Free prize draws could be cannibalizing lottery

During the third quarter of the year, the percentage of individuals participating in gambling activities in the UK held steady at 48%. However, Andrew Rhodes, CEO of the Gambling Commission (GC), posits that the surge in free prize draws may be undermining the traditional licensed lottery sector.

A recent survey conducted by the Gambling Commission, which involved 4,675 adult participants, addresses trends in gambling behavior through the latest wave of the Gambling Stakeholder Behavioural Survey (GSGB). The findings reveal that 48% of respondents engaged in gambling within the previous four weeks, consistent with data from both Q1 and Q2.

At the Betting and Gaming Council’s Annual General Meeting on February 27, Andrew Rhodes remarked on the notable increase in activity associated with free prize draws. These types of draws, which fall outside the purview of the Lotteries Act, are not classified as gambling under current legislation, thus omitting them from the survey data.

“The rise of large-scale prize draws has been remarkable,” Rhodes stated to BGC members, emphasizing the growth in participation of these draws.

Rhodes highlighted that sales from society lotteries have surpassed the £1 billion threshold for the first time, indicating a thriving segment of the market. He noted that participation rates for prize draw products are now comparable to traditional gambling avenues, both in terms of player engagement and average expenditure.

“The engagement levels are approaching parity with both betting and average spend,” Rhodes explained.

On the significance of GSGB data, Rhodes underscored that these surveys, operational since 2023, offer valuable insights into consumer preferences and trends. “The frequency of these gambling surveys in Great Britain allows us to track shifts with an unprecedented level of detail and regularity,” he added.

Debate continues within the industry regarding the need for regulatory oversight of free prize draws, exemplified by platforms like Omaze and Raffle House. Advocates of licensed lotteries argue that these draws possess an unfair advantage due to their unregulated status, while proponents of free draws maintain that their products are lower-risk and should not be classified as gambling.

The Reign of the Lottery in the UK

According to the recently published Q3 data (February 27), 20% of respondents exclusively participated in lottery draws, which encompasses both the National Lottery and other licensed charity lottery initiatives. This figure mirrors the participation rates from Q2. Excluding lottery-only players, overall gambling participation adjusts to 28%, remaining consistent with the previous quarter’s statistics.

Among all demographics, male participants aged 45 to 54 dominated gambling activities, although when isolating lottery-only players, men aged 25 to 34 represented the largest group. Interestingly, the overall gender breakdown indicated that women were more likely to engage in gambling, accounting for 56% of active players in the previous four weeks versus 44% for men.

In terms of preferences, the National Lottery emerged as the most popular form of gambling at 31%, followed by charity lotteries at 16%. Other prominent gambling options included scratchcards at 22%, sports betting at 10%, and online instant win games at 7%.

Decline in Non-Lottery Online Gambling in Q3

Regarding online gambling habits, 38% of individuals reported engaging in online gaming, indicating a slight increase from the 37% recorded in the preceding period. However, this figure drops to 15% once lottery-only participants are excluded, which the GSGB identifies as a “significant decline” from the 17% noted in wave two (Q2).

For in-person gambling, participation decreased slightly from 29% in wave two to 28%. After removing lottery-only players, the in-person rate remains steady at 18%, aligning with wave two figures.

Players Persist in Pursuit of Major Wins

When exploring motivations for gambling, participants largely cited the “chance to win big money” as their primary reason. Additionally, a considerable number of respondents expressed that they engaged in gambling for enjoyment.

The next installment of the quarterly publication—wave four, covering the three months ending in December—will be unveiled on May 22, providing further insights into emerging trends and consumer behavior in the UK gambling industry.