A lot of UK competition businesses start the same way. A post with a great prize, entries paid by bank transfer, a spreadsheet of names, and a live draw with a random name picker. It works well enough to prove people want what you're offering, which is the hardest thing to prove.
It also has gaps, and they get bigger as you grow. Here's where they are and what fixing them looks like.
General information, not legal advice
This is a practical overview, not legal advice. If you're running paid competitions now, have a solicitor look at how you do it.
The legal gap: is it actually a lottery?
Under the Gambling Act 2005, if people pay to take part and the winner is picked wholly by chance, it's a lottery, and running a lottery generally needs a licence. A prize competition avoids that in one of two ways, and most operators use both:
- A genuine skill question. It has to be hard enough to stop a significant proportion of people from entering or winning. "Answer in the comments" with a question everyone gets right is unlikely to count.
- A free entry route, usually by post, that's properly publicised and gives the same chance as a paid entry.
A post that takes money by bank transfer and picks a name at random, with neither of those in place, is exactly the setup the law is aimed at. This is the first thing to fix, whatever else you do.
The platform gap: Meta's own rules
Facebook and Instagram have their own rules for promotions, separate from the law. Meta's Pages terms say you're responsible for running a promotion lawfully, that it must make clear Meta isn't involved, and that you can't ask people to share to their own timeline or tag friends as a way to enter. Instagram has similar guidelines. Check the current wording before your next post, because breaking them can get a page restricted.
Paid ads are stricter again. Meta treats prize competitions under its gambling and gaming advertising policy, and you'll usually need advance written permission, often backed by a solicitor's legal opinion, before ads will run.
The money gap: bank transfers
Bank transfers feel simple until you have a few hundred of them.
- Matching payments to entries by hand is slow, and mistakes mean the wrong person in the draw.
- Refunds and disputes are hard to handle cleanly.
- Using a personal account for business payments can break your bank's terms, and it makes your records harder to prove to HMRC.
- Card payments convert better. Most people would rather pay by card than send a transfer to someone they found on Instagram.
Taking cards means a merchant account with a provider that accepts prize competitions, in a business's name. Not every provider does, which is why it's worth starting early.
The trust gap: the draw
A live draw with a name picker looks fair, but nobody can check it afterwards. Was the list complete? Were free entries in it? Was it re-spun? As your prizes get bigger, so do the questions.
A draw people can verify settles them. On Giveawayz, for example, the draw is fixed to a secret committed before the draw and public randomness that nobody controls, and every result gets a page where anyone can check the winner against the full list of entries.
The data gap
Names, emails and addresses collected in messages and spreadsheets are still personal data. You're responsible for keeping them secure, telling people how you'll use them, and deleting them when you no longer need them. You'll almost certainly need to pay the ICO's data protection fee. And emailing past entrants about your next competition needs their consent, or a valid soft opt-in if they bought from you and could say no at the time.
What "proper" looks like
- A business, ideally a limited company, with a business bank account in its name
- Card payments through a provider that accepts prize competitions
- A genuine skill question, plus a publicised free entry route with equal odds
- Written terms that cover what the CAP Code expects: how to enter, the closing date, how the winner is picked and told
- A draw anyone can verify, with results published
- Entrant data stored properly, and marketing only to people who agreed to it
Moving over without losing momentum
You don't have to choose between your socials and a site. Keep your page for what it's best at: showing off prizes, announcing draws and celebrating winners. Send people to your own site to enter. Run your next competition there, tell your followers why ("card payments, a proper free entry route, and a draw you can check"), and post the result when it's done.
Our guide to starting a prize competition business covers the setup steps in order, from the bank account to your first competition.