Booming Sector of UK Prize Draw Competitions and Their Voluntary Code

The UK’s online prize draw sector, once considered a casual and small-scale form of entertainment, is gaining big traction in the UK. In fact, this once niche activity generates around £1.3 billion in annual revenue and there are over 7.4 million UK players who actively play prize draws. They are becoming more prominent and one of the key pulls for iGaming operators is that prize draw competitions fall outside the legal oversight of the UK Gambling Commission. These platforms do not pay Remote Gaming Duty.

This is a bit of a sore point for online casinos in the UK, who are reshuffling and restructuring their business models to accommodate the massive Remote Gaming Duty tax hikes that went into effect on April 1 of this year. Prize draw competitions, however, are not completely devoid of regulation. The Voluntary Code of Good Practice, a self-created regulation model, was made by prize draw competition operators, and from May 20th they will be implemented. While prize draws may be a good alternative vertical for iGaming operators to explore, there are some key points to observe.

Voluntary Code of Good Practice

The Voluntary Code was submitted to the UK Gambling Commission on April 28, and the document intends to clarify exactly what Prize Draw Competitions are from a legal perspective. They are competitions in which there are paid and free entry routes. Prize draw outcomes are completely randomised and are not based on skill. Operators who offer skill-based competitions must undergo relevant testing procedures, which are addressed in the Voluntary Code, so that they can avoid being classified as lottery games or alternative/secondary lottery products.

The prize draws are not going to be defined as lottery games either. The main distinction between the two is that prize draws must offer a free entry method, as well as a paid one. Therefore, they will not require an iGaming licence in the UK, and can exist outside the framework of the UK gambling laws.

Though the document acknowledges that PRC operators should integrate player protections, alongside transparency and accountability, to protect the public from potential harm. The paper finishes with a signatory that contains 177 company signatures, as well as 28 more from “relevant” parties.

What are Prize Draws

The prizes you can win from prize draws can range from cash to luxury watches, cards, or even homes. They are online contests that you can enter either for free or with a paid entry. Some operators structure their products as “skill based”, but the only difference with those is that you will have to answer a question or a series of questions to enter. Though for the most part, the primary factor determining the outcomes are RNGs, proving that these are fair to play contests and not rigged.

Participation can be done via free postal entries or claiming free tickets online, but there is an option left open for paid entry. That is mainly there if you want to purchase multiple entries – but note that paid and free tickets have the same probability of winning. The ticket prizes can range depending on the contest, but typically, you can find penny tickets for £0.02 up to £1, and then tickets that can go as high as £100 a pop.

Main Operators

You may recognise some of the operators, as they market aggressively on social media and appear all over British TV media. They have no affiliation to bingo operators, UK bookies, or even online casino gaming brands, PDC really falls into an entirely separate category.

• Omaze: One of the largest in the UK, accounting for over 60% of the sector. The contests mainly have luxury house giveaways
• BOTB: Best of the Best is one of the oldest PDC operators in the UK, originally becoming famous for its Dream Car contests. It now also has cash prizes, holidays, tech prizes, lifestyle rewards, and of course, cars too
• Raffall: This is more of a marketplace platform where businesses and individuals can host their own prize competitions
• Aspire Competitions: Prizes typically include luxury watches, cards, designer goods and cash. The platform has Facebook livestreams and huge social media engagement, with lower ticket prices for the paid entries
• Elite Competitions: Another PDC operator big on social media, the live draws are hosted live, running daily and weekly. Prizes include cash jackpots, supercars and electronics
• Raffle House: Specializes in property contests and luxury home giveaways
• Bounty: The prizes can include SUVs, sports cars, gaming consoles, cash giveaways and holidays
• Click: A quickly growing PDC operator, it is more entertainment-focused, with a broad range of prizes from holidays to tech products
• Storm: Another operator that focuses on automotor giveaways, but also extends to motorcycles, modified vehicles and camper vans
• Nitrous: Focuses on car culture and motorsport audiences, with prizes ranging from drift vehicles to modified sports cars

PDC Popularity in the UK

While prize draws have been around for centuries, this quick and casual online format of PDCs has really surged in the past 5 years. They were originally rooted in local raffles or charity competitions, gradually expanding as professional companies took over and expanded the online entertainment vertical.

A big part of the appeal is through the easier accessibility. There are free entries to attract first timers or newcomers to draws, and then paid tickets for anyone who wants to get more involved and take on the chances of winning a camper van or a luxury home.

Social Media Driving the Engagement

A big part of the drive into mainstream entertainment has been through social media. Platforms advertised and streamed onto popular social media channels like Facebook, Instagram, TikTok and YouTube have helped build the online community and raise awareness for PDC in the UK.

There has also been a wave of influencers and content creators chipping in to promote competitions through affiliate arrangements or sponsored posts. This short-form content, alongside the high frequency of the draws, built the PDC format very quickly, and with those figures – of £1.3 billion in revenue and 7.4+ million active UK players, PDC are becoming impossible to ignore.

Compare it with the UK National Lottery, which has an active base of over 30 million, and PDC operators have a lot of headroom left to expand into.

Limits and Constraints in Gameplay

PDC operators are going to have obligations according to the white paper they sent to the UKGC, and this will affect customers. The player protection rules set a minimum age of 18+, and will also require operators to ask for age verification. Furthermore, they will have to make responsible gambling messages, ban credit cards and make monthly payment limits, and display clear odds on paid and free entry – which should be equal.

The UK Gambling Commission reaction has been cautious, which is surprising considering how strongly they have tightened the regulations for iGaming operators. They are acknowledging the sector, but also recognising that the legal boundaries and monitoring are not exactly completely fixed yet. The products are not related to gambling products, although there may be some lines to draw in the future so that PDC operators do not cross that line.

But for now, as a customer (or an interested party), the only things you should take note of PDC are the following:

• 18+
• Credit cards are banned
• £250 monthly limits on payments
• Have responsible gambling messages
• GamStop not needed
• Paid and free tickets have equal odds of winning

For operators, the biggest win of all of this is that they can avoid the UK Remote Gaming Duty, which is now 40%. It may not stay this way for the long run, but for now that is something they can celebrate.

Could iGaming Operators Pick Up On PDC

And something that UK iGaming operators can envy. Because the online casino industry in the UK is in a slightly chaotic state following the tax hikes. Big brands have been forced to take drastic action, with some scaling back on other verticals like high street betting shops or sports products, or withdrawing bigger promotions and bonuses. The latter is also enforced by the new UKGC player protection laws, which severely restrict the bonuses and promotions at online casinos in the UK.

There has even been talk of operators cutting back their RTP, in attempts to salvage their profit margins and keep business in the UK. It has not all been bad though. Flutter, for instance, has pumped money into expanding its bingo brand Tombola with a new arcade gaming app. One way to avoid the impacts is to explore new verticals, creating more engagement and potentially opening new revenue streams. This, the PDC, could be a very interesting prospect for the online casino brands. Sure, there are strict spending limits and these platforms cannot really offer high stakes gaming. But the engagement and revenue figures right now speak for themselves, and PDC is really a booming market.

Of course, it still sits in a gray area, and it is anyone’s guess how, when, or even if the UKGC is going to intervene. But for now, it does look promising, and it is quickly becoming one of the UK’s favourite pastimes.