More and more businesses are considering the idea of introducing some form of prize scheme or competition, for the purpose of promoting their sales.

They are often unaware, however, that such competitions are governed by various rules and regulations, including the Lotteries and Amusements Act 1976.

It is therefore important that the competition rules are formulated in such a way as to ensure they do not fall foul of the law. The definition of a 'lottery' is particularly relevant in this area of the law.

Should a competition fall within this definition then it will be illegal unless it qualifies as one of a limited number of exemptions. In deciding whether or not a competition is classed as a lottery there are three main criteria. These are:

There must be a distribution of prizes. This is not limited to money prizes.

The winning of the competition must be by means of chance.

There must be some actual contribution made by participants in return for them obtaining a chance to take part in the competition.

It is to avoid falling within this definition that competitions often involve a tie-breaker question where entrants must, for example, complete a limerick.

This is intended to add a skill element. Likewise, competitions stating that no purchase is necessary aim to get around part three of the above criteria.

While these competitions prove extremely beneficial, the start-up and printing costs are often fairly substantial. It is, therefore, important to ensure the validity of any competition while planning is still in its early stages.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.