‘Spot the Ball’- Game of chance or no game at all

This case involved operators of Spot the Ball (STB) Competitions and whether their activities could be classed as a game of chance under the Gaming Act 1968 in order to claim VAT exempt status under the Finance Act 1972, the Value Added tax Act 1983 and the Value added Tax Act 1994.

The operators originally sought to recover VAT paid between 1979 and 2006 in the region of £70 million.

The STB competitions in question invited players to place a cross where he or she thought the ball was located on a player coupon, which was then returned to the operator. The winners of the competition would be decided not by reference to the actual position of the ball in the original photograph, but by reference to the opinion of a panel of experts.

The competition was presented to the public as involving skill and judgment and also involving elements of chance.

The First Tier tribunal found that however a skilful a competitor might be and even if superlative skill was applied that in the circumstances a player could only approximate the ball’s location and that accordingly the Spot the Ball was indeed a game of chance and therefore exempt from VAT.

HMRC appealed that decision and the Upper Tribunal found that the First Tier Tribunal had erred in its findings. A game of chance required some sort of engagement with other players and therefore the STB competition, where no such interaction occurred, could not be classed as a game and therefore the VAT exemption would not apply.

The matter has finally reached the Court of Appeal which has held that the First Tier Tribunal did not err in its decision and that ‘Spot the Ball’ in these circumstances was indeed a game ‘of chance’.

• For the purposes of the Gaming Act 1968, whether a competition is a ‘game’ or not is a question of fact and ‘game’ is to be given wide meaning, although there must be a degree of active participation.
• There is no requirement for competitors to be assembled together.
• There is no requirement for inter-player interaction.
• Courts will look at the realities of the offer and the competition and will not be deceived, whether innocently or otherwise, by delusive appearances or descriptions.

So where does this leave us?

• Spot the ball can be run as a game of chance where the result is determined by a panel of judges. If players’ crosses were compared with a footballs’ actual location there could be a strong argument that this may be less a game of chance and more a game of skill.
• Prize competitions (games requiring a players skill and judgment and not determined by chance) do not require any form of licence from the Gambling Commission.
• If Spot the ball is a game of chance it is likely to also be a lottery, which would require the appropriate permission and be subject to further restrictions.
• Depending how a particular promotion/game is run there are potential costs implications from both licensing and taxation perspectives.

For further information on gambling contact solicitor Richard Bradley on 0115 953 8500.