Prize Competition vs Lottery: What's the Difference?
This is an independent, informational guide for UK readers and is not affiliated with the organisations mentioned. It is provided for general information only.
The difference comes down to how you win. A lottery is pure chance and needs a gambling licence; a prize competition uses a genuine skill question, or a free entry route, to stay outside lottery rules and so is not classed as gambling. That single distinction shapes how each is regulated.
The legal dividing line
In UK law a lottery is a game where you pay to enter and the result is purely chance — that needs a licence and is gambling. A prize competition is different: it requires genuine skill or judgement to enter, which keeps it outside lottery rules.
A free prize draw is a third category: if entry is genuinely free, it is not gambling either.
How competitions stay legal
Paid competition sites use one of two routes under the Gambling Act 2005. Either they include a skill question that a meaningful number of people would get wrong, or they offer a free entry route — usually by post — on equal terms to paid entry.
That is why those sites ask you a question or accept postal entries before a draw.
What it means for you
Because competitions are not licensed gambling, the Gambling Commission's player protections don't apply. You rely instead on the operator's terms and on general consumer law.
Lotteries, by contrast, are licensed and regulated, with the National Lottery overseen by the Gambling Commission.
Free prize draws
There is also a third option: a genuine free prize draw, where there is no payment to enter at all. With no stake, it is not gambling either.
Many competition sites combine a paid route with a free postal route precisely so they fit this framework.
The distinction matters because it tells you what protections you have. With a licensed lottery, a regulator stands behind the game; with a competition or free draw, you are relying on the operator's terms and on consumer law. Knowing which you are entering helps you judge what to check before you part with any money.
Is a prize competition the same as a lottery?
No. A lottery is pure chance and needs a gambling licence; a competition uses skill or free entry to stay outside gambling rules.
Why isn't a prize competition gambling?
Because it requires genuine skill, or offers a free entry route, which takes it outside the legal definition of a lottery.
Which is better regulated?
Lotteries are licensed gambling with formal player protections; competitions rely on their own terms and consumer law.
What is a free prize draw?
A draw you can enter without paying anything; because there is no stake, it is not classed as gambling.
Related guides: Are prize competitions legal?, How online raffles work, What is a society lottery?
18+ only. Gambling should be fun, not a way to make money. If you are worried about your gambling, or affected by someone else's, free and confidential help is available from the National Gambling Helpline on 0808 8020 133, from BeGambleAware.org, and through the self-exclusion scheme GAMSTOP. You must be 18 or over to gamble.