UKGC license vs free-entry route
The two legal structures every UK raffle operator picks between, demystified. When you need a Gambling Commission license, when you don't, and the practical implications either way.
TL;DR
- · UKGC license is required if you run a paid-only lottery, a society lottery above small thresholds, or a remote gambling product. It costs money, time (3-6 months KYC) and ongoing compliance work.
- · Free-entry route means your competition isn't legally a lottery — anyone can enter for free by post, so payment doesn't confer entry. No UKGC license needed. This is what nearly every commercial UK raffle site you've seen actually runs.
- · Pick the license only if you're raising for a registered charity (society lottery) or operating a true gambling product. Otherwise the free-entry route is faster, cheaper, and gives you more product flexibility.
- · Either way, you owe corporation tax + VAT on revenue. The license question is about gambling regulation, not tax.
The two paths in one paragraph
The UK Gambling Act 2005 defines a lottery as a scheme where (1) people pay to participate, (2) prizes are awarded, and (3) winners are determined wholly by chance. Hit all three and you need a license. Break any one and you don't — which is why the free-entry route works. It removes the "pay to participate" condition by guaranteeing free entry too.
Both structures can run the same consumer-facing experience: a customer picks a prize they want, "buys" entries, and watches a draw. The legal plumbing underneath is what differs.
When you actually need a UKGC license
You need a UK Gambling Commission license if you're operating a lottery — paid-only entries, prizes by pure chance, no skill, no free route. The two practical scenarios this happens in are society lotteries (raising for a registered charity or non-commercial society) and commercial remote gambling (online casino, instant-win-as-product, etc.).
Society lottery licenses come in two tiers: small (up to £20,000 in ticket sales per draw, registered with your local council) and large (above that, regulated directly by the Gambling Commission). Both require at least 20% of proceeds to go to the named good cause. Set-up fee, annual fee, ongoing reporting, and audit obligations apply.
Remote gambling operator licenses are required for commercial online gambling — casinos, sports betting, true-lottery raffle products without a free route. Application is 3-6 months, requires extensive KYC, anti-money-laundering systems, age verification, and ongoing reporting. Fees scale with turnover.
If you're a for-profit business running a free-entry raffle, neither license applies to you. The free-entry route puts you outside the Gambling Act entirely — you're a competition operator, not a gambling operator.
When the free-entry route is enough
If your raffle business is for-profit, sells "entries" to a prize draw, and offers a genuine free entry method alongside the paid one, you don't need a UKGC license. You're running a competition with a payment-optional entry path — which legally isn't a lottery.
The Gambling Commission's own guidance on prize competitions and free draws sets out the rules. The critical compliance points are: the free entry method must be genuinely available (a real postal address, not a hidden P.O. Box), free entries must have the same chance of winning as paid entries, and the free option must be advertised prominently — not hidden in 8pt grey text at the bottom of the page.
The cost of this route is minimal: a real postal address, an admin process to log free entries into the same draw pool, and an audit trail. The legal review costs around £500-£2,000 one-off for a solicitor to sign off on your T&Cs and free-entry process.
Side-by-side: license vs free-entry
| Aspect | UKGC License | Free-entry route |
|---|---|---|
| Setup time | 3-6 months KYC | 1-2 weeks (legal review) |
| Setup cost | £1,000s in fees | £500-£2,000 legal review |
| Ongoing compliance | Annual fees, audits, reports | Audit trail of free entries |
| Can be for-profit | Only for commercial gambling tier | Yes, fully |
| % required to charity | 20% (society lottery) | 0% |
| Advertising allowed | With operator-license terms | Yes, subject to ASA rules |
| Product flexibility | Constrained by license terms | High |
Tax implications of each
Both structures attract normal UK corporation tax. The license vs free-entry choice doesn't change your tax position, but it does change which extra taxes apply.
Licensed gambling operators pay Gambling Duty on top of corporation tax — typically Remote Gaming Duty (21%) on the gross gambling yield. Society lotteries get a different, lighter regime.
Free-entry route operators are not gambling operators, so no Gambling Duty applies. You pay normal corporation tax (currently 25%) on profits, and VAT (20%) on revenue if your turnover exceeds the registration threshold. Ticket sales for prize draws are typically VATable — confirm with an accountant.
In rough terms: the free-entry route is materially more tax-efficient than holding a remote gambling license for the same revenue.
Advertising implications of each
The advertising rules differ meaningfully. Free-entry route operators have more freedom; licensed gambling operators face stricter Advertising Standards Authority (ASA) and Committee of Advertising Practice (CAP) constraints.
Licensed gambling ads must follow CAP's gambling-specific rules: no targeting under-18s, responsible-play messaging, no urgency tactics, no exploiting vulnerable groups. The watershed (9pm) applies to TV. Influencer partnerships have specific disclosure rules.
Free-entry route ads still follow standard ASA rules but escape gambling-specific constraints. You can advertise freely to adult audiences, run influencer campaigns with normal sponcon disclosure, and aren't bound by gambling-specific tone restrictions. The free entry route itself must be prominently disclosed in the ad — this is the one place the ASA has rapped operators repeatedly.
How to choose for your business
- · Pick the free-entry route if you're a for-profit business, want to launch fast, want product/marketing flexibility, and don't need to raise money for a registered charity. This is 95%+ of commercial UK raffle businesses.
- · Pick a society lottery license if you're a registered charity, sports club, or non-commercial society raising funds. The 20%-to-good-cause requirement is structurally aligned with that mission.
- · Pick a remote gambling operator license only if you're building a true gambling product (casino, sportsbook, paid-only lottery). For raffle/competition use cases, this is the wrong tool.
FAQ
Is the free-entry route a loophole?
No — it's an explicit, intended structure under the Gambling Act 2005. The legislation literally defines a lottery as requiring paid entry; making entry optionally free puts your competition outside the definition. It's not a loophole, it's the design.
Can I switch from free-entry to licensed later?
Yes, but it's rare. Most operators run free-entry indefinitely. If you grow to scale where a remote gambling license makes commercial sense (rare for a raffle business), you'd apply separately and run them as different products.
What if I run a skill-based competition instead?
Skill-based competitions (the "tiebreaker question" model) are a third option that also avoids the lottery definition — but the skill must be genuine, not trivial. Most operators combine skill + free entry to be doubly safe. We cover this in detail in the launch guide.
Do I need to register the business separately for the free-entry route?
No specific registration — you operate as a normal UK limited company. The "free-entry route" describes how you structure entries to your competitions, not a separate legal entity.
Has the Gambling Commission ever challenged a free-entry operator?
Yes — when the free entry route was inadequate (hidden, hard to use, or paying entries had a higher win probability than free ones). When the route is genuine and prominent, operators have not been successfully challenged. Get the route right and you have a defensible structure.
Continue reading
The free-entry route explained
ASA-compliant copy, postal handling, draw-pool logistics, the audit trail you need.
How to start a UK raffle business
Legal structure, tech stack, costs, marketing, common mistakes — full launch playbook.
Raffle platform comparison
Template SaaS vs traditional agency vs licensed multi-tenant — 11-point matrix.
Pricing
Launchpad from £99/mo, Growth Partner revenue-share, or Enterprise bespoke.
Ready to launch?
Turbo IT's Launch tier ships every tenant with the free-entry admin tools, postal-address handling, and audit trail — the compliance plumbing is built in. £99/mo + 19p per ticket, live in 1-2 weeks.