Sweepstakes: are your staff running an illegal gambling racket?

As Euro 2016 gets under way, and with Wimbledon and the Olympics just round the corner, the workplace sweepstake season is in full swing. As folded up team names do the rounds and the pounds are collected, Ben Rowe, barrister at Stewarts Law, considers the legalities of the humble sweepstake.

In our own offices, as in many others across the country, every major sporting event is preceded by an email from someone offering us the chance to stick a quid in an envelope and get involved with the office sweepstake.

We have just been through the ritual of picking out our teams for Euro 2016. One colleague was really excited about picking England, until he remembered that he would never see his pound again as England will inevitably fail in the quarter finals.

Workplace sweepstakes can always add a bit of extra excitement to a tournament, but organisers need to be careful that it's all above board.

What does the law say? In general, you can't organise a sweepstake without a licence. Fortunately, legislators swerved the spoilsport charges with some exceptions for the workplace.

The rules about workplace sweepstakes - or "work lotteries" as the 2005 Gambling Act calls them - are pretty simple. Happily, most offices up and down the country are probably getting it right already, but there are some traps that can be fairly easy to fall into.

For instance, our firm has offices in London and Leeds, but the sweepstake organiser would not be allowed to hold a sweepstake which involves both locations - they would have to do it separately, one for each office.

There are other considerations too. Consider the classic sweepstake: everyone puts money in a tin and picks a name out of a hat. For this to be legal, your staff need to abide by the following rules:

• the organiser and participants must all work at the same, single workplace;
• you can't advertise the sweepstake anywhere at all apart from at your workplace;
• the organiser cannot make any kind of profit;
• every ticket has to cost the same amount;
• participants can't specifically choose their own teams, the choice has to come down to chance; and
• there can't be any kind of "roll-over".

It is also worth noting who is liable if anything does go wrong. The law says the promoter and organiser is liable. In most cases, workplace sweepstakes are arranged ad hoc, so that will be the employee.

But if the organisation has explicitly approved and is organising the sweepstake, the employer would become liable. So these things are probably best left on an ad-hoc basis.

There are a few other quirks. First, if your workplace has a gambling licence, then you cannot organise a workplace sweepstake - so a roulette croupier can keep spinning the wheel until all the customers are penniless, but he or she cannot get together at work with the poker dealer and the bar staff to have a bit of sweepstake fun during Euro 2016.

Secondly, the organiser can deduct their reasonable expenses from the entrance fees, but everything else has to go out in prizes.

There's a final quirk which could be a real winner for the harried sweepstake organisers dealing with the inevitable workplace punter who says: "Sorry, I haven't got any money on me. Can I owe you?" (The one who picks the tournament turkey and then "forgets" to pay up). The law about workplace lotteries says that you have to pay before you are allowed a ticket - so sweepstake organisers can legitimately hold out against this kind of sharp practice.

Although that final good news may save you from having a sweepstake prize pot that's a few quid down, it may not be enough to spare you that most horrible of fates: the elation of picking out England/Wales/Northern Ireland (delete as appropriate), followed by the crushing disappointment when it all ends in tears.

The law can't help you there. But if your staff follow the tips above, at least their sweepstake will not land them in court.