In Jane’s blog this week Partner, Simon Catterall takes a look at the legal minefield surrounding house lotteries…
Would you raffle your home?
Would you buy a ticket in a raffle to win a home?
You know, part with £50 for one shot at winning a mansion?
In this age of fast forward technology, house raffles are becoming more frequent because the logistics are more manageable but what does the law say?
It depends upon whether the house raffle is regarded as a ‘lottery’ or a ‘competition’. Raffles or lotteries where the prize exceeds £50.00 are a form of gambling in the UK and subject to the regulations of the Gambling Commission. It therefore follows that any house raffle must be regulated by the Gambling Commission or else the enterprise is illegal.
How is it, then, that the ever increasing numbers of people now raffling their homes are bypassing the legislation? The answer is because these raffles are dressed up as ‘competitions’ where apart from purchasing a ticket, the winner must also demonstrate a degree of skill before his or her entry goes into the pot. The reader will be familiar with the ‘competition’ device; those entering are asked to answer a very straight forward (usually multiple choice) question which the operator suggests is an intellectual challenge likely to prevent some people from taking part or getting the right answer. In reality, the questions are very straight forward, some are even a joke. One such ‘competition’ required the entrant to specify the colour of Little Red Riding Hood’s hood. There are others, particularly on reality/talent TV shows where the questions are ridiculously simple but the fact that they are posed enables the organisers of the phone-ins to make a great deal of money from what would otherwise be an illegal lottery.
The Gambling Commission do not like raffles or ‘competitions’ particularly where the compulsory free postal entry route is tucked away in a quiet corner of an all singing, all dancing website. Estate Agents, with fees under threat, are also sniffy suggesting people only go down the raffle route when a property hasn’t sold on the open market because the owner believes it is worth more than it is.
So what of the future? It seems to the author that raffling homes will become more mainstream when a regulating body is created to oversee such enterprises. Pending this overdue legislation, arranging or partaking in any house raffle or ‘competition’ is risky. The organisers must cope with the sheer logistics of the operation while satisfying the Gambling Commission that the raffle is a genuine competition and not a scam. They must also comply with ordinary accounting rules and legislation regarding the management of other people’s money. For the punter it is also a leap in the dark. While most house raffles start out in good faith, some have been derailed through mismanagement or, more usually, by the failure to sell the requisite number of tickets. There is also the cost of entry, usually in the region of £50.00. You can buy a lot for £50 these days.
Promoters of house raffles claim that the chances of success are more realistic than the National Lottery but are they right? The odds of winning the Lotto jackpot are approximately 1 in 14,000,000 however, the chance of winning any prize is approximately 54/1. In a typical house raffle, the organisers look to sell about 30,000 tickets. On the face of it this gives odds of 30,000/1 but at £50.00 a shot, the punter forsakes 25 tickets in a regulated national lotto where the odds of winning at least something are approximately 1/2.
These kind of house raffles or ‘competitions’ are only going to increase. The author can see a situation in, say, 10 years’ time where there will be specialist, regulated agents raffling a number of properties in circumstances where the interests of the consumer are transparent and seen to be protected. Until then, I guess it could be you. But it probably won’t be and it is considerably less painful spending £2.00 rather than £50.00 to find out.