Lottery services provider Jumbo Interactive and The Lotteries Council are calling on the UK Government to regulate the growing prize draw and competition market and for a clampdown on credit card use after new research revealed consumers are racking up millions entering these popular competitions, which are not currently regulated by authorities.
The research, which was conducted among a sample of 4,000 UK adults by Opinium for Jumbo between 15th-19th October 2021, found consumers spent £117 million on credit cards entering prize draws and competitions in the last year. Due to a loophole, these forms of gaming are not currently regulated in the same way as lotteries and raffles.
The study also found nearly one in 10 people who entered “big ticket” prize draws, which offer the chance to win prizes such as multi-million pound houses or luxury cars, have ended up in debt as a result.
While using credit cards to gamble was banned in April 2020, a loophole in regulation means commercial prize draw and prize competition companies operate without such restrictions in place. For prize draws, this is because they offer “free” entry methods where it’s possible to play by post for the cost of a postage stamp. However, despite this allegedly “free to enter” model, an estimated £860 million was spent on entries into prize draws during 2020.
Research also shows that prize draws and competitions promising a donation to charity also makes 45% of participants more likely to enter. However, over half of players (57%) admit to not checking how much actually goes to good causes.
Jumbo Interactive, which owns and manages lotteries and provides its Software-as-a-Service (SaaS) online lottery platform in the UK, is now calling for greater regulation on the market. The Australia-based business highlights “significant consumer protection concerns” over credit card debt, as well as a lack of transparency around prizes and charity donations from entry fees.
"A huge amount is being spent on credit cards on prize draws, pushing people into debt, despite the free entry option being the reason they are exempt from oversight,” Nigel Atkinson, UK General Manager, Jumbo Interactive commented. “With so much money changing hands, the government needs to look at the proper regulation of prize draws and competitions to better protect consumers.”
The company is also urging consumers to check the T&Cs as there is little enforcement of minimum donation percentage for prize draws and competitions. This compares to regulated society lotteries, which give a minimum of 20% of gross ticket sales and often over 50% to good causes.
"For many, the fact that some of the cost of entering prize draws and competitions goes to charity is a big part of why they enter,” Atkinson added. “But it remains easy for companies to bury information in the terms and conditions about how much actually goes to charity. Society lotteries on the other hand have minimum donation rates and help raise funds for a wide range of important causes, large and small.”
The Lotteries Council supported the claims, stating it is “increasingly concerned” about the use of prize draws operated by commercial gambling companies which are “marketing themselves in a similar way to charity lotteries.”
“Lotteries face a series of legislative hurdles that restrict our ability to grow and raise funds for good causes while prize draws face no limits on how many tickets they can sell, what prizes they can offer, and choose whether and how much to give to any charity,” said Tony Vick, Chair of the group, which represents those involved in fundraising lotteries in the United Kingdom. “We hope the Government looks at this to ensure a fairer playing field."
Additional research findings reveal falling foul of scams has also been an issue for 15% of entrants, including paying money for postage on a prize that never arrives, paying significant amounts of money on phone calls to enter competitions, or winning a prize that turned out to be of less value than advertised. Notably, 72% of those who enter lotteries, draws or competitions think prize competitions and prize draws should be regulated in the same way as gambling.