Online Raffle – Legal Issues & a Working Example

[Ducky13]

Hi All,

I am interested in starting up an online raffle. It will be a for-profit venture & I will be a sole owner.

I am in the process of finalizing the idea & putting down detailed guidelines, information, target audience etc. on paper. The next step for me would be to approach a lawyer for advice on intellectual property rights, NDA, terms & conditions, privacy policy etc. However, I wanted to make sure that I can go through with the next step before actually doing it (hence this post).

I understand that there are many legal issues behind online raffles. Are they even allowed to exist? I have glanced through the laws regarding gambling / lotteries etc, & the bottom line is that there are many laws & regulations which would deem it as illegal (I hope I am wrong).

Anyhow, I was about to give up hope, but then came across the website "Best of the Best." They are an online lottery for super-cars & other items & I know for sure that they are a legal business & are making profits (their financial statements are available on their website).

How have they managed to legally operate?

I would appreciate any help or advice regarding this. I just want to assure that I am eligible to proceed with my venture before approaching a lawyer & wasting precious pounds only to be told that I cant go through with the idea.

Cheers & Thanks,
Ducky

 

[Podge]

You need to make it a competition rather than a lottery, if you look at "best of the best" they use a spot the ball competition.

 

[Ducky13]

Hi Podge,

Thank you for your reply & for bringing that to my attention. Much appreciated!

I just had a look myself & noticed the spot the ball picture, although I am a bit baffled. Is the winner decided based on who successfully spots the ball or is there a lucky draw? When you pay for a ticket, are you effectively paying to play a game of “Spot the ball,” wherein if you successfully spot it, you win, or is there a lucky draw involved & the ball spotting is just a work-around to make the raffle legal?

Using the same principle, if I were to implement a basic question like “Who is the Prime Minister of the UK” into the website just to get past the “raffle” tag, would it be legal?

I will obviously seek professional help regarding this, but just wanted to understand the working & principles first.

Cheers & Thanks,
Ducky

 

[Podge]

Have a read of this, it should answer most of your questions.

http://www.out-law.com/page-6780

 

[JackieC]

As far as I know, you need to turn it away from being a lottery into being a game of "skill and judgement" - so that some level of skill or knowledge is required in order to enter.

This can be a farily simple question or task.

Jackie

 

[Ducky13]

Thank you so much for all the replies guys! This has given me a lot of insight! Much appreciated!

I have read into the “spot the ball” competitions on the HMRC website & came across the following –

If the ‘spot-the-ball’ competition is to determine as nearly as possible the actual position of the ball in the original photograph it is pool betting. However, a competition decided by reference to the decision of a panel of judges is a game of skill. The supply of the right to play games of skill is standard-rated.

Does this mean that websites such as BOTB employ a panel of judges? Or is the right answer the actual position of the ball in the original picture?

Lastly, does anyone have any experience with the website rudeball.com?

Cheers & Thanks,
Ducky

 

[-Joe-]

What about "describe in 20 words why you should win"? Very little effort, and it can be randomized, before being "decided by a panel of judges"

 

[Ducky13]

What about "describe in 20 words why you should win"? Very little effort, and it can be randomized, before being "decided by a panel of judges"

Seriously? Please elaborate / confirm?

Sorry if the answer is obvious, but I'm fresh off the boat

 

[-Joe-]

Just an idea tbh, I'm not a lawyer, I'm sure someone on here who is could verify whether that's legal.

 

[Ducky13]

That would be perfect!! But I will wait for someone to confirm before getting my hopes high!

 

[The Resolver]

That would not satisfy the skill requirement as there is no correct answer. Such a question can be used as a tie breaker between two or more correct answers but not as the main question itself.

 

[Ducky13]

Thanks for that Resolver!

Can someone please elaborate on the point below from the HMRC website? Does that mean that I can't use the actual position of the ball as the "correct answer" & would have to employ a panel of judges, lawyers etc, instead to pin-point where they believe the ball is?

If the ‘spot-the-ball’ competition is to determine as nearly as possible the actual position of the ball in the original photograph it is pool betting. However, a competition decided by reference to the decision of a panel of judges is a game of skill. The supply of the right to play games of skill is standard-rated.

Are there any websites that provide this service? That is, the spot-the-ball competition & panel of judges (basically a service to determine a rightful winner)?

Lastly, are there any alternate means to select a winner based on skill, rather than a spot the ball competition which apparently requires a panel of judges / sports experts & a lawyer?

Cheers & Thanks,
Ducky

 

[The Resolver]

This does not relate to the 'skill' necessary to avoid having to apply for a gaming licence but to a separate matter of whether a competition becomes liable for a special tax called the Pool Betting Duty, ie 'winner takes all' type of competitions. To qualify, HMRC have to show that the only 'skill' is in prediction of an actual fact ie where the ball is in the original photograph. If, however the winner is the one whose position comes closest to that of the views of a panel of experts, irrespective of where the actual ball was on the original photograph, then its treated as 'skill' and avoids the PBD.

But this has nothing to do with the original question which I assume is about whether it is lawful to run the competition without a licence. That relies on a different interpretation of the necessary 'skill' and I would say such is satisfied by a Spot The Ball competition that awards by proximity to the actual position in the original photograph. One warning would be not to use a photograph that itself is widely published showing the ball.

The old joke was that the way to win these competitions was to just use a pin....and wait until you hear a hissing sound.

Torres should launch a Spot The Goal competition.

 

[Ducky13]

Thanks Resolver, that was really informative. My website would be in the form of a winner takes all raffle. It would be a for-profit website & I would be a sole owner. Players / Bidders would pay to play & a winner would take all.

My original hope was that I could have a system that would randomly select winners, but as this is illegal, I would be obliged to use a “spot the ball” workaround, similar to websites like “best of the best.”

Taking what I have mentioned above into account, I just want to summarise what you said in order to confirm that my understanding is correct. As per your explanation, I would NOT have to employ a lawyer or panel of judges & can award the prize to whoever’s estimate is closest to the ball in the original photograph. This is a 100% legal practice & I would not be bending any rules.

The only benefit of having lawyers / judges / sporting experts chose where they think the ball is & then awarding the prize to whoever comes closest to their estimation would be that I can avoid “Pool Betting Duty.” However this option would NOT be available to me as it is a “winner takes all” competition & I would hence have to pay PBD.

Regarding the actual photograph, would it be OK for me to take random pictures from, say for example, a local park with people playing football / rugby etc?

Torres needs to take spot the goal lessons first!

Cheers & Thanks,
Ducky

 

[The Resolver]

You understand correctly. However do not start without a written legal opinion on the precise detail and an attempt to obtain some clearance from the GC. I know they don't like to be drawn but there are ways of writing to them so they can be drawn to a degree to provide a belt to the braces of legal advice.

I do not recommend taking random photographs of people that you use for a commercial purpose unless you have their written consent. Its a grey area of privacy. Footballers created their own rules on so called 'image rights' but they do not exist as such in English law. They get round it through 'passing off' and implied endorsement etc. For the rest of us we would be left with trying to push a privacy right square peg into a round hole. The clever marketeer may say it could get you some valuable publicity coverage if anyone took offence.

The problem with the alternative, using someone else's photo say of a football match, would amount to breach of copyright if you did not have permission. Taking your own photo at a match would not only risk the players paying expensive lawyers to push a slightly rounder peg into the hole, but also would be a breach of the contractual term sunder which you were permitted to enter the ground (ie not use camera for commercial purposes).

Maybe answer is not use people. Your own dog jumping to head a ball? More seriously why not do a deal with a local cricket team to take pictures of them at the nets? You can offer a percentage of the take. Similarly why not reach agreement with the organisers of a charity football match ?

 

[Podge]

Maybe a spot the ball type competition is not best suited to your needs if you want to maintain a draw element to the competition.

Why not consider a crossword, with this you can still maintain the draw element, it would just be limited to the people who have provided the correct solution to the crossword.

 

[Ducky13]

Thank you for the wise words Resolver. Duly noted! I think I would be best off taking some pictures of some of my mates kicking a ball around in a park or alternatively, my mates dog running after a ball (as you mentioned). Some friends of mine organize cricket matches now & then. I could capitalize on that as well.

What about availing of the services of a website like rudeball.com? They claim that it's free & you can use it on your website.

Podge, thank you for responding! The website would be aimed at conducting a large number of raffles simultaneously. People can bid (play) to win many different items. Hence, I thought that a crossword would be too tedious & time consuming as opposed to a spot the ball game. Would you agree? Are there any alternate routes?

Just 2 more questions –

• In a spot the ball game, what if more than one person selects the closest spot to the actual ball, hence generating multiple winners for a ‘winner takes all’ competition? Would I need a disclaimer in place that states that if that were to occur then whoever selected the closest position first wins?
• Would I need to have a separate spot the ball picture / game in place for each item? For example, say I have 10-items to be raffled / won on a daily basis. It costs £1 to play for each item, that is, select 1-spot on the spot the ball picture. Do I need to have 10-different pictures for each item or can there be just one picture per day & players can pay to play multiple times & place bids on different items by selecting multiple spots on the same picture?

Cheers & thanks for all the help!
Ducky

 

[Ducky13]

Just one more:redface: -

How does one obtain clearance from the GC? What is the process like & how long does it take?

Thanks,
Ducky

 

[The Resolver]

What about availing of the services of a website like rudeball.com? They claim that it's free & you can use it on your website.

Maybe but you would have to have them checked out -eg do they have the rights to use the photo

Just 2 more questions -

• In a spot the ball game, what if more than one person selects the closest spot to the actual ball, hence generating multiple winners for a 'winner takes all' competition? Would I need a disclaimer in place that states that if that were to occur then whoever selected the closest position first wins?

• 
  
  Yes if you are prepared to stop the competition as soon as someone was right on target- as others then wasting their money. Best to say you will draw out the winner if more than one.
  
  

  [*]Would I need to have a separate spot the ball picture / game in place for each item? For example, say I have 10-items to be raffled / won on a daily basis. It costs £1 to play for each item, that is, select 1-spot on the spot the ball picture. Do I need to have 10-different pictures for each item or can there be just one picture per day & players can pay to play multiple times & place bids on different items by selecting multiple spots on the same picture?
  ]

  
  Sorry can't understand what you are saying here. Simplest to have 10 simultaneous competitions with one prize each. Different picture each time so people have to play for each prize they want to win. If you take a movie then can easily use 10 separate frames. that way each frame gives a clue to the trajectory compared to the others - in fact if they had to pay for further plays perhaps the separate images would only display once paid extra, ie the more they play the more clues and thus the greater the chance of winning on later images.

 

[The Resolver]

Just one more:redface: -

How does one obtain clearance from the GC? What is the process like & how long does it take?

Thanks,
Ducky

They won't give a clearance as such. I am referring to having a chat with a named individual for some formal guidance and putting them on notice to protect your back to some degree.

 

[Ducky13]

Thanks Resolver! All your answers have been invaluable!

I was earlier under the impression that drawing out the winner from the multiple people who select the right answer would be considered as a raffle, hence did not want to go down that road. Thanks for clarifying that it's not! I think that would be the best approach!

 

[DeclanJordan]

We can also help in preparation for the USCIS or consular interview and can represent you at the interview.The United States has always attracted the best and brightest from the world over, so it is not surprising that American businesses like to access this available talent.

 

[Suzanne Williams]

This has been a really interesting and informative thread.

I wonder if someone might be able to assist me with something similar please? I am a physical trainer - my plan was to run a monthly raffle aimed at members of my gym. The cost to the member would be in the region of £1 per entry and the prize would be a free training session with myself or a colleague.

This would ultimately be for profit when I have more people entering than the cost of my time for the session.

My interpretation of the above thread is that I can't simply put everyone's names into a hat (or the equivalent software) and randomly select the winner. This would have been my preferred option.

Instead - each person who enters the competition/raffle/prize-draw (I'm unsure of which word best describes the scenario) would need to perform some sort of skill based activity e.g., a spot the ball in a tennis serve (performed by me as an example) and that the person who is closest to the centre of the ball (as judged by a panel of experts such a tennis coaches) would be awarded the prize of a free training session.

Does this sound legal?

Thanks so much to anyone who is willing and able to help

 

[Charlie B ACS]

I've seen a company recently offer a watch as a prize, selling chances to win, each person entering getting a number, with the names published to all on Facebook before a lottery draw, with the bonus ball determining the winner.

 

[The Resolver]

Suzanne, sounds Ok but bear in mind that the test of 'skill' , to ensure it is outside of regulation, is one in which the level of difficulty should either deter a significant number of people from entering (not likely to be satisfied in a 'spot the ball' competition since everyone can easily put an 'x' on a picture) OR ensure that a significant number of people would fail (this IS satisfied by a 'spot the ball' competition). The decision should not be the actual position of the ball but the position as judged by a panel of experts,which could be wrong. Do not make it too easy, ie a picture of you preparing to serve with the ball in your hand!

Charlie- the watch competition is a lottery and , if it is for commercial gain and not free , it needs a licence.

 

[Suzanne Williams]

Thanks Resolver,
That's extremely helpful.
Based on what you wrote to Charlie - would I be ok in assuming that I would not need a licence for this? I'd be thrilled if that is the case as I would be able to get on with creating it straight away.

 

[The Resolver]

Yes you should be able to avoid requiring a licence on the basis it is a game of skill.But its all subject to the fine detail of it operation and the competition rules .Do he judges really judge without seeing the position of the ball? Is a picture obvious (eg ball in hand on serve ) etc. I can look at final details and draw up the Rules if you wish.

 

[Lawyer]

Exactly as said above. There has to be skill invoilved hence spot the ball etc which I have used for clients when they have say wanted people to pay to enter and it is a house raffle. If there is no skill it can become an illegal lottery. the Gambling Commission has some guidance on the difference - http://www.gamblingcommission.gov.u...the-requirements-of-the-gambling-act-2005.pdf.

Nor can it just be an obvious question anyone could guess the answer to.

Presumably you are charging? If not then things are very different.

 

[Suzanne Williams]

Thanks The Resolver - Yes I'd very much like to take you up on that offer. I'll get it all in place and come back to you. I really appreciate your help with this.

 

[Suzanne Williams]

Thanks Lawyer. I have had a look at that guidance but its great to see you write in in plain English. Thanks so much for your input