A new report by nfpResearch and the Lotteries Council warns that unregulated million-pound prize draws—like those operated by Omaze and Raffle House—are threatening the future of charity lotteries in the UK. While both formats offer games of chance with potential benefits for good causes, they operate under starkly different regulatory conditions.
Charity lotteries are highly regulated under the 2005 Gambling Act, must donate at least 20% of their ticket sales to charity, and face strict oversight from the Gambling Commission. In contrast, prize draws exploit a legal loophole that allows them to bypass regulation by offering a “free entry” option via post. These draws, although commercially driven, present themselves similarly to lotteries, leading to public confusion and a lack of transparency.
The report outlines 12 key regulatory differences, including the ability of prize draws to:
- Offer multimillion-pound prizes without limits.
- Operate for private profit with minimal charitable return.
- Avoid licensing, age restrictions, and advertising controls.
Despite their unregulated status, nearly 70% of the public incorrectly believe that prize draws are regulated like charity lotteries. Moreover, only 32% realize that companies like Omaze are profit-driven. This misperception damages consumer trust and undermines support for traditional, regulated charity lotteries.
The public strongly supports reform: 81% of respondents agree that all games of chance that claim to support good causes should operate under uniform regulations. The report calls for the UK government to “level the playing field”, suggesting four policy options, from banning dual entry routes to lightly regulating prize draws while deregulating certain constraints on charity lotteries.
If no regulatory changes are made, the report warns that the sector could face a gradual decline, where charity lotteries are replaced by commercial prize draws offering lower returns to charities and fewer consumer protections. Without intervention, the current model risks becoming unsustainable and may erode vital fundraising streams for hundreds of UK charities.
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