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Regulating Free Prize Draws

April 2021

Prize draws can be a very effective marketing tool for any business and may be particularly useful at present as businesses begin to open their doors to consumers once again as Covid restrictions begin to ease.

There are many different kinds of prize draws, competitions, and lotteries, and different rules apply to each. The most important piece of legislation in many cases is the Gambling Act 2005; however, free prize draws (or those which have both a paid and free entry route) are not subject to that Act. The key rulebook to follow in this case is known as the CAP Code or, to give it its full name, the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing. The CAP Code regulates sales promotions, including prize draws, and can be accessed here.

It is important that you understand the requirements of the CAP Code before running a free prize draw to ensure that your draw complies with the rules and is conducted fairly and transparently. Having a set of terms and conditions in place is an important part of this.

New Template for Free Prize Draws

Our new set of Terms and Conditions for Free Prize Draws is designed for use by private companies who wish to run free prize draws for consumers (adults aged 18 or over), for example, for promotional purposes. Please note that it is not designed for use by a charity.

This new document has been written to assist in compliance with the CAP Code and provides information on a number of key aspects of your prize draw including:

  • Entry instructions, conditions, and restrictions.
  • Important dates and time limits.
  • An explanation of the mechanism of the prize draw.
  • Details about prizes (which should include the number and nature of the prizes).
  • Information about claiming prizes.
  • The use of prize winners’ information for compliance with CAP Code requirements.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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