What is the UK law for prize competitions and sweepstakes rules

What is the current Legal Position around promotions?

Prize Competitions and Sweepstakes rules in the United Kingdom (“UK”) differ between its countries, namely between Great Britain and Northern Ireland. Great Britain is comprised of three nations: England, Wales, and Scotland. The UK is a union of these three nations and Northern Ireland. This subtle yet important distinction adds nuanced complexities to the operation of the sweepstakes rules in the UK.

In Great Britain, the Gambling Act 2005 (amended 2015) governs such competitions and is regulated by the Gambling Commission. In Northern Ireland, the governing legislation is the Betting, Gaming, Lotteries and Amusements (NI) Order 1985.

Advertisements of such promotions come within the jurisdictions of the Advertising Standards Authority (“ASA”).

Sometimes it is necessary to stipulate that no entries will be accepted from residents of Northern Ireland to avoid having to apply with the laws in that jurisdiction e.g., it is legal in Great Britain for entrants to be required to buy a product to be eligible to enter into a prize draw but this is not allowed in Northern Ireland where prize draws will only be legal if they are free.

What is the Advertising Standards Authority and what is it purpose?

The ASA is a non-statutory regulator of advertisements in the UK which is funded via levies imposed on advertisers. Its purpose is to ensure that all advertisements which are released comply with its Codes, including the Code of Non-Broadcast Advertising and Direct & Promotional Marketing (“CAP Code”). Where there is an alleged breach of the CAP Code, the ASA are called upon to adjudicate.

CAP Code and Sweepstake Promotions

Contextualising this to prize competitions and sweepstakes promotions, the overriding objective of the CAP Code is to ensure that promoters conduct promotions equitably, promptly, and efficiently and treat participants fairly and honourably. The following case is an example of how the ASA considers in detail the explanations provided by advertisers for apparent breaches and how the ASA expects compliance with the spirit as well as the letter of the CAP Codes.

Case Study: Team Hard Racing Ltd (THR)

Facts

THR promoted its prize competition on Instagram and invited the public to participate in the hopes of winning a Volkswagen motorsport car provided they could correctly answer the question: “Who is the Managing Director of Team Hard Racing?”

Participants were redirected to THR’s website. Here, two routes of entry were made available: a paid route and a free route. The former allowed participants to make limitless submissions whereas the free route participants were restricted to one entry.

THR set the deadline of 21 January 2021 but, in its terms and conditions, reserved the right to extend the deadline up to 4 times owing to the fact that many of its competitions involved human interaction and COVID-19 would disrupt this. THR later extended the deadline to 19 February 2021.

Issue

A complainant challenged the promotion claiming the promotion breached CAP Code rule 8.2 as it did not treat participants fairly and CAP Code rule 8.17.4(e) which prevents promoters from extending any closing date unless it is necessitated by circumstances out of their control.

Ruling

The ASA agreed ruling that the ‘pay-to-win’ structure did not treat participants fairly and that COVID-19 would not have precluded THR from honouring the original closing date. Ultimately, the ASA ordered for the advertisement to not be featured in that form again and that any future promotions from THR ensures that the opportunity to win is equal among all participants.

Comment

This case is significant as it highlights not only that THR breached the letter of the CAP Code it also contravened the spirit of it. Promoters have a duty to avoid causing unnecessary disappointment and to ensure that all reasonable steps are taken to honour the original terms of a competition.

THR’s ‘pay-to-win’ structure did cause unnecessary disappointment. The ASA noted that the free-entry route ought to be equitable and not discriminatory against those who had entered the competition using it. It was unfair that  the paid route allowed participants to make limitless submissions and have a higher chance of winning whereas the free route participants were restricted to one entry.

The ASA further noted that, although COVID-19 was disruptive, it did not act as a defence to THR’s decision to extend the closing date because, on investigation, THR’s excuse, that a delay was necessary because its competitions involved human interaction and COVID-19 would disrupt this, did not apply to the present facts.

It was held:

• Participants who submitted their answers prior to the original closing date found that their odds of winning were reduced unnecessarily when the closing date was extended.
• THR did not implement alternative mechanisms to address any unexpected occurrences, such as delaying the award of the prize or offering a reasonable alternative, to ensure that the original terms of the competition were honoured.
• Although previous THR promotions did include a considerable element of human interaction, such as accompanying the winner on a test drive of the car, this was not applicable here where the prize was the race car itself.

A link to the full ASA Adjudication can be found here.

If you have any questions around prize promotions and your business, please contact Maninder Gill.