The end of the school holidays this year sees the advent of an entirely new statutory regime governing gambling in this country. At long last, the Gambling Act 2005 came fully into force over the weekend – its provisions have important implications, not only for bookmakers and casinos, but for all organisations engaging in advertising and marketing.

Businesses operating prize draws and competitions to encourage sales will be aware of the danger of such schemes amounting to illegal lotteries. Criminal offences await the unwary. The aim of the new provisions is to seek to ensure that genuinely free prize draws and competitions are free from statutory control. Businesses will find therefore that there are, in fact, some significant changes allowing greater scope for marketing activity. For example, it is now likely to be permissible to operate a prize promotion linked to the purchase of a product (such as a breakfast cereal) provided that the price of the product is not augmented to reflect the chance of winning a prize. The “no purchase necessary” entry routes (previously employed to satisfy the old law) can now potentially be avoided.

However, those seeking to take advantage of the new rules must exercise caution. The Act is not as clear as it might be and there are still significant areas of uncertainty. It is not yet clear how the new regulator, the Gambling Commission, will interpret the new law and criminal penalties remain the ultimate sanction.

In addition, the advent of the new legislation is, sooner or later, likely to herald a crackdown in terms of enforcement. The period of relative quiet and widespread non-compliance with law, which has persisted in the time between Parliament’s passing of the new legislation and it coming into force, is not likely to continue for long. The Gambling Commission as a new regulator is likely to be seeking to assert its authority. It has been tasked with achieving the government’s aim for the legislation: “keeping crime out of gambling, by ensuring that gambling is conducted fairly and openly, and by protecting children and vulnerable people from being harmed or exploited by gambling”. This is likely to extend to looking to limit the public’s exposure to prize promotions constituting illegal lotteries. Recent scandals around TV phone-in competitions can only serve to increase attention on these everyday tools for marketers and advertisers.

Wise counsel therefore is to take legal advice before operating any prize draws or competitions. In that way businesses can seek to take advantage of potentially greater freedoms whilst avoiding the many pitfalls.