Workplace Raffles and Lotteries: UK Gambling Act 2005 Guide for Employers

UK workplaces run thousands of raffles every year. Most are small, well-intentioned, and operate in a part of the Gambling Act 2005 most organisers don’t realise applies to them. The good news: the Act is genuinely permissive of small-scale charitable fundraising and provides specific licence-free exemptions for workplace lotteries and event raffles. The bad news: those exemptions have hard rules, and a raffle that strays outside them is, technically, an unlicensed lottery and an offence under section 258 of the Act.

This guide explains the rules that actually apply to a UK SMB running a workplace raffle, tombola, sweepstake or one-off prize draw alongside its fundraising activities. It’s written for HR, office managers and finance leads who organise these events as part of a broader workplace giving programme.

For the underlying source material, the Gambling Commission’s public guide to types of lottery and the Gambling Act 2005 itself are the authoritative reference points.

What counts as a “lottery”

Under section 14 of the Gambling Act 2005, a lottery is any arrangement that has three features:

1. People pay to participate. That includes buying a ticket, but also paying an “entry fee”, buying a programme that includes a ticket strip, or contributing to a “voluntary donation” that’s required to enter the draw.
2. Prizes are allocated. Cash, goods, vouchers, experiences — anything of value.
3. The prize allocation depends wholly on chance. Drawing tickets from a hat is the canonical example. A quiz where prizes go to the top-scoring team is not a lottery (it depends on skill, not chance) — see our charity quiz guide.

If your activity has all three features, it’s a lottery, and it needs to be run under either an exemption or a licence.

Examples of activities that are lotteries under this definition:

• Tombola
• Strip raffle (“five tickets for £1”)
• Sweepstakes on the Grand National, Six Nations, World Cup, Eurovision
• “Guess the weight of the cake / number of sweets in the jar” if the prize is allocated to the closest guess — though strictly this can be argued as skill-based and falls outside the lottery definition. The Gambling Commission tends to treat clearly random “guess the number” promotions as lotteries; “guess the weight” with no pre-set answer can be skill-based.
• Online prize draws where entry costs money

Examples of activities that are not lotteries:

• Quizzes (skill-based)
• Auctions (highest bidder wins, no chance element)
• Free prize draws (no payment to enter)
• Bake-off competitions judged on merit

The licence-free exemptions you actually need

Schedule 11 of the Gambling Act 2005 lists seven categories of “exempt lottery” that can be run without a licence. Two of them matter for UK workplace fundraising:

1. Workplace lottery exemption (for raffles that run within the office over a period of time)
2. Incidental non-commercial lottery exemption (for raffles bolted onto a specific event — a quiz night, charity dinner, summer fete)

A third category, private society lottery, applies if you run a lottery within a members’ society (e.g. a sports club) rather than a workplace — beyond the scope of this guide.

If your raffle fits neither exemption, you’ll need to either change its design to fit, or register a Small Society Lottery with your local council (covered later).

Exemption 1 — Workplace lotteries

The workplace lottery exemption is defined in paragraphs 9–11 of Schedule 11. The rules:

Eligibility rules

• The lottery must be promoted exclusively for people working at a single set of premises.
• Tickets can only be sold to people who work at those premises.
• The lottery must not be conducted for commercial purposes — its purpose must be charitable or otherwise non-commercial (e.g. a workplace social fund counts).
• It must not be advertised outside the workplace beyond reasonable internal channels.
• No rollover is permitted. Each lottery is self-contained.

Operational rules

• No profits may be deducted beyond the reasonable cost of prizes and expenses. The remainder goes to the stated purpose.
• No employed promoter or external administrator — it must be run by people working at the premises.
• The arrangement must be set out in writing (e.g. internal poster or rules sheet) and made available to participants before they buy a ticket.
• A single prize cannot exceed £500 from the lottery’s proceeds, though donated prizes are not subject to this cap.

What “single set of premises” means in practice

This is the rule most workplace lotteries get wrong. “Single set of premises” means one physical location. If your business operates from two offices (e.g. London + Manchester), a single raffle covering both offices does not fit the workplace lottery exemption — each office would need its own self-contained raffle, or you’d need to use a different exemption / licence.

The exemption explicitly cannot be used for company-wide fundraising across multiple sites. For multi-site fundraising, you either need an incidental non-commercial lottery tied to a specific cross-site event, or a Small Society Lottery registration.

Practical example

Acme Ltd runs a monthly raffle in its single London office. Tickets are £1, sold only to Acme staff at that office. The pot is split: 30% goes to a charity, 30% to an in-house social fund, 40% to a single cash prize for the winner. This is not a valid workplace lottery — the social fund and prize structure can pass, but if a prize over £500 is being funded from proceeds it must come from donated stock. Also, if any of the proceeds count as “profit” (e.g. an organiser’s fee), the exemption fails.

A compliant version: Acme runs a monthly raffle, £1 tickets sold only to staff at the London office. All proceeds after a £50 prize go to the named charity. Donated prizes from suppliers add a “main prize” worth £600. No external advertising, no rollover.

Exemption 2 — Incidental non-commercial lotteries

The incidental non-commercial lottery exemption is in paragraphs 1–4 of Schedule 11. It’s the right exemption for raffles run as part of a specific charity event — quiz night, summer fete, dinner, ball.

Eligibility rules

• The lottery must be incidental to a non-commercial event (a charity event, school fete, community gathering). The event itself must not be run for private profit.
• Tickets must only be sold at the event itself, while it is taking place.
• The draw must take place during the event. Sealed-ticket draws after the event ends are not permitted.
• All proceeds (after permitted expenses) go to a purpose other than private gain.

Financial caps

The Gambling Act 2005 originally imposed caps on prizes and expenses; these were amended in 2014:

• Up to £500 from the lottery’s proceeds can be spent on prizes.
• Up to £100 from the lottery’s proceeds can be spent on the costs of organising the lottery (printing tickets, etc).
• Donated prizes do not count against the £500 cap. Useful — most workplace raffles rely on donated prizes anyway.

Practical example

Beta Ltd runs a charity quiz with a raffle alongside it. Tickets are sold during the quiz event only. Proceeds after permitted expenses go to a chosen charity. Three of the prizes are donated by local businesses; one is a £50 voucher Beta has bought (well within the £500 cap). The draw happens at the quiz end. Compliant.

If Beta sells raffle tickets to staff in the week leading up to the quiz, that breaches the “tickets only at the event” rule. To stay compliant, ticket sales must start when the event begins.

When you need a Small Society Lottery licence

If your raffle doesn’t fit either exemption, the most common next step is to register a Small Society Lottery with your local licensing authority (the council). The thresholds are set out in Part 4 of the Gambling Act 2005.

When the Small Society Lottery route applies

• The proceeds of any single lottery are £20,000 or less.
• Aggregate annual proceeds for the society are £250,000 or less.
• The lottery is run by a “non-commercial society” — most workplace charity committees can constitute themselves as such, but a private company itself cannot register: you need a non-commercial society as the promoter. In practice, an internal charity committee or staff fund constituted in writing is usually sufficient.

Process

• Apply to your local council’s licensing department. The fee is £40 for registration plus £20 annual renewal (rates as published; confirm current fees with your council).
• Submit returns within 3 months of each lottery’s draw date — proceeds, prize value, expenses, beneficiary.
• Tickets must show the registered society’s name, ticket price, draw date and promoter details.

When you’d choose this route

The Small Society Lottery route is the right choice when:

• You want to sell tickets across multiple offices.
• You want to sell tickets to friends and family beyond the workplace.
• You want to advertise the raffle outside the workplace.
• You want to run the same raffle structure repeatedly across a year and not have it tied to individual events.

For most one-off workplace raffles, registering is overkill. For ongoing fundraising programmes — a quarterly all-company raffle that’s part of a Charity of the Year programme — it’s worth the £40.

When you need a Gambling Commission licence

If your lottery’s proceeds exceed £20,000 in a single draw or £250,000 across a year, you need a Large Society Lottery operating licence from the Gambling Commission. This is rare for workplace fundraising — it generally applies to medium-sized charities running their own lottery products (Macmillan, Cancer Research UK, the Air Ambulance lotteries) rather than to a single workplace’s raffle.

Sweepstakes — special rules

Sweepstakes (Grand National, Six Nations, World Cup brackets) are lotteries when entry costs money and prizes go to randomly drawn participants. Two routes:

1. Workplace lottery exemption — confined to a single workplace, no rollover, all proceeds (less prizes/expenses) to charity. Most office Grand National sweepstakes fit here.
2. Incidental non-commercial lottery — only if the sweepstake is part of a defined event (e.g. a charity dinner that includes a sweepstake on a televised sporting event).

A sweepstake that lets the office “keep half the pot” as a prize, with the other half going to charity, can be compliant under the workplace exemption only if the prize is funded from the lottery’s proceeds within the rules (the workplace exemption is permissive on prize allocation as long as no profit is taken). It’s tighter than people assume.

What about “donations” and “free” raffles?

Two specific patterns come up:

“Free raffle with optional donation”. If entry is genuinely free and donation is genuinely optional, the activity is not a lottery — there’s no consideration. But if a donation is required or strongly implied, it counts as payment, and the activity is a lottery. The Gambling Commission’s guidance on prize draws and free draws is the reference point.

“Donate to enter”. This is a lottery. The donation is the entry fee, the activity needs to fit an exemption or be licensed.

Vulnerable beneficiaries and prizes

The Gambling Commission’s licensing objectives include “preventing harm to children and vulnerable adults” (section 1 of the Gambling Act 2005). For workplace lotteries this translates into:

• No ticket sales to under-16s. Lottery tickets cannot be sold to people under 16 under section 56 of the Act. Not normally an issue for adult-only workplaces; matters if you have apprentices or work-experience juniors.
• Sensible prize choices. Alcohol prizes are legally permissible but worth thinking about — a strong-spirit prize at a charity event may not suit a workplace with known recovery participants or with religious staff for whom alcohol is forbidden. There’s no statutory rule here; it’s about employer judgement.
• Cash prizes are permitted but consider the optics within a charity-focused event.

Data protection and ticket records

If you collect names and contact details with raffle tickets (so you can call the winner), you’re processing personal data under UK GDPR. Three practical points:

• Tell ticket buyers what their data will be used for (just to contact the winner; not for marketing unless explicitly opted in).
• Don’t keep ticket stubs longer than needed — typically destroy after the draw + a short audit period.
• For a Small Society Lottery, you’ll need participant records for the returns to the council; keep them in line with that requirement (usually a year), then dispose of them.

Tax treatment

Two angles to remember:

Gift Aid. Raffle tickets are not eligible for Gift Aid. The buyer receives something of value in return (the chance to win), so it’s not a pure donation. This applies to all UK raffles, including those run for registered charities. Pure additional donations on the night can be Gift-Aided if collected with a proper declaration; raffle ticket revenue cannot.

Corporation tax. A company donating prizes to a workplace charity raffle can usually claim the cost as a deduction under the Gift Aid rules for company donations — provided the prize value goes to a UK charity or CASC, and there’s no significant benefit to the company in return.

VAT. Raffle ticket sales are exempt from VAT under VAT Notice 701/26, provided the raffle is run by an exempt body for an exempt purpose. Most charity workplace raffles fit.

Compliance checklist before you sell a ticket

Use this checklist for any workplace raffle:

• Confirm the activity is a lottery (payment + chance + prize)
• Decide which exemption applies — workplace, incidental non-commercial, or registered Small Society
• If workplace exemption: confined to one set of premises, no external promotion, no rollover, no profit
• If incidental non-commercial: tickets sold only at the event, draw at the event, prize/expense caps respected
• If registered: Small Society Lottery registration in place, ticket details correct, returns process set up
• Decide on prizes; donated prizes recorded separately from prize spend from proceeds
• Confirm prize-value cap is not breached (£500 from proceeds, in either exemption)
• Decide on ticket pricing and how proceeds are accounted for
• If under-16s might buy tickets, restrict sales explicitly
• Confirm beneficiary (named charity or stated cause) is clear to participants
• Set out the rules in writing (poster, intranet page, or ticket back)
• Plan secure handling of cash and clear records of ticket sales
• Plan the winner notification process and data-protection treatment

A note on enforcement

In practice, the Gambling Commission’s enforcement focus is on commercial operators, unlicensed remote gambling, illegal lottery operations and consumer harm — not on small workplace charity raffles. Documented prosecutions of small workplace fundraising raffles are vanishingly rare.

But the legal framework is what it is. Workplace fundraising organisers should treat the exemptions as the design constraint, not as a formality to ignore. The penalty for getting this wrong is mostly reputational — a story about a workplace running an unlicensed lottery is bad PR — but the underlying offence (under section 258 of the Act, unlawful lottery) is criminal.

When to ask for advice

For most workplace raffles, this guide and the Gambling Commission’s published guidance are enough. Ask for specialist advice if:

• Your raffle proceeds will exceed £20,000 in a single draw
• You want to sell tickets online to a wider audience
• You’re running a recurring lottery as part of a national campaign
• The cause is sensitive (gambling charities, alcohol-related charities)
• Your local council pushes back on a Small Society Lottery registration

Specialist legal advice or a call to the Gambling Commission’s licensee helpdesk resolves most edge cases.

Sources

• Gambling Act 2005 — full text
• Gambling Act 2005, section 1 — licensing objectives
• Gambling Act 2005, section 14 — definition of lottery
• Gambling Act 2005, section 56 — minimum age
• Gambling Act 2005, section 258 — unlawful lottery
• Gambling Act 2005, Schedule 11 — exempt lotteries
• Gambling Commission — types of lottery
• Gambling Commission — prize draws and free draws
• Gambling Commission — society lottery licences
• HMRC — VAT Notice 701/26: lotteries
• HMRC — tax when your limited company gives to charity
• Find your local council (for Small Society Lottery registration)
• Information Commissioner’s Office — UK GDPR guidance

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FAQs — JSON-LD enabled

Questions HR keeps asking.

Can we run a raffle at work without a licence?+

Usually yes, if the raffle fits within either the workplace lottery exemption or the incidental non-commercial lottery exemption under Schedule 11 of the Gambling Act 2005. The workplace exemption requires the raffle to be confined to a single set of premises, restricted to people working there, with no rollover, no profits to the organisers, and no employed promoter. The incidental exemption requires the raffle to be incidental to a non-commercial event, with strict caps on prize value and admin costs.

What is the prize cap for a workplace raffle?+

Under the workplace lottery exemption itself, there is no statutory cap on prize value, but the lottery must not make a profit (after prize and reasonable expenses), and a single prize cannot have a value greater than £500 from the lottery's proceeds. Under the incidental non-commercial lottery exemption, no more than £500 of the proceeds can be spent on prizes, although donated prizes do not count against this cap.

When do we need a Small Society Lottery licence from the council?+

If your raffle does not fit either of the licence-free exemptions — for example, you sell tickets across multiple offices, to the public, online beyond the workplace, or proceeds exceed £20,000 — you'll likely need a Small Society Lottery registration with your local licensing authority. Larger lotteries (over £20,000 in ticket sales or £250,000 in aggregate annual proceeds) need a Large Society Lottery operating licence from the Gambling Commission.

Can we sell raffle tickets online?+

Selling tickets online widens the audience beyond a single workplace, which usually breaks the workplace lottery exemption. Online sales may still fit the incidental non-commercial exemption if the sale and draw happen at a defined event. Otherwise you need a Small Society Lottery registration, and additional rules apply to remote (online) lotteries — see Gambling Commission guidance.

Can alcohol be a prize in a workplace raffle?+

Yes. There is no specific prohibition on alcohol prizes under the Gambling Act 2005 for licence-free lotteries. Be sensitive to participants who don't drink and to the workplace context — a high-strength spirit as the main prize at a charity raffle may not match the room. Note that under licensing law, the prize itself is not a 'sale' so a Licensing Act 2003 premises licence is not generally required for the act of giving the prize.

Do we have to pay out 100% of ticket sales to the charity?+

Under the workplace lottery exemption, no profit may be made — all proceeds after prizes and reasonable expenses must go to the named cause(s). Under the incidental non-commercial lottery exemption, the rules are similar: profits go to the purpose stated for the event, and admin/prize costs are capped (£100 reasonable expenses + £500 prizes from proceeds, with donated prizes uncapped). Practically, this means you should treat any raffle's net proceeds as 'all goes to charity'.

Can the company match the raffle proceeds?+

Yes, matching is unrelated to the Gambling Act exemptions. The company's match payment is a corporate donation to the charity, deductible against corporation tax under HMRC rules. Matching is also a strong fundraising mechanic — see our matched giving guide.

What happens if we get the rules wrong?+

Running an unlicensed lottery is an offence under the Gambling Act 2005. In practice, prosecutions of small-scale, well-intentioned workplace fundraising are rare; the Gambling Commission tends to focus on commercial operators. But the legal risk is real, and so is reputational risk for the employer if the raffle is challenged. If in doubt, register a Small Society Lottery with the council — it's a £40 fee and removes the question.