Coast Competitions Guide · Legal
Prize Draw vs Lottery: What Is the Difference in the UK?
“Prize draw”, “lottery” and “raffle” get used interchangeably in everyday speech, but in UK law they are very different products with very different rules. This guide explains where the Gambling Act 2005 draws the line, why it matters for the draws you enter online, and how to tell at a glance which one you are actually looking at.
Last updated 18 August 2026 · Written by Coast Competitions
Key Takeaways
- The legal line
- Pay to enter plus prizes allocated wholly by chance equals a lottery, which needs a licence. Add genuine skill or a free entry route and it becomes a prize competition, which does not.
- Is it gambling?
- Skill-based prize draws are not legally gambling. They sit outside the Gambling Act's definitions of lottery, betting and gaming.
- Raffles
- A raffle is legally a small lottery. Paid online 'raffles' from commercial operators are almost always prize competitions in disguise.
- Spend sensibly
- Not being gambling in law does not change how spending feels. Set a budget and treat entries as entertainment, never as an investment.
The three words and what they legally mean
A lottery has a precise definition in the Gambling Act 2005. People pay to enter, one or more prizes are awarded, and the prizes are allocated wholly by chance. Running a lottery is a criminal offence unless you hold an operating licence or fit a narrow exemption, and licensed lotteries must give a share of proceeds to good causes.
A raffle is not a separate legal category. It is simply a lottery, usually a small one. The tombola at a school fete runs legally under an exemption for incidental non-commercial lotteries. A company selling chance-only raffle tickets online has no such exemption, which is why you will not find legitimate commercial operators doing it.
A prize draw, when run as a skill-based prize competition, is deliberately engineered to fall outside the lottery definition. The operator either introduces a genuine element of skill that prevents a meaningful number of people from entering or winning, or provides a free entry route so that entry does not depend on payment. Do both and the product is neither a lottery nor gambling of any kind, so no licence is required. Our guide on whether prize competitions are legal covers the case law on what counts as genuine skill.
Is entering a prize draw gambling?
Legally, no. The Gambling Act regulates three activities: betting, gaming and lotteries. A compliant skill-based prize competition is none of the three, which is why the Gambling Commission does not regulate these products and why operators can accept entries without age and affordability checks that a casino would need. Most reputable operators still self-impose an 18+ rule and responsible play tools.
Practically, the distinction deserves honesty: paying small amounts for a chance at a large prize feels similar whichever legal box it sits in. The sensible approach is the same as with any entertainment spend. Decide what it is worth to you, stick to it, and use the operator's limits if they help. Coast Competitions' approach is set out on our responsible play page.
Why the National Lottery is allowed to be chance-only
The National Lottery runs under a dedicated licence, and society lotteries run by charities, hospices and sports clubs are licensed by the Gambling Commission or registered with local authorities. Those licences permit paid chance-only draws precisely because the proceeds are ring-fenced for good causes and the operators are supervised. A commercial prize draw business has no route to that kind of licence, so the skill question and free post route are what keep it lawful.
How to tell which one you are looking at
Three quick checks settle it. First, the promoter: if the small print names a licensed lottery operator or a registered society, it is a lottery; if it names a limited company selling entries as its business, it is a competition. Second, the entry mechanic: a paid entry with no question and no free route is a lottery mechanic, and if a commercial site offers it, that is a red flag rather than a bargain. Third, the destination of the money: lottery tickets fund good causes by law, while competition revenue funds the prizes and the operator's business.
A legitimate skill-based operator will show you a genuine multiple choice question before payment, publish a free postal entry route in its terms, and display its company number and registered address in the footer. The full checklist for vetting an operator is in our complete guide to UK prize competitions.
Summary
Lotteries are paid, chance-only and licensed, with proceeds going to good causes. Raffles are small lotteries. Skill-based prize draws are neither: the skill question and free entry route move them outside the Gambling Act entirely, which makes them legal for commercial operators and means they are not classed as gambling. To see how a compliant draw runs end to end, read how prize draws work or browse the live competitions to see the mechanics in practice.
Frequently Asked Questions
- A skill-based prize draw is not gambling under UK law. The Gambling Act 2005 regulates lotteries, betting and gaming. A prize competition that includes a genuine skill element or a free entry route falls outside all three categories, so it is not classed as gambling and does not need a Gambling Commission licence.
- A lottery is a draw where people pay to enter and prizes are allocated wholly by chance. Lotteries are strictly regulated and generally reserved for good causes. A prize draw run as a skill-based competition adds a genuine skill question and a free entry route, which takes it outside the legal definition of a lottery.
- Yes. In UK law a raffle is simply a form of lottery, usually a small one. That is why commercial businesses cannot legally sell chance-only raffle tickets online without a licence, and why paid online 'raffles' are almost always structured as skill-based prize competitions instead.
- The National Lottery operates under its own licence granted by the Gambling Commission, and society lotteries such as hospice or air ambulance lotteries are licensed or registered separately. Those licences allow chance-only paid draws. A commercial prize draw operator has no such licence, which is why the skill question and free entry route exist.
- Check three things. Who runs it: a licensed operator or society means a lottery, a company means a competition. How you enter: chance-only paid entry means a lottery, a skill question or free route means a competition. Where the money goes: lottery proceeds must partly fund good causes, competition revenue is the operator's business income.
Disclaimer
This guide is general information about UK law as it stands in 2026, not legal advice. If you are thinking of running a prize promotion yourself, take professional advice before launch.