Voluntary Code of Practice for UK Prize Draw Operators

Lee Hills, CEO

When we published Hittin’ It Big at Risk After Report Questions Online Competitions in June, the sector had grown to £1.3 billion annually, 7.4 million participants, and over 400 operators, yet the online prize draw space was still operating in a regulatory grey area.

At the heart of that piece was the London Economics report, commissioned by the Department for Culture, Media and Sport (DCMS). It claimed the sector’s vulnerabilities included questionable marketing practices, unclear odds, hidden free-entry options, and risk of harm. The report’s recommendation was to begin with a Voluntary Code, while remaining ready to legislate if the industry failed to clean up its act.

Now, Westminster has spoken, and the Voluntary Code is coming.

On 26 June, Gambling Minister Stuart Andrew announced in Parliament that the UK Government will introduce a Voluntary Code of Practice for Prize Draw Operators later this year. His words echoed many of the factors we raised in ‘Hittin It Big’ at Risk After Report Questions Online Competitions:

"While many operators act responsibly, we cannot ignore the risks highlighted in the London Economics report. This Voluntary Code is a first step in ensuring fairness, transparency, and consumer protection."

Legal specialists have been quick to frame the move as measured and proportionate. Wiggin LLP described it as

“a considered and proportionate response to a sector that has grown in popularity but remained… lightly regulated and not well understood.”

That choice of words matters because campaigners argue prize draws should be treated more like lotteries, an approach that risked stifling an entire segment of the UK’s entertainment industry and even pushing it into the black market. Instead, the government has opted for a collaborative starting point. To set standards first, regulate later if needed.

Voluntary Code

The new Voluntary Code will focus on three “core pillars”:

1. Player Protection

2. Transparency

3. Operator Accountability

The government’s outline includes:

• Clearer Terms & Conditions to ensure players understand how competitions work.

• Responsible Marketing Rules to protect vulnerable players from aggressive advertising.

• Transparent Disclosure of Odds and Winners.

• Fairer Access to Free Entry Routes

Free Entry

In theory, because anyone can enter without paying, it acts as a safeguard, keeping prize draws distinct from lotteries. In practice, free entries are not as visible as paid routes and most commonly via postal entry.

The reality is even a postal entry costs the price of a stamp, petrol to drive to a post box and the time cost of doing so. It is simply very inconvenient. The likelihood of going through that process instead of paying a very low paid-entry fee is negligible, especially in the modern era where convenience is at the heart of almost all innovation.

Regardless of what side of the fence you are or numbers you believe, it is safe to say that under 10% of entries are via free routes. It is also unclear if free entries have the same chance of winning.

With the Voluntary Code, the government is making visibility and accessibility part of the standard.

The problem is not just fairness, it is trust. If players suspect the free option is a box-ticking exercise rather than a genuine entry, confidence in the whole sector suffers. On the flip side, if it is as easy to enter for free as paid and you have the same chance of winning, why would any reasonably minded person pay to enter.

One must accept that there will be some sort of weighting, free entry limit, that free entries continue to be inconvenient, a mixture of these or other measures meaning paid outweighs free for the businesses to be viable.

A Voluntary Code will set expectations, giving operators a framework before they cross the line, rather than punishing them after the fact.

Reaction from operators has been split. Supporters see the Voluntary Code as a chance to standardise best practices without the bureaucracy and costs of a licensing regime. Sceptics fear that without enforcement powers, the Voluntary Code will simply be ignored by bad actors, forcing DCMS to legislate sooner rather than later.

What Happens Next

The DCMS will publish the full Voluntary Code later this year. Once live, its effectiveness will be monitored, and the government has explicitly stated that failure to implement could lead directly to full licensing and statutory regulation.

Compliance with the Voluntary Code could preserve the current business model and avoid the heavier costs and restrictions of licensing. Non-compliance, on the other hand, risks inviting the very regulatory burden the sector has long sought to avoid.

In my opinion, it is likely that the introduction of a Voluntary Code is a stepping stone to regulation. However, compliance with the Voluntary Code and meaningful engagement with the government by operators could slow the march towards burdensome regulation by years, possibly even decades.

As there are more than 400 operators, assuming all are run by fair-minded people would be naive, so we may see the larger, more reputable operators form a trade association to protect their interests and act as a common voice while discussing the sector with the UK Government.

The Voluntary Code may go so far as to expect operators engage independent testing agencies such as eCOGRA, GLI and iTech Labs, which audit game systems, verify random draws, and certify compliance.

However, if the Voluntary Code does not, we are likely to see the more reputable operators establish their credibility by engaging test houses, possibly even as a condition of membership of the trade association.

Engagement, cohesive voice via a trade association and independent testing is all likely to delay statutory regulation for as long as possible. History in other gaming sectors shows that self-regulation only works if it is visible, credible, and consistently applied. If the industry hesitates or allows a few bad actors to dominate headlines, the government will have both the public support and the political will to legislate.