Running a prize draw can be a brilliant way to build buzz, grow your audience, or reward loyal customers. But as with most feel-good marketing ideas, it comes with a side of legal risk – and no one wants their giveaway to end in a regulatory headache.

The good news? With the right guardrails in place, you can keep your prize draws compliant and fun. Here’s how in-house lawyers can help the business do just that.

First up: know what you’re actually running

Not all promotions are created equal – and the rules shift depending on whether you’re running a draw, a competition, or a lottery:

• Prize draw = chance-based (you randomly pick a winner).
• Competition = skill-based (entrants do or answer something to win).
• Lottery = entrants pay to enter, and the winner is chosen at random.

Lotteries are tightly regulated under the Gambling Act 2005 and usually need a licence. So if your promo involves paying to enter and picking winners at random, hit pause and rethink the format.

The golden rules for legal prize draws

If you want to keep things squeaky clean, here’s your legal checklist:

Make it free to enter

Free means properly free – no premium-rate texts, admin fees, or “buy this to enter” mechanics. Unless you’re a registered charity with the right licence, charging to enter could turn your draw into an illegal lottery.

Pick your winner at random

• No judging panels or “best answer wins” – that would make it a competition. For a prize draw, stick to fair and random selection.

Be clear on your terms and conditions

Your T&Cs should explain:

• who can enter (e.g. UK residents over 18)
• how to enter and when the draw closes
• what the prize is and how winners will be chosen
• when and how winners will be contacted

Make sure they’re easy to find – no burying the juicy details in the fine print.

Keep your data protection house in order

If you’re collecting names and contact details (spoiler: you are), make sure your privacy notice is clear, GDPR-compliant, and says exactly what you’re doing with that data. No cheeky marketing bolt-ons unless people have opted in.

Run it fairly

Don’t move the goalposts halfway through. Don’t cancel the draw because you didn’t get enough entries. And absolutely do not forget to give out the prize.

Common mistakes we see (and how to avoid them)

• Asking for a purchase to enter – That’s a lottery, not a draw.
• Making entry conditional on marketing sign-up – That’s not truly free.
• Skipping the prize delivery – Obvious, yes. But it happens.

Bonus tips for a smooth ride

• Use a third-party platform with built-in compliance features if you’re running things at scale.
• Treat bigger draws (cash prizes, influencer involvement, big reach) like a proper campaign – and get legal involved early.
• Sense-check the whole journey from a customer and compliance point of view – are you being clear, fair, and consistent?

In a nutshell:

Keep it free. Keep it fair. And keep the paperwork tidy. With a little legal input upfront, your marketing team can build buzz without breaking the rules.

‍