10 practical tips for running a prize draw in 2026

The New Year has arrived, and businesses are naturally sharing their most anticipated offers and promotions to stand out from the crowd and attract new customers. Prize draws can be a key part of this strategy, providing customers with a unique, fun opportunity to engage with your brand.

Defining a prize draw

In recent years, prize draws have soared in popularity, with around 7.4 million UK adults participating each year, according to Gov.uk. This provides a great opportunity for businesses looking to enhance brand visibility, customer engagement, and sales.

Unlike a competition, which relies on skill, or a lottery, which entrants pay to enter, a prize draw is generally free to enter, and winners are selected at random.  Due to the free entry route, prize draws do not currently require a license under the Gambling Act 2005.

Alternatively, entrants may be required to purchase a product with the aim of winning a prize. In some cases, businesses can even charge for a prize draw as long as a free route of entry is provided. 

How to run a prize draw

While running a prize draw may not seem like the most complicated process, there are a number of legal considerations you need to make to stay transparent and compliant.

It is important to run a prize draw correctly, otherwise you could face legal action from entrants, a referral to the regulator (including the Competition and Markets Authority) and bad publicity.

Here are 10 practical tips that you need to consider when running a prize draw. 

1.       Make sure your terms and conditions are clear and transparent

Make sure participants accept your prize draw terms and conditions and your privacy policy or notice before participating in a prize draw.

Separately, don’t use ambiguous or unclear language in your terms and conditions.

2.       Explain how to enter.

Explain to participants how they enter the prize draw. This might seem obvious, but it is often overlooked! If the participant needs to scan a QR code or fill out a form to enter, tell them.

3.       Be upfront about cost of entry.

Be upfront about whether there are any costs incurred by the participant to enter the prize draw, for example, the cost of purchasing an item, or paying for a normal rate telephone call to enter the prize draw.

4.       Tell participants what the prize includes.

Explain clearly what the prize includes, and in some cases what it does not include -which leads onto our next tip.

5.       Highlight any additional costs.

Make participants aware of any additional costs they may incur in order to use the prize, for example, additional travel costs.

6.       Don't discriminate.

Make sure your prize draw does not discriminate against participants, for example on grounds of disability, race, age etc.

7.       Privacy policy.

Ensure that your privacy policy or notice is referred to in your prize draw terms and conditions.

8.       Sharing data

If you share personal data with external third parties to carry out the prize draw, tell participants in your privacy policy or notice that you intend to do so.

9.       Direct marketing.

If you want to send direct marketing to people who have entered your prize draw, you must not make signing up for a newsletter or other marketing and communications a prerequisite to entry. You may invite them to subscribe to your newsletter or other marketing and communications, but this must be separate from entering the prize draw.

10.  Get consent.

It is always best to obtain the consent of the winner before you publicly announce that they have won the prize draw.  

If you would like more information on running your prize draw compliantly, please contact David Wozniak or Rhiannon Hastings.