How desperate would you get to sell your house if it had been on the market for a while and just wasn’t budging? Would you be desperate enough to raffle it off? Well if you did you definitely wouldn’t be alone – with the current slump in the market, house raffles are becoming a growing trend. However, beware; if a lucky lottery is something that tweaks your interest, it is advisable to seek legal advice first because if you fall foul of lottery legislation you may end up in court.
A recent example of the practice first came to the public’s attention in the Sun newspaper in June of this year. A homeowner called Brian Wilshaw was losing £12,000 per month whilst he struggled to sell his £1m valued home. In desperation he decided to have a raffle, hoping to sell 46,000 tickets at £25 each. The legality of the raffle was immediately called into question by gambling experts, who said that it is against the law to run a lottery for personal profit. The Wilshaw’s got around this by running the raffle as a competition with a question that 10-20% of the population could answer. Thanks to the media attention the Wilshaw’s were able to close the “competition” three months ahead of schedule and are currently verifying entries prior to the big draw set to be held sometime this month.
Other homeowners who have tried to raffle their properties have not had the benefit of the legal advice that the Wilshaw’s have obviously headed so well. In March 2006, Angela Jones from Prestatyn had sold a number of tickets for £30, hoping to raise £150,000 for her three-bedroom home. She ended up having to pay nearly £8,000 in compensation and getting a 12-month suspended sentence after admitting a charge contrary to the Lottery and Amusements Act 1976 of unlawfully selling, distributing, offering or advertising lottery tickets or chances to win the house over a six week period. Rather ironically, she was working as an estate agent at the time.
Now a Wilmslow couple, inspired by what is already commonplace in the USA, are offering their three bedroom house as the prize in a “competition”. Gary and Gabriela van Houton-Smith intend to sell 6,500 tickets at £25 each so that they can raise enough to cover their costs and realize the house’s value of £136,000. The couple have done their homework by making the competition legally watertight, publishing the terms and conditions on their website and giving 2.5% of the ticket price to charity. They decided on the idea of a competition when they found that it is illegal to sell raffle tickets for more than £2 if it is for commercial gain and a lottery can only be run if registered with the Gambling Commission.
So whilst it is illegal to raffle a prize once it exceeds a certain amount and to run a lottery for personal profit it is legal to run a competition for personal gain – provided there is an element of skill for the participants. That is why the current property “raffles” often require you to answer a question. However, the chance of actually offloading the required amount of tickets is negligible unless you can attract the glare of the full media spotlight – something that is unlikely to happen now that it has already been done. There have been a number of documented instances recently where the competition winner has ended up with a cash prize instead of the property because not enough tickets were sold. As a ticket buyer, beware of scams such as bogus property “lotteries” and others who have far too many tickets for sale, hoping to cash in by over-valuing the property.