Could the Challenge be unlawful in the UK?

[tkingdoll]

I'm currently looking at UK law regarding competitions (for an entirely unrelated matter), and I came across something interesting.

Under section 14 (Prize Competitions) of the Lotteries and Amusements Act 1976, certain types of competition are deemed unlawful:

"Competitions in which prizes are offered for the forecast of the result of a future event"

and

"Competitions in which prizes are offered for forecasts of the result of a past event, the result of which is not yet ascertained or not yet generally known"

I'm trying to get my head round whether or not that could be twisted to render a paranormal challenge unlawful.

Any law types have a better clue than I?

[geni]

JREF is US based so non issue.

[tkingdoll]

JREF is US based so non issue.


There are several similar UK-based challenges though, for example from ASKE. I did say "A paranormal challenge" in my OP.

Regarding the JREF challenge, there must be competition law regarding overseas-based competitions that are offered to UK residents, I know there are strict rules for lotteries so presumably there is something. I'm going to see what I can find, but I could do with an expert's perspective.

[Darat]

There are several similar UK-based challenges though, for example from ASKE. I did say "A paranormal challenge" in my OP.

Regarding the JREF challenge, there must be competition law regarding overseas-based competitions that are offered to UK residents, I know there are strict rules for lotteries so presumably there is something. I'm going to see what I can find, but I could do with an expert's perspective.

I would be very surprised to learn that the definition of a "competition" would cover what the challenge is. Doesn't the legislation define what a "competition" is?

[tkingdoll]

I would be very surprised to learn that the definition of a "competition" would cover what the challenge is. Doesn't the legislation define what a "competition" is?

"Prize competitions are competitions in which success depends to a substantial degree on the exercise of skill."

ETA "There is no statutory definition of what constitutes a substantial degree of skill."

[exarch]

Under section 14 (Prize Competitions) of the Lotteries and Amusements Act 1976, certain types of competition are deemed unlawful:

"Competitions in which prizes are offered for the forecast of the result of a future event"

and

"Competitions in which prizes are offered for forecasts of the result of a past event, the result of which is not yet ascertained or not yet generally known"
That sounds like it would make most types of sports betting illegal. Actually, all types of betting probably ...

And what about something silly like a prize competition that includes a question to settle ties (like: "How many answers will we have received on the morning of the closing date of the competition, and what will be their combined weight?")

[Darat]

Yes but I'm pretty sure this covers "open" competitions, the JREF challenge is not such a "competition", I would suggest its nature would fall more within the idea of a contract between both parties for "services rendered" ;)

[exarch]

"Prize competitions are competitions in which success depends to a substantial degree on the exercise of skill."

ETA "There is no statutory definition of what constitutes a substantial degree of skill."
Referee: Well, you know that marathon you just ran and won? Well, you're not getting the Mercedes yet. First you have to guess how many other contestants are going to make it across the finish line in the next 10 minutes. If you guess wrong, you'll get nothing ...

[tkingdoll]

That sounds like it would make most types of sports betting illegal. Actually, all types of betting probably ...

And what about something silly like a prize competition that includes a question to settle ties (like: "How many answers will we have received on the morning of the closing date of the competition, and what will be their combined weight?")

I've never seen a tiebreaker question like that, I must admit. They're usually along the lines of "in the event of a tiebreaker, please complete the following: I want to win a Mini Cooper because......", etc. The example you gave would, presumably, be unlawful.

Companies have been taken to task over offering prizes for answering questions that are too easy, for example "what colour is the sky, blue, green or red?". The law prohibits that sort of pointlessly easy question.

There are different laws for sports betting, I think. They're not a competition in the same way.

Darat, the JREF challenge is open for anyone to enter though, right? OK, you have to agree a protocol, but is that any different to any other competition restriction? For example, being over 18 or whatever?

[exarch]

I've never seen a tiebreaker question like that, I must admit. They're usually along the lines of "in the event of a tiebreaker, please complete the following: I want to win a Mini Cooper because......", etc. The example you gave would, presumably, be unlawful.
Well, they're used all the time in Belgium, which makes me assume that British competitions are indeed forced to follow that particular guess-rule.

As an aside, wouldn't "competition" hint at multiple contestants? In which case it doesn't apply to the JREF challenge because so far no challenge has ever pitted multiple contestants against each other (as far as I know). Regardless of whether or not they need a particular skill to perform a certain feat.

[gruk]

There are different laws for sports betting, I think. They're not a competition in the same way.


I think sports betting (well, betting in general) is classed as lotteries. I'm very much not sure, though.

[Darat]

...snip...

Companies have been taken to task over offering prizes for answering questions that are too easy, for example "what colour is the sky, blue, green or red?". The law prohibits that sort of pointlessly easy question.


Really? Have you seen the questions they ask on TV shows these days - this was a real one from Richard & Judy (I was doing the ironing OK!)

What is the name of the President of the USA?

a) Bush
b) Tree
c) Shrub




Darat, the JREF challenge is open for anyone to enter though, right? OK, you have to agree a protocol, but is that any different to any other competition restriction? For example, being over 18 or whatever?

But it's not open to everyone - the JREF decides who to allow to take the challenge.

[tkingdoll]

As an aside, wouldn't "competition" hint at multiple contestants? In which case it doesn't apply to the JREF challenge because so far no challenge has ever pitted multiple contestants against each other (as far as I know). Regardless of whether or not they need a particular skill to perform a certain feat.

Hmm. Interesting. I'm really not sure (damn, we need an expert!), as two claims can be on the go at the same time, I presume. They wouldn't need to be pitted against each other per se, to be considered both entrants in the same competition...or would they?

Is the challenge one big competition, or is each agreed protocol a seperate competition with one entrant? If the latter, does that still make it a competition?

[brodski]

Teek, do you have a link to the '76 act? OPSI (nee HMSO) don't carry SI's that far back.

[tkingdoll]

Teek, do you have a link to the '76 act? OPSI (nee HMSO) don't carry SI's that far back.

No, I'm struggling to find one myself. Hence my request for expert advice, because it looks on the face of it that offering a prize for a demonstration of skill that involves predicting the future is unlawful. BUT, I may have my eyes and brain in upside down.

I got the original info from here: http://www.gamblingcommission.gov.uk/client/detail.asp?ContentId=47

[Darat]

Have a look at this site: http://www.out-law.com/page-6780

[Darat]

I see no way the Challenge could be considered a lottery or a competition under the conditions laid out on that site. (See also: http://www.marketinglaw.co.uk/open.asp?A=1186).

[Beady]

Under section 14 (Prize Competitions) of the Lotteries and Amusements Act 1976, certain types of competition are deemed unlawful:

Is the Challenge a competition? Against whom, precisely, are the applicants competing?

BTW, for the US, the legal definition of "competition" (according to Black's Law Dictionary) is "the effort or action of two or more commercial interests to obtain the same business from third parties."

IOW, to be a competition, there have to be two or more competitors. While it may be possible to construe the Challenge as a contest, I think it far more likely that any legal attempt to do so would be short-lived.

[Mojo]

I'm currently looking at UK law regarding competitions (for an entirely unrelated matter), and I came across something interesting.

Under section 14 (Prize Competitions) of the Lotteries and Amusements Act 1976, certain types of competition are deemed unlawful:

"Competitions in which prizes are offered for the forecast of the result of a future event"

and

"Competitions in which prizes are offered for forecasts of the result of a past event, the result of which is not yet ascertained or not yet generally known"The gambling commission website accurately quotes those bits, but they are preceded by the words "Subject to subsection (2) below, it shall be unlawful to conduct in or through any newspaper, or in connection with any trade or business or the sale of any article to the public..." This looks to me as if a not for profit organisation might not be covered by it, but I am not a lawyer.

What about the sort of competition you get at village fetes in which you have to guess the number of jellybeans or whatever in a jar? It sounds as if that ought to be illegal if the Challenge is.

[Rasmus]

The gambling commission website accurately quotes those bits, but they are preceded by the words "Subject to subsection (2) below, it shall be unlawful to conduct in or through any newspaper, or in connection with any trade or business or the sale of any article to the public..."

This might just mean, that you are not allowed to run a competition that people may participate in only if they bought something from you first.

Germany seemsto have laws that are similar to this interpretation; and many comptetitions that are run as promotions for specific products do in fact offer alternative phone-numbers to participate.

Coke is currently offering promotional codes in their bottle caps that you can use to download ringtones for your mobile. Instead of buying the bottle you can use a (premium, i think) phone nnumber to receive such a code.

(The ringtones or other gimmicks are random, and there may be the odd big prize, too.)

[Mojo]

This might just mean, that you are not allowed to run a competition that people may participate in only if they bought something from you first.

Germany seemsto have laws that are similar to this interpretation; and many comptetitions that are run as promotions for specific products do in fact offer alternative phone-numbers to participate.

Coke is currently offering promotional codes in their bottle caps that you can use to download ringtones for your mobile. Instead of buying the bottle you can use a (premium, i think) phone nnumber to receive such a code. Things like that in the UK have "no purchase necessary" and an address or phone number to contact to enter without making a purchase somewhere in the small print.

[tkingdoll]

Things like that in the UK have "no purchase necessary" and an address or phone number to contact to enter without making a purchase somewhere in the small print.

You can still make a purchase a necessary condition of entering, but the competition would have to involve the demonstration of a skill (for example answering a tough question). In fact, that's what started me looking at this in the first place, as Ocado sent me an email invitation to enter a competition, the conditions of which were a) answer a question and b) spend £85 with them by a certain date.

I'm still not convinced the challenge isn't a competition - presumably the first person to win it gets the million and the challenge closes? Or is it ongoing even after someone wins?

[Ririon]

Norwegian pointlessly easy competition:

Rearrange these letters to get a famous Irish rock band:

2U

(I did not make that up. Of course, you have to send a $1.50 text message to enter...)

Anyway:

I'm still not convinced the challenge isn't a competition - presumably the first person to win it gets the million and the challenge closes? Or is it ongoing even after someone wins?

I would guess that if the win was a result of cheating or genuinely new science, the Challenge would start over once another million was raised.

If, on the other hand, the win was the result of a demonstration showing that science is BS and everything really is touchy-feely conscious energy, then there is no point in continuing, is there? ;)

[Meffy]

From the early 1960s I remember commercial "contests" that advertised in cheap magazines, comic books, etc. A typical advert might say:

WIN BIG PRIZES!
Can you identify this famous landmark?
[picture of Eiffel Tower]

or

$100, $1000, EVEN $10,000 COULD BE YOURS!
What president of the United States is in the picture below?
[pic of Abraham Lincoln or George Washington]

Of course, all that sending in your dime with the answer would "win" you would be the right to pay more money to enter the next level of the so-called competition. I've no idea whether the questions turned difficult, then impossible to answer (so nobody would win), or whether the contest operators arranged things so the payout would always be a tiny fraction of the combined entry fees... but AFAIK this kind of "contest" is now illegal in the US.

[BanthaTracks]

Only a lawyer could try to twist the meaning of that section. The intent is obvious.

The section cited is referring to competitions of a lottery type. The Challenge isn’t a lottery, but an offer to pay an amount once an applicant has proven an ability that goes against current scientific understanding. It’s not a competition. The Challenge is based on conducting a sound and valid test. The applicants my view it as a competition but from Randi’s standpoint it’s an exercise in the scientific method.

Weather forecasters are in violation of the law if you twist the section enough aren’t they? Not that they are right often but now and then they are to a degree. The prize is they get to keep their job regardless of the outcome.

I’m all for having clear wording but at some point you have to step into reality.

[tkingdoll]

The section cited is referring to competitions of a lottery type. -

No it's not. It's referring to lotteries and competitions. They are two seperate things. Lotteries require no skill to enter, and therefore require a licence. Competitions do require skill to enter.

Only a lawyer could try to twist the meaning of that section. The intent is obvious.


My whole point is, challenge applicants have lawyers. Clearly, I am looking for an expert to confirm whether or not the law could be interpreted that way to include the challenge. I stated that clearly in the OP.

[brodski]

My whole point is, challenge applicants have lawyers. Clearly, I am looking for an expert to confirm whether or not the law could be interpreted that way to include the challenge. I stated that clearly in the OP. Unless you can find some case law which is applicable, you won't get a definitive answer, regardless of what any statues says, only the courts can interpret how legislation will actually be applied. Sending a question to DCMS (http://www.culture.gov.uk/global/contact_us/) who are responsible for this legislation may help you get a reliable answer.

[tkingdoll]

Unless you can find some case law which is applicable, you won't get a definitive answer, regardless of what any statues says, only the courts can interpret how legislation will actually be applied. Sending a question to DCMS (http://www.culture.gov.uk/global/contact_us/) who are responsible for this legislation may help you get a reliable answer.

I might do that, by sending them a vague scenario but without mentioning the challenge specifically.

It's a hypothetical question, but some folk will look for any ammo they can (I know this because we use the same tactics to try and stop psychics), and if I thought of this, then anyone might, so it's worth making sure, IMHO.

[brodski]

I might do that, by sending them a vague scenario but without mentioning the challenge specifically.

It's a hypothetical question, but some folk will look for any ammo they can (I know this because we use the same tactics to try and stop psychics), and if I thought of this, then anyone might, so it's worth making sure, IMHO. Don't worry about mentioning the challenge specifically,
1) its US based so DCMS have no jurisdiction and
2) DCMS aren't the enforcement authority for this legislation, it's enforced by LA trading standards bodies, and you know how hard it is to get them to take any action.

IMHO you're probably going to get a better answer if you can give an example, so just asking "if the Randi challenge at www.randi.org (http://www.randi.org) was organized in the UK, would it fall under the Lotteries and Amusements act" or words to that effect.

[Almo]

"Prize competitions are competitions in which success depends to a substantial degree on the exercise of skill."

ETA "There is no statutory definition of what constitutes a substantial degree of skill."

Ah... hence the need to answer a question to be entered into a drawing to be a contestant on a show. Always wondered about that...

[alock]

I believe it is all about tax. If Richard and Judy gave you some money, it would be taxable as a gift. If you win it because of your skill and knowledge it falls under this law an is not taxable. The challenge (depending on what is being tested) might fall under gambling laws because someone is trying to predict the future. The million would then be taxable under the current gambling tax rates.

[brodski]

The million would then be taxable under the current gambling tax rates.
I was under the impression that gambling was no longer taxed, it was part of a deal to get bookies to move back to the mainland from the Channel Islands

[Lothian]

I would have thought the lack of a participation fee would take the competition out side the act. There should be a clause to that effect somewhere in the legislation.

I will see if I can find it.

[exarch]

Really? Have you seen the questions they ask on TV shows these days - this was a real one from Richard & Judy (I was doing the ironing OK!)

What is the name of the President of the USA?

a) Bush
b) Tree
c) Shrub
Well, I'm assuming you were not the target audience. Perhaps this question is not too easy for the average R&J fan.

[Lothian]

Section 14 would not (in my worthless opinion) apply.

Section 14 is headed Newspaper and other competitions

And goes on to say


14 Prize competitions
(1) Subject to subsection (2) below, it shall be unlawful to conduct in or through any newspaper, or in connection with any trade or business or the sale of any article to the public—
(a) any competition in which prizes are offered for forecasts of the result either—
(i) of a future event; or(ii) of a past event the result of which is not yet ascertained, or not yet generally known;
(b) any other competition in which success does not depend to a substantial degree on the exercise of skill.
(2)…



The key as I see is that the JREF prize is not in or throught a newspaper and is not in connection with any trade or buisness or sale of an article to the public. It therefore falls out side the law.


However the above act was repealed by section 356 of the Gambling act of 2005.

In that Act prize competitions are covered by section 339

339 Prize competitions
Participating in a competition or other arrangement under which a person may win a prize is not gambling for the purposes of this Act unless it is—
(a) gaming within the meaning of section 6,
(b) participating in a lottery within the meaning of section 14, or
(c) betting within the meaning of sections 9 to 11.


Section 14 is more or less the old act above. I think however the key section is 6.



6 Gaming & game of chance
(1) In this Act “gaming” means playing a game of chance for a prize.(2) In this Act “game of chance”—
(a) includes—
(i) a game that involves both an element of chance and an element of skill,(ii) a game that involves an element of chance that can be eliminated by superlative skill, and(iii) a game that is presented as involving an element of chance, but
(b) does not include a sport.
(3) For the purposes of this Act a person plays a game of chance if he participates in a game of chance—
(a) whether or not there are other participants in the game, and(b) whether or not a computer generates images or data taken to represent the actions of other participants in the game.
(4) For the purposes of this Act a person plays a game of chance for a prize—
(a) if he plays a game of chance and thereby acquires a chance of winning a prize, and(b) whether or not he risks losing anything at the game.
(5) In this Act “prize” in relation to gaming (except in the context of a gaming machine)—
(a) means money or money's worth, and(b) includes both a prize provided by a person organising gaming and winnings of money staked.
(6) The Secretary of State may by regulations provide that a specified activity, or an activity carried on in specified circumstances, is or is not to be treated for the purposes of this Act as—
(a) a game;(b) a game of chance;(c) a sport.



I dare say you can take it form here yourself.

[SwissSkeptic]

I'm still not convinced the challenge isn't a competition - presumably the first person to win it gets the million and the challenge closes? Or is it ongoing even after someone wins?

I haven't seen an answer to that, so I'll take a shot at it: As far as I understand, the challenge is a contract between two parties. By performing the required task under the specified conditions, the applicant is entitled to one million dollar. Two applicants at the same time simply means two such contracts, so both would be entitled to the million if both managed to win. The fact that there's only one million dollar on the account is irrelevant, as you don't need to have money to owe it to somebody.

[exarch]

Indeed, I think the contract is what makes all the difference here.

However, compare it to this hypothetical situation for a moment:
You apply for a job as a somelier, and your potential employer wants to test your skill, so he lines up three glasses and asks you to identify which is the merlot, the cabernet and the bordeaux by tasting them. The only difference between the million dollar challenge and this job application is the fact that the challenge already has a contract containing the requirements for getting the prize-money, while in case of the job application, the contract is drawn up afterwards.

[SwissSkeptic]

I don't think you can really compare the two situations, exactly because of the lack of existing contract in the case of the job interview (and therefore the lack of obligations). Or maybe this was your point?
Another difference is that the job offer is for a specific job at a specific company, while a money offer can't be specific. A successful challenger is entitled to a million, not the million.

[tkingdoll]

Interesting. Thanks for that Lothian. I'm not sure the JREF or organisations like ASKE aren't considered businesses though - for example UK Skeptics is a business not a charity, so to offer a challenge might be dodgy ground. It's really hard to tell.

Exarch, that's an excellent comparison, thanks for that. I think the contract is the crux of the matter, but I'm still not sure how it negates the competition definition.

It does seem unlikely that anyone could argue against a paid challenge using that law, but it's certainly been worth exploring. Forewarned is forearmed, as they say. I don't know who 'they' are, but they say a lot of sensible stuff.

[Lamuella]

I'd say this doesn't apply because the result of the challenge does not depend on an event taking place. It instead depends on a person performing an action.

[Questioninggeller]

"Competitions in which prizes are offered for the forecast of the result of a future event"


Isn't that gambling? I "predict" the 49er's will beat a 7 point spread against the Raiders. I "predict" the number on roulette table is 23...

[Kimpatsu]

What is the name of the President of the USA?

a) Bush
b) Tree
c) Shrub
I vote C), 'cos his intellect is definitely stunted. :D
---
For more on how stupid the British people can be, check out the Dumb Britain column in Private Eye.

[tkingdoll]

Isn't that gambling? I "predict" the 49er's will beat a 7 point spread against the Raiders. I "predict" the number on roulette table is 23...

Sports and games have a whole other set of laws.

[vIQleS]

The key as I see is that the JREF prize is not in or throught a newspaper and is not in connection with any trade or buisness or sale of an article to the public. It therefore falls out side the law.



<pedantic> You might want to be a bit more careful with your wording - "It therefore falls outside this law." not The Law. We don't need to be giving the woos quotes that they can use against us...

<pedantic>

[vIQleS]

Sports and games have a whole other set of laws.

Stop me if i'm wrong but I'm pretty sure i've heard of read Randi refering to the challenge as a 'bet'.

"It's not a competition - it's a bet. We bet that you can't do what you say" or something...

ETA:OK - i was wrong:
"It's a prize, not a bet, nor a one-sided bet. It's a prize to be awarded. I'm not making any wager. I'm offering a prize. "

What am i thinking of?

[TheBoyPaj]

I think we have already heard the answer. The British law about illegal lotteries only applies if the person pays to enter. Hence the "no purchase necessary" loophole adopted by many practitioners for the purposes of promotional competitions.

No one pays to enter a paranormal challenge. You don't have to buy anything. There might be costs involved, but they don't go to the organisers (just as you might have to buy a stamp to enter a No Purchase Necessary competition on a can of Coke).

So it doesn't really matter if a challenge is a game of skill or one of chance. Of course, our definitions of "game of chance" sort of assume that one does not have paranormal abilities which would redefine them as games of skill.

[Jaggy Bunnet]

I was under the impression that gambling was no longer taxed, it was part of a deal to get bookies to move back to the mainland from the Channel Islands

What happened previously was that there was a tax applied (either to the stake or the winnings) every time a bet was placed in the UK.

Result was bookies went offshore (normally Gibraltar) to run their internet and telephone operations, as no tax would apply.

UK government changed the law to increase the tax on gambling profits (from the bookmakers) and eliminate the direct tax on bets.

For most people gambling profits are not taxable (mainly so that HMRC does not have to give relief for gambling losses), however if you are trading as a gambler, then your income will be taxable.