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House raffles may be illegal, Gambling Commission warns

Written by: John Fitzsimons
House raffles, where properties are given away as prizes to the winner, may fall foul of gambling rules, according to the regulator.

In May, our sister title Mortgage Solutions reported that a local authority had shutdown one homeowner’s raffle of her £1.25m London house.

This was just one of a succession of high profile housing raffles which have garnered national attention, including last week when a woman won a six-bedroom mansion in Lancashire valued at more than £800,000 with just a £2 ticket.

Cliff Young, the Gambling Commission’s lotteries expert, said it was understandable that competitions were becoming more popular for homeowners who were struggling to sell their property via traditional means.

However, he said the commission was concerned that it was seeing instances where the organisers of such competitions were breaking the law by essentially setting up an illegal lottery.

Not for profit

Raffles are referred to as lotteries in gambling law, and there are rules around how they can be run and who can run them. In some circumstances a licence may be needed before a lottery can be promoted.

What’s more, lotteries can only be run for good causes, rather than for private or commercial gain.

Young explained: “Most of the schemes we are aware of have been operated as free draws or prize competitions, which are not caught as gambling under gambling laws.

“We do not regulate free draws or prize competitions and we don’t provide advice on how they should be organised, however, these type of schemes can look similar to lotteries and we do provide some tips on the difference between lotteries, competitions and free draws.”

Legal trouble

Young continued: “Our role is to monitor the boundary between lotteries, competitions and free draws to make sure people who organise lotteries operate lawfully, and if necessary, are properly licensed.

“We really don’t want to see members of the public unintentionally getting caught out by the law and potentially landing themselves in legal trouble by running an illegal lottery,” he added.

He urged anybody thinking of holding such a competition to seek expert legal advice before proceeding.

Last week payments company PayPal confirmed it would no longer allow users to buy tickets for such draws with their PayPal accounts, saying that these draws presented an “unusual challenge”.

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