They can’t win your raffle unless they buy a ticket… or can they?
The story of Dunstan Low, who successfully raffled his £845,000 Lancashire mansion by selling 500,000 raffle tickets,[i] is another example of the re-appearance of the earlier… Read more
The story of Dunstan Low, who successfully raffled his £845,000 Lancashire mansion by selling 500,000 raffle tickets,[i] is another example of the re-appearance of the earlier trend for homeowners who have lost faith in the traditional method of selling their homes to raffle them instead. On the face of it, this looks a great idea. If you charge £2 a ticket and your property is valued at £500,000, then you need only sell 250,000 tickets to recover the full value, plus some extra tickets to cover your costs. In theory, you shouldn’t be short of entrants to your raffle either, as the odds aren’t bad and the prize a chunky one.
In practice, it’s not quite that easy. Several house sale raffles and competitions have failed to achieve sufficient ticket sales and had to refund entry fees or pay a smaller cash prize instead. Potential entrants may ask why the house hasn’t sold by the traditional route, and be wary of acquiring a property without the usual investigation of problems and associated costs.
Anyone thinking of raffling their house should also be aware that the Gambling Act 2005[ii] makes it a criminal offence to run a lottery without a licence – and licences are only available to charities (and local authorities) as raffles can only be run to raise funds for good causes. There are some limited exemptions for things like raffles to raise money for charities and workplace sweepstakes, but these won’t apply to house sale raffles (even if you give part of the profits to charity). Whilst the law in this area is complex and advice should always be taken, there are two ways to differentiate your scheme from an illegal lottery. Firstly by requiring entrants to use skill, judgment or knowledge so that the winner isn’t chosen by chance, or secondly by giving entrants the option of participating for free.
Questions will only satisfy this “skill test” if they require sufficient skill, judgment or knowledge to prevent a significant proportion of entrants answering correctly (or entering at all). Of course, those who get the answer wrong must not be entered into the draw. If there’s any doubt whether the questions are sufficiently challenging, you would be wise to offer an alternative free entry route too – even though this seems counter-intuitive when you’re trying to raise money.
The free entry route can be ordinary (first or second class) post (but not special delivery), or telephone at ordinary rates (but not using a premium number), or any other method which doesn’t involve any additional expense reflecting the chance to enter the raffle and is as convenient to the entrant as the paid route. The free route can’t be “hidden away”, and of course free entries must have the same chance of winning. The Gambling Commission offers useful guidance, on both the skill test and free entry routes, on its website[iii] as well as a recent update on house sales[iv].
For more information regarding raffles and skill competitions please see our article “Healthy competition: your legal how-to guide for the sporting Summer” and do take legal advice if you are considering running a raffle, whether to fund-raise for charity or to sell your house. If you fail to negotiate the legal pitfalls correctly, you may have to close the scheme and refund all the ticket sales – and could be fined (or even imprisoned) for committing a criminal offence.