ASA ruling: Elite Competitions
The company under scrutiny in a recent ruling from the ASA was Hydro Solutions Fylde. Now you might wonder what Hydro Solutions Fylde does. Perhaps it builds water purification plants? Or maybe it makes dried food for astronauts (or campers)? No, neither of the above. At Companies House its area of business is listed as ‘gambling and betting activities’, a fact which I suggest you keep in mind as you read on.
If I tell you Hydro Solutions Fylde trades under the name ‘Elite Competitions’ you’ll get a better sense of its sphere of operations. Indeed, if you’re a regular reader of this blog with a particularly good memory that name may ring a bell, because at the end of last year (oh how long ago that seems now) I wrote about an ASA ruling against the very same Elite Competitions.
Paid-for prize draws
What Elite Competitions does – and I’m going to call them Elite because, well, it’s just easier – is run paid-for prize draws. On its website it has several of these going on simultaneously, many with high-value prizes such as cars. To enter the draw to win, say, a silver Porsche 911 Turbo S with red leather interiors, which is one of the prizes currently on offer, you buy a ticket for £6 (reduced from £9.99), and alongside a nice prize photo there’s a ticker which counts down towards the time of the draw.
As I write this, there are 5 days, 23 hours, 41 minutes and 16 seconds left before this draw is made, and there are 8365 tickets still available to be purchased out of a total of 24,024. By my calculations, Elite has sold 65% of the tickets for its Porsche draw, leaving 35% left to shift. I doubt the revenue from those tickets is yet enough to cover the cost of the car plus whatever Elite’s profit margin is, which probably accounts for the reduction on the ticket price.
CAP Code breaches?
So, to the complaints and the ASA received two – one from a member of the public and one from a solicitor specialising in regulation and compliance in the gaming and betting industry: Both complainants challenged whether a draw which ran last November and offered a first prize of £10,000 in cash and four prizes of £5000 breached the CAP Code, because the free entry route was not explained clearly or prominently.
One complainant also challenged whether the promotion breached the CAP Code because the closing date was extended and one complainant, who had read the terms and conditions and understood that if insufficient tickets were sold a cash alternative of 70% of ticket sales would be given, challenged whether the promotion breached the CAP Code, because 70% of ticket sales was not equivalent to the value of the prize.
What the ASA said
The ASA upheld all three complaints, and I’ll look at the second and third complaints first, because the first one is slightly more involved. Elite stated that if all tickets were not initially sold, then the closing date would be extended by seven days, and that if all tickets still hadn’t been sold then there would be up to four further extensions. However, the CAP Code essentially says that you cannot extend a closing date.
Elite also said that if all tickets were not sold, the winner would receive 70% of ticket sales instead of the advertised prize. However, the CAP Code says that promoters must award the prizes as described in their marketing communications. Reasonable equivalents are permitted, but in this instance 70% of ticket sales was clearly going to fall some way short of £10,000.
Circumventing the Gambling Act
So, back to the first complaint. Paid-for promotions are not illegal as such in the UK as long as the rate of entry is not inflate, but promoters like Elite offer a free entry route to their prize draws, because that means the draw isn’t defined as a lottery under the Gambling Act 2005 and, therefore, they don’t need a licence to run it.
However, the CAP Code says that all significant information – and that would include information about free entry – should be explained clearly and prominently. Elite has one set of terms and conditions for all its prize draws, and a brief, one-line reference to the free entry route on each prize draw page, but you need to dig around a bit to find the details.
Much like property raffles, which regular readers will know are one of my bugbears, it’s hard, if not impossible, to make paid-for prize draws work financially and the pressure to turn a profit leads promoters into bending – and even breaking the rules – set out in the CAP Code, which is unfair on entrants and isn’t good for the reputation of the prize promotions industry as a whole.
Prizeology run prize promotions which help brands and businesses increase sales, engage customers and build awareness, but not profit directly from prize promotions. To find out more about how we can support your promotions, please get in touch.
Sarah Burns is Prizeology’s Chief Prizeologist and a National Trading Standards Scams Team Scambassador.