Your home as a raffle prize

The Wilshaw family recently devised a competition for their house after they failed to sell it through normal means. They sold 46,000 tickets priced at £25 to the draw via a website. Those participants who put in a wrong answer to the question posed (which related to fishing licences) were told to try again. The tickets could not be purchased until the correct answer was given. It seems that in these uncertain times, those seeking to sell their homes are resorting to unconventional tactics.

Private lotteries

In essence, promotions where prizes are distributed by chance following payment are illegal, as per the Gambling Act 2005. However, a number of promotions are exempted from sanction, one example being 'incidental non-commercial lotteries'. Since it is a pre-requisite of exemption that no sum raised can be appropriated for private gain, this could not help the Wilshaws.

Defining a lottery

Section 14 defines a lottery as one where payment is made to participate. 'Payment' is defined to include the transfer or money or money's worth and hence covered the Wilshaws. The Act does, however, disregard any payment for a product sold at its normal price. This would have allowed them instead to have required each entrant to acquire some household item (for example, detergent) which the family could itself buy and then sell to each entrant at the price they paid the supermarket. The Act does not say the goods sold by the party running the promotion must be those in which he normally trades, or indeed trades at all.

Injecting skill

Lotteries are illegal only if winning depends on chance. The Act does, however, ensure that any skill deployed is not derisory. It stipulates that winning will be regarded as being 'by chance' if the question posed would

(a) not prevent a significant proportion of entrants from getting the right answer; and (b) would not deter a like proportion from taking part.

This may be easy to understand, but it is not easy to apply, as disagreement within the Gambling Commission readily shows. When asked what level of skill would suffice when the answer to a question could be easily found on the web, the Commission replied: 'Single questions can qualify as tests of skill or judgment even when the answer can easily be found on the internet. It does not matter that the answer can be found from basic research on the internet. If this was the case then it would rule out virtually every question and answer skill competition. It is clear that a person is not eligible to enter the draw without answering the question properly, which stops it being a lottery.'

The Commission, however, later retracted this advice, and stressed that each case must depend on its individual facts.

The problem is that what might appear to be less than taxing questions, can appear to pose considerable difficulties to a sizeable number of people. A survey of 2,000 UK citizens in 2004 revealed that 53 per cent of those questioned believed that Nelson was the commander of the troops at Waterloo. In Andren v Stubbings (The Times, 16 October 1924), prizes were awarded to those who bought a box of matches and who could distinguish a match burning with a green flame as opposed to the normal blue. The court did not regard this as a true test of skill. Yet much mental acuity has to be deployed to distinguish one colour from another: the fact that many people can do it does not mean that the task is not inherently skilful. In the situation posed by the Gambling Commission, there is no small skill in devising the rights words to put into a search engine before the desired response is achieved.

Are houses legitimate prizes?

It may be, however, that the simple answer to the problem faced by the Wilshaws is that the Act does not apply when the prize is a house. Section 14 defines a prize as including 'any money, articles or services'. This cannot be read as applying to real property. The counter-argument is that the definition is inclusive and hence could be so read where necessary. Even so, the omission of any specific reference to houses, or real properly generally, seems significant. Section 14 of the Trade Descriptions Act 1968, when outlawing misleading statements, made specific reference to 'accommodation'. The Consumer Protection Act 1987 deals with misleading pricing and refers to 'accommodation'. More recently still, the Consumer Protection from Unfair Trading Regulations 2008 No. 1277, outlawing misleading practices in relation to 'products', defines the latter as including 'immovable property'.

There is also the argument that reading in real property to the definition of 'prize' contained in the Gambling Act would not sit easily with s.14(4)(b). This adds to the definition by stating that a prize is a prize 'whether or not consisting wholly or partly of money paid, or articles or services provided' by those who participate in the promotion. The specific reference here to 'money', 'articles' and 'services', without any indication that these terms are inclusive renders it even more difficult to argue that the term 'prize' embraces real property.

Refuge for brave souls

As the disagreement within the Gambling Commission shows, judging just what amounts to sufficient skill is an impossible task. Other countries, such as Spain and Portugal, have opted for a registration process for prize promotions. Perhaps the braver souls in the property market should, therefore, take refuge in the argument that, by oversight or design, the Gambling Act does not extend to those cases where the prize is a house.