A quick Google search of "UK regulations for prize draws" the first result will tell you everything you want to know for the UK (as I haven't had 30 posts, I am forbidden from uploading a link). If you actively market in other countries, you may have to research their regulation. The main things are you need a licence (tax paid) and that it cannot be entirely chance, or it will be deemed a lottery, and that is a different ball game.
This is the reason many prize draws have a simple question - the winner is picked at random from those who qanswer the question. A purely random draw will have you in lottery territory (the alternative is to base your servers in somewhere like the BVI and not "actively" market in the UK).
I built a site on a similar basis... I did my research after building the site. Seems daft, but as I was building it to teach myself J2EE and other web technologies, it cost me only my time and when it came to investing hard cash - I did my research - what similar competitors are doing, what the failure rate is of the business, and importantly, if your site has a market killing function, how quicly established players can adapt to offer a competing service and nobble you. Also, look for similar competitors sites and check their draws - how long do the remain open - do they suspend them - what do they offer, etc. Draws that wait for a certain number of entries can take a long time to fill or may never do and you will find people are not happy with even parting with small sums of cash.. In fact, partake in them and work out for yourself what works and doesn't. They will be varioations of what you do, but it may give you food for though. If your prizes are smaller, even id popular - such as ipads, forget it... People want to win big. And how are you going to convince them you will delivery on your promise - or even that there is a winner? I recall early gambling web sites using the big 4 audit/accounting firms to certify everything to prove they were legitimate.
In my case, the virtual landscape was littered with those that were variants of what I was offering that fell by the wayside. The positive press espoused to the two major players I could find were easily countenanced by the negative press that particular type of prize draw was. I was differentiating myself, but in the end, the risk was not worth the reward, even though when I demoed it to work colleagues (more to show I conquered their tech), 5 colleagues offered me a £10K investment (each). I wasn't looking for it and didn't take them up on it.
From what you've written, the software will be the easy bit (there is probably open source stuff that does the most of it and you only have to tweak it).. I wrote the core of a pure lottery website including all of the client handling and ability to define different lotteries and repeat them at different intervals after draws, etc, in about 6 hours. The hard work is the rest.
