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Is your office World Cup sweepstake legal?

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Many of the sweepstakes being run at workplaces ahead of next week's football World Cup are likely to be illegal, according to an expert in gambling law. Sweeps with informal tickets and even those where some proceeds go to charity can be illegal.

As next Friday's World Cup draws nearer, clubs, societies and workplaces are beginning to offer members and colleagues the chance to participate in informal competitions to pick the winner of the World Cup. Entry to the competitions is usually a pound or two, with winners sharing the pot.

But some of these schemes will fall foul of the Gambling Act, according to Susan Biddle, an expert in gambling law at Pinsent Masons, the law firm behind OUT-LAW.COM. Biddle has produced free guidance on the issue.

Even those who run competitions at no profit and those who make a charity donation from proceeds could be committing a criminal act, according to Biddle. The Gambling Act effectively outlaws lotteries and unlicensed betting, even when conducted on a very small scale. There are exceptions to this, but many workplace sweepstakes may have overlooked the steps necessary to qualify for these exceptions.

Sweeps which randomly allocate World Cup teams to people will probably be lotteries, though they can be lawful 'work lotteries' if certain conditions are met. Tickets for work lotteries must be sold at a single location and the sweepstake cannot be advertised anywhere other than those premises.

"The Gambling Act does not explain what is meant by a single set of premises, but Gambling Commission guidance indicates this was intended for the situation where there are multiple buildings on a single site, and that it is not meant to cover multiple sites," said Biddle in the guidance. "So if you have premises on more than one site, you would not be able to run a single sweepstake across more than one of your sites."

The law says that tickets must be in the form of a document and state: the name and address of the promoter; the group of people who are eligible to buy tickets; that the ticket (and the right to any winnings) is not transferrable; and the price of the ticket.

This exemption also only applies if no profits are made from the lottery and all funds are paid out as prizes. This means that any attempt to make a charity donation with some of the proceeds would make the lottery illegal.

A sweepstake that seeks to raise funds for charity can fall within another exemption, but to qualify it must be incidental to a non-commercial event, such as an office party. It would be difficult for a World Cup sweepstake to meet the criteria for this exemption: the tickets must be sold at the party, not in advance, and the winner must be announced before the end of the party. The exemption is unsuited to a tournament that lasts several weeks.

If entrants to a competition actually choose the teams they want to back or predict match results then that competition would be classed as 'betting' under the Gambling Act. Operating a betting scheme without a licence is generally against the law. However, a scheme could be operated under one of two exemptions from the law. The first allows 'workers' betting', but that term is closely defined.

To fall within this exception the betting must take place between people who are all employed by the same employer, according to the Act. "In some workplaces, it may be that the employees are employed by a number of different employers, for example different group companies or because some services have been outsourced," says the OUT-LAW guide. "Where this is the case, any sweepstake open to employees of different employers will not fall within this exception."

The other exemption is for "making or accepting a bet … otherwise than in the course of business", according to the Act. Biddle said that though there is ambiguity about this exemption, it could cover many internal employee-only betting schemes that, again, are tied to an employer.

"Neither the Gambling Act nor the Gambling Commission has to date given any guidance on the scope of this exception," she said. "However, it would seem probable that an internal workplace sweepstake should fall within this exception."

So-called 'prize competitions' are allowed to operate outside of the regulation of the Gambling Act and Gambling Commission but there are strict conditions about what can count as a prize competition.

A scheme which randomly assigned teams to paying entrants could not count, but one in which entrants made choices could satisfy the Gambling Act's demand that prize competitions involve the exercise of skill or judgment.

"The Gambling Act 2005 includes several exemptions which may apply to internal workplace sweepstakes. However it is not always easy to fall within the detail of these exemptions, even if you are trying to raise funds for charity," said Biddle. "If you are thinking about running a sweepstake at work, you need to think carefully about how it is constructed to ensure that you do not inadvertently fall foul of the provisions of the Act and open yourself up to criminal prosecution."

See OUT-LAW's guides:

* Running a sweepstake at work: the law * Running a competition

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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