Thursday, 5 July 2012

Sweepstakes at Work

Why employers shouldn’t be taking a punt on compliance with the Gambling Act.

Although Euro 2012 is now done and dusted, with a plethora of other sporting events coming up this summer, many employees will be keen to participate in office sweepstakes. But what most employers consider a bit of harmless fun may actually be illegal and carry the possibility of a criminal prosecution.
All workplace sweepstakes must comply with the strict provisions of the Gambling Act 2005. Employers need to ensure these competitions are run in a way that means they are exempt from the Act’s regulatory regime.

Lottery v bettingThere are two popular types of workplace sweepstake. The first is where entrants make a payment and are allocated a team or a competitor based purely on chance (picking your team from a bowl, for example). Such arrangements constitute a “lottery” for the purposes of the Act.

It is a criminal offence to “promote” a lottery unless it falls within one of the statutory exemptions or the promoter has a lottery-operating license. Promotion of a lottery is widely defined and includes selling tickets and advertising. Penalties for promoting an illegal lottery are substantial and can include imprisonment and/or a fine of up to £5,000.

In the second type of sweepstake, participants choose the team they wish to support or predict the result of an event (say, predicting the final score of a football match). Such a competition would be classed as “betting” under the Act, which is prohibited without a betting operating license.

Work lotteries Companies that permit or operate sweepstakes may be able to rely on one of the exemptions under the Act. “Work lotteries” are exempt, for example, if they are not run for profit and all proceeds (less reasonable expenses) are paid out as prizes. They must take place on one set of premises, each person taking part must work on those premises, and the lottery must not be advertised outside those premises. Any tickets must be in a form of a document and state the name and address of the promoter, the group of people eligible to buy tickets, that the ticket is not transferrable, and the ticket price. If all of these provisions are met, staff can enjoy the fun without risking their employer falling foul of the law.

BettingThere are two statutory exceptions for betting: “worker’s betting” and “betting otherwise than in the course of business”. For the “worker’s betting” exception to apply, those involved in the betting must all be employees of the same company. Many sweepstakes risk falling foul of this provision, especially where multiple employers are spread throughout the same building. But, provided the betting occurs internally and otherwise than in the course of business (in other words, the sweepstake is incidental to the business of the employer) it will be legal.

Don’t gamble with the lawIf employers or employees are thinking about running a sweepstake at work, careful consideration should be given to how it is operated and promoted to ensure that it does not inadvertently fall foul of the provisions of the Act. Because of the risk of criminal prosecution, HR may want to consider setting out the rules of any sweepstake in writing so organisers can be held accountable afterwards.

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