Coast Competitions Guide · Legal
UK Lottery Rules: Who Can Run a Lottery, Raffle or Prize Draw?
British law is unusually clear about who may run a lottery and unusually generous about small ones. A raffle at a school fete, a sweepstake in the office and a charity's weekly draw are all lotteries, and each has its own set of rules. This guide walks through every category the Gambling Act 2005 allows, the limits attached to each, and where paid prize competitions like ours fit into the picture.
Last updated 25 September 2026 · Written by Coast Competitions
Key Takeaways
- What a lottery is
- Payment to enter, prizes on offer, and a result decided wholly by chance. Raffles, tombolas and sweepstakes are all lotteries in law.
- No licence needed
- Incidental lotteries at events, private society, work and residents' lotteries, and customer lotteries, each with strict conditions and no private profit.
- Registration or licence
- Small society lotteries register with the council (£20,000 per lottery, £250,000 a year). Larger ones need a Gambling Commission licence.
- Outside the Act
- Skill-based prize competitions and free draws are not lotteries, which is how commercial operators run paid prize draws legally.
What the law counts as a lottery
The Gambling Act 2005 defines a simple lottery by three elements. People pay to take part. One or more prizes are allocated. And the prizes are allocated by a process that relies wholly on chance. Where all three are present, you have a lottery, whatever you call it. A raffle, a tombola, a 100 club, a sweepstake and a prize draw with paid entry and a random winner are all lotteries in law.
The default position is that running a lottery is a criminal offence unless it falls into one of the permitted categories. The categories fall into three groups: lotteries that need no permission at all, society lotteries that need registration or a licence, and the National Lottery, which is a separate regime with a single licensed operator. Everything else is unlawful, and in particular no lottery may be run for private or commercial gain.
Lotteries you can run without any permission
Five kinds of lottery are exempt from licensing and registration, provided every condition is met. The best known is the incidental lottery, which is a raffle held at a non-commercial event such as a school fete, a village fair or a charity dinner. Tickets must be sold at the event, no more than £100 of the proceeds may go on expenses and no more than £500 on prizes, although donated prizes do not count towards the £500. The result can be drawn at the event or afterwards, and none of the proceeds may be kept as profit.
A private society lottery is run by a club or society for its own members and their guests, with tickets sold only on the society's premises. A work lottery covers people who work at a single set of premises, and a residents' lottery covers people who live at one. In all three, every ticket must cost the same, tickets cannot be sold to outsiders or advertised outside the premises, and the lottery may not make a profit: everything goes on prizes, reasonable expenses or, for a society, its own purposes. Two offices in different towns are two sets of premises, so a company-wide raffle across sites does not qualify.
The fifth exemption is the customer lottery, run by a business for customers at one set of premises. It is the most restricted of all: no prize may exceed £50, no profit may be made, there can be no rollover, and no more than one draw may take place in any seven day period. It exists for the shop counter raffle and very little else.
Small society lotteries
A society is any non-commercial organisation established for charitable purposes, for sport, athletics or culture, or for any other purpose that is not private gain. When a society wants to sell lottery tickets to the general public, it must register with the licensing authority for the area where its principal office is located. Registration costs £40 and renewal £20 a year. Once registered, the society may sell up to £20,000 of tickets in a single lottery and up to £250,000 across all its lotteries in a calendar year.
Other conditions follow. No single prize may be worth more than £25,000, even if it was donated. At least 20% of the gross proceeds of each lottery must be applied to the society's purposes, which leaves up to 80% for prizes and expenses combined. Every ticket must cost the same, tickets may not be sold to anyone under 16, and they may not be sold in the street or in the walkways of shopping centres. Within three months of each draw the society sends the council a return showing the proceeds, the prizes, the expenses and the amount that went to the good cause.
Large society and local authority lotteries
A society that expects to exceed either the £20,000 per lottery or the £250,000 per year threshold needs an operating licence from the Gambling Commission. Licensed society lotteries can sell up to £5 million of tickets in a single lottery and £50 million across a calendar year. The maximum prize is £25,000 or 10% of the proceeds, whichever is greater, subject to an overall cap of £500,000, and rollovers are allowed within that cap. The 20% minimum to the good cause still applies. This is the regime that covers the big charity lotteries and hospice draws, and local authorities may run lotteries under the same rules for their own purposes. Many licensed societies use an external lottery manager, which itself needs a Commission licence.
The National Lottery
The National Lottery sits outside the Gambling Act framework altogether. It is governed by the National Lottery etc. Act 1993, operated under a single licence held since 2024 by Allwyn, and regulated by the Gambling Commission under separate powers. It is the only lottery in the country with no cap on proceeds or prizes, and since 2021 the minimum age to play has been 18 rather than the 16 that applies to society lotteries.
What you cannot do
The rule that catches most people out is the ban on private profit. An individual cannot sell paid raffle tickets to the public and keep the money, even for a genuinely good prize, and doing so on Facebook or in a WhatsApp group does not change the analysis. The Gambling Commission has taken action against personal online raffles for years and continues to warn about them. Equally, a business cannot boost sales with a paid prize draw decided purely by chance, because that is a lottery run for commercial gain.
Where prize competitions and free draws fit
Because commercial lotteries are prohibited, businesses that want to run paid prize draws do so by removing one of the three lottery elements. Remove the payment and you have a free draw, which is why every purchase-to-enter promotion must also offer a free entry route that is treated equally. Remove the element of pure chance by requiring entrants to answer a genuine skill question and you have a prize competition, which the Act expressly puts outside the definition of gambling.
Most UK online prize competition operators, including Coast Competitions, use both belts: a skill question before purchase and a free postal entry route in the terms. That is what allows a paid draw for a car or a cash prize to run lawfully without a Gambling Commission licence. The detail is in our guides on whether prize competitions are legal and the difference between a prize draw and a lottery.
The limits at a glance
| Type | Who can buy | Key limits | Permission |
|---|---|---|---|
| Incidental lottery (at an event) | Anyone attending the non-commercial event | Max £100 expenses and £500 on prizes from proceeds. Tickets sold at the event only. No private profit. | None |
| Private society lottery | Members of the society and guests, on the premises | Proceeds only to prizes, expenses and the society's purposes. No rollover. | None |
| Work or residents' lottery | People who work or live at one set of premises | No profit at all. Same price for every ticket. Not advertised outside the premises. | None |
| Customer lottery | Customers at one set of business premises | Max £50 per prize. No profit. No rollover. No more than one draw every seven days. | None |
| Small society lottery | The public, aged 16 or over | Max £20,000 per lottery, £250,000 a year, £25,000 top prize. At least 20% to the good cause. | Register with the local council |
| Large society or local authority lottery | The public, aged 16 or over | Max £5 million per lottery, £50 million a year. Top prize £25,000 or 10% of proceeds, capped at £500,000. | Gambling Commission licence |
Summary
A lottery is paid entry, prizes and pure chance. Small raffles at events, among members, at work or among residents need no permission but may not make a profit. Good causes that sell to the public register with the council up to £20,000 a lottery and £250,000 a year, and need a Gambling Commission licence beyond that. Nobody may run a lottery for private gain, which is why commercial operators run skill competitions and free draws instead. To see that model in practice, browse Coast Competitions' live draws or read our overview of online raffles in the UK.
Frequently Asked Questions
- It depends on the type. A raffle at a one-off event such as a school fete, a raffle among members of a club, a workplace or residents' raffle, and a small society lottery for a good cause can all be run without a Gambling Commission licence, although a small society lottery must be registered with the local council. A lottery run for private or commercial gain needs a licence and, in practice, cannot be run at all by an individual.
- Yes, as a work lottery. Tickets can only be sold to people who work at the same single set of premises, every ticket must cost the same, and the raffle cannot make a profit: all the proceeds must go on prizes or reasonable expenses. It cannot be advertised outside the workplace and cannot be run online across multiple sites.
- Not as an individual selling paid tickets. A paid raffle open to the public, with the winner chosen by chance, is a lottery under the Gambling Act 2005 and needs to be either a registered society lottery for a good cause or a licensed lottery. The Gambling Commission has repeatedly warned that personal Facebook raffles for profit are illegal lotteries. Businesses that want to run a paid prize draw use a skill question and a free entry route so the promotion is a prize competition rather than a lottery.
- Up to £20,000 in ticket sales in a single lottery and £250,000 across all lotteries in a calendar year. No single prize can be worth more than £25,000, at least 20% of the proceeds must go to the society's purposes, and the society must be registered with its local licensing authority, which costs £40 initially and £20 a year to renew.
- No. Lotteries in Great Britain can only be run for good causes, by local authorities, or as the National Lottery. The exemptions for incidental, private society, work, residents' and customer lotteries all prohibit private profit. A business or individual that wants to charge for entry to a prize draw must structure it as a skill-based prize competition or a free draw instead.
- Legally there is none. A raffle, a tombola, a sweepstake and a 100 club are all lotteries: someone pays to enter, prizes are awarded, and the outcome depends wholly on chance. The word raffle is just the everyday name. What matters is which of the Gambling Act's lottery categories the draw falls into, because that decides whether it needs registration, a licence, or neither.
Disclaimer
This guide summarises the lottery provisions of the Gambling Act 2005 as they apply in England, Scotland and Wales in 2026. Northern Ireland has separate legislation. It is general information rather than legal advice. Anyone planning to run a lottery should read the Gambling Commission's guidance and check with their local licensing authority.