough to stop a ‘significant’ number from entering or winning a prize, as required by the Act.
However, the wording of the legislation is subjective. Some guidance on what percentage is considered ‘significant’ and how this could be proven with records would reduce the potential for abuse.
Assuming the new government wants to pick up the last one’s plans for a consultation, a more appropriate outcome would be some type of self-regulation scheme for the prize draw sector. This would help customers distinguish between companies that have signed up to certain principles and guidelines and those that have not.
This would better protect not just consumers, but also the many cash-strapped charities that rely on the funds they get from the larger prize draws, including ours.
Benno Spencer is the CEO of Raffle House, which he founded in 2017. Prior to starting the company, he worked as director of oil pricing at S&P Global Platts. He holds a double honours BA degree in english and classical literature from the University of Leeds.
The post There’s no need to widen the regulatory net to include free draws first appeared on EGR Intel.