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HMRC internal manual

VAT Betting and Gaming Guidance

Lotteries: what is a lottery?: pool competitions

Schedule 9, Group 4 of the VAT Act 1994 used to be Schedule 6, Group 4 of the VAT Act 1983. This earlier version of the Group had a note which specifically provided for certain types of competitions to be treated as lotteries for VAT purposes:

(3) Lottery includes any competition for prizes which is authorised by a licence under the Pool Competitions Act 1971

The Pool Competitions Act dealt with ‘competitions for prizes’, which its section 7 defined as follows:

  1. Supplemental


(2 ) In this Act “competition for prizes” means a competition for prizes where -–

  1. the allocation of prizes depends upon the outcome of sporting events, and
  2. each competitor has the right to forecast the outcome of those events, and
  3. prizes can be won both where a competitor forecasts the outcome of events, and where he does not,

and ‘competition’ includes any scheme or arrangement for the distribution of prizes among persons who have paid to participate, and ‘competitor’ shall be construed accordingly.

When the Pool Competitions Act was repealed, Note (3) was removed from the exemption Group. The effect of this was that competitions of this type, which would formerly have been treated as lotteries, could now be classified either as lotteries or as games of chance, depending upon the nature of each individual competition.

However, in light of the definition of ‘lottery’ given in paragraph VABANDG18200, for VAT purposes pool competition/betting occurs when people make bets and where:

  • winners share the stakes paid or agreed to be paid;
  • winnings are shared among the winners; or
  • winnings are set at the discretion of the promoter.

Any supply will therefore fall within the exemption, under Item 1 of Group 4.