Can you run a Christmas prize draw?

Yes, as long as entry is free. A free draw needs no licence and no permission, but the moment people have to pay to enter, you're running a lottery, and a business can't run one of those for its own gain. Beyond that, the rules are mostly about honesty: set out the conditions before anyone enters, and draw the winner at random.

This is the third part of our series on Christmas marketing, checked, which reports what the rules and the platforms say and links to each source. It isn't legal advice.

Why entry has to be free

The Gambling Commission says you "do not need a licence or permission to run a free draw or prize competition as long as they are being ran in a way that meets the requirements of the Gambling Act 2005". Get those requirements wrong and "you may be running an illegal lottery", because all lotteries "are regulated under the Gambling Act 2005 and cannot be run for commercial or private gain".

If you offer a paid route alongside a free one, the free route has to be a real one. It "can be no more expensive and must be no less convenient than the paid route", and it has to be promoted "at the same level as the paid for routes". At Christmas, the simplest answer is to have no paid route at all.

What you have to tell people before they enter

The advertising code covers the rest. Every significant condition has to be communicated, including how to enter, any free-entry route and "a prominent closing date". A prize promotion must also state, before or at the time of entry, any limit on entries, whether you might substitute cash for the prize, "how and when winners will be notified of results", and information showing that a valid award took place, "ordinarily the surname and county of major prizewinners".

Two more rules catch people out. Prizes must be awarded "in accordance with the laws of chance", and the draw has to be made by an independent person, or under that person's supervision, unless a computer picks the winners in a way that is verifiably random. Prizes also go out "normally within 30 days", so a draw on Christmas Eve shouldn't end with the hamper arriving in February.

Running the draw properly

• Make entry free, with no purchase and no paid route.
• Write the conditions before you post: how to enter, the closing date and time, how you'll pick, how you'll tell the winner.
• Draw it at random, and keep a record of how you did it.
• Tell entrants up front that you'll name the winner, and let them object.
• Send the prize within 30 days.

The same advertising code governs the rest of a sale, which is why an 'up to 50% off' headline and a countdown timer come with conditions of their own. The question everybody asks next, whether the regulator goes after a small shop, has an answer too. And if a draw is the only Christmas marketing you have planned, our 90-day marketing plan is where the wider conversation starts.