The UK prize draw sector is emerging as a lucrative opportunity for iGaming operators. With a market worth £1.3 billion and 7.4 million active players, it is attracting significant attention and investment, particularly from major players like Flutter and Zeal Network. The introduction of a voluntary code in May aims to regulate the sector while highlighting its potential as a cross-sell opportunity for traditional gambling activities.
The landscape of prize draws in the UK is shifting, presenting an enticing opportunity for the iGaming sector. Currently, this market operates outside the purview of Gambling Commission regulations, making it ripe for investment.
According to a recent white paper from Rokker consultancy group, the prize draw competition has found favor among millennials, thanks to its low cost-per-acquisition and the growing interest in engaging, non-traditional gambling formats. This trend highlights the sector's compatibility with conventional iGaming.
Rokker's report, titled ‘The Evolution of Prize Draws’, estimates the UK prize draw market to be worth approximately £1.3 billion annually. It boasts around 7.4 million active participants and more than 400 operators competing for market share.
Crucially, the report indicates that a significant 88% of those who engage in prize draws also partake in commercial gambling and lotteries within a year, underscoring the potential for cross-selling opportunities.
The demographic landscape is particularly promising. The core audience spans both genders aged 25 to 65, capturing a substantial portion of the millennial and Gen Z markets, which have been relatively underserved by traditional iGaming offerings.
Low-cost entry points, aspirational prizes, and entertainment value drive participation in prize draws, distinguishing them from traditional gambling that often focuses on odds.
Recent years have seen a notable uptick in mergers and acquisitions within the prize draw sector as leading operators aim to consolidate amidst growing competition. Notably, Flutter Entertainment has been active in this space. In 2024, it provided funding for a prize draw start-up through its Gaming Innovators program.
In a further show of commitment, Flutter invested in Rafflee, a prize draw platform that launched in the UK in 2025. Meanwhile, German lottery brokerage Zeal Network has also made significant investments in this arena, managing several products in its home market.
During a recent earnings call, Zeal's CEO, Stefan Tweraser, indicated that the company is exploring opportunities for further investments in social lotteries and prize draws beyond Germany.
Currently, UK prize draw operators are not constrained by the same regulations that apply to traditional lotteries. In November, the government’s Department for Culture, Media and Sport (DCMS) announced a voluntary code aimed at providing guidelines for prize draw operators, set to take effect in May.
However, it's essential to note that while this code will offer some structure, it is not legally binding. It will not replace existing regulations concerning consumer rights, advertising, or data protection.
The traditional lottery sector has long advocated for prize draws to be subjected to the same regulatory framework dictated by the Lotteries Act, citing concerns about market fairness.
Andrew Rhodes, the outgoing CEO of the Gambling Commission, has previously warned about the potential for prize draws to undermine traditional lotteries.
Amid a hefty 40% tax burden on iGaming operators in the UK, the report highlights the 0% tax rate associated with prize draws as a significant incentive for operators to explore this market.
According to Rokker, while compliance with the voluntary code may introduce additional costs, it can serve as a protective measure. This could help the sector avoid stricter regulations from the Gambling Commission, making it more attractive to prospective investors.
Rokker emphasizes that the current fragmented nature of the market, combined with its regulatory independence, makes it an opportune time for investment. However, changes in regulation could alter this landscape in the future.
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