New gambling
legislation passed in 2005 but due to take effect in September of
this year will clear up a longstanding ambiguity about what exactly
constitutes a lottery, and experts have told weekly technology
podcast OUT-LAW Radio that the new
definitions will take in many television phone quizzes.
Those quizzes have been the subject of recent
controversy as the multi-million pound premium phone line industry
has come under scrutiny. Many television programmes, from Richard
and Judy to Channel 4 Racing, from the X Factor to Blue Peter, have
admitted that their competitions or phone votes have been
misleading or conducted in error in recent weeks. Regulator
Ofcom
announced its own investigation today.
The companies behind those lines will soon
face greater regulation than ever before. "If you look at a lot of
the services they are generally operating in the realms of being
games of chance, and any game of chance is technically classified
as a lottery," said Scott Davies, founder and director of mobile
phone game company Million 2-1, which does have a lottery
licence.
"I think if you look at a lot of the call-TV
shows at the moment which are blatant lotteries when you call in
and get selected to go on air, you are going to have to get a real
free route to enter, which obviously questions the
commercialisation, or get a lottery licence and do them under the
correct legislation," said Davies.
In its assessment of the new legislation the
Gambling Commission identifies three things which have to be
present in order for something to qualify as a lottery: there has
to be payment to enter, there have to be prizes, and the award of
those prizes has to be left to chance.
Those of the televised quizzes with questions
so easy they do not involve any real skill do qualify as lotteries,
the Gambling Commission said.
"Good examples are the TV quiz shows on dedicated
channels which have sprung up in the last two or three years.
Commonly, participants call to enter via a premium rate telephone
number, all calls are connected and therefore all callers have to
pay for the premium rate call, but only a limited and small number
are randomly selected to be put through to the studio to attempt to
answer the question asked or to complete a puzzle," said a
Commission paper on the new laws.
"All such channels will either have to stop
operating altogether or operate under the provisions relating to
lotteries, or ensure that they operate such that they fall within
the provisions relating to either prize competitions or free
draws," it said. "Prize competitions are those in which success
depends, at least in part, on the exercise of skill, judgement or
knowledge by the participants. This distinguishes them from
lotteries, where success depends wholly on chance."
Being deemed a lottery could be a major
headache for companies. A licence can cost £30,000, and 20% of
total income must be given away to charitable causes. According to
Davies, there are also stringent background checks.
"In terms of getting that lottery licence the
company goes under quite a lot of scrutiny, so the people behind
the company, the directors, the shareholders, the people behind the
company are monitored so if you have bankruptcy or any
discrepancies that might make you a less than desirable person you
won't get a lottery licence," he said.
Companies have two ways they can get out of
having competitions defined as lotteries. They can either offer
entry for free or attempt to turn the competition into a genuine
game of skill. "I suppose you can say if you want to take part in
any of our programmes which take place on Wednesday evening at 7
o'clock then write in with your phone number and we'll call you,
though I'm not quite sure how practical that would be," said Julian
Harris, of Harris Hagan, a law firm specialising in gambling law.
"The other way would be to ensure that the first part of [the quiz]
is dealt with on the basis of skill with skill based questions, or
alternatively not to charge for the initial phone call, but of
course that's rather difficult because that's where the income is
generated."
