How compliance is reshaping M&A in the prize draws sector
The UK prize draws and competitions (PDC) sector is changing fast, and so is the experience of selling a business within it.
In the space of a few months, the Voluntary Code of Good Practice for Prize Draw Operators came fully into effect. The PDC sector’s first dedicated trade body, the Prize Competition Council, launched just earlier this month.
Together, those developments signal a market that is becoming more organised, more accountable and increasingly attractive to sophisticated acquirers. Having advised on a number of transactions in this sector, both before the Voluntary Code existed and since its introduction, a clear shift in how deals are approached has become increasingly apparent.
In earlier transactions, the sector was at a more entrepreneurial stage of its development. There was no government-backed code of practice, no industry trade body and relatively limited awareness among operators of what a sophisticated buyer would scrutinise in due diligence.
The market was active. Deals like the sale of Click Competitions to Winvia Entertainment in 2025 illustrate the level of interest that was already building. However, the compliance environment in which those transactions were negotiated and documented was quite different from today.
More recent transactions have taken place against a markedly different backdrop. The Voluntary Code came fully into effect in May 2026, and deals agreed in the period surrounding that milestone show how quickly the Voluntary Code’s influence was being felt. Buyers had already absorbed its standards and were applying them as a benchmark, regardless of whether its provisions had formally taken effect.
The subsequent launch of the Prize Competition Council this month has added a further layer of institutional maturity.ย Although it is too early to identify any direct impact on transaction dynamics, its establishment is a significant milestone in the PDC sectorโs evolution.
A new era of buyer scrutiny
Before the Voluntary Code, a buyerโs legal due diligence in this sector followed a broadly familiar template: corporate structure, contracts, IP, employment, data protection, regulatory history and tax. Sector-specific questions were present โ e.g. on free entry route mechanics, competition structure and payment processing โ but compliance depth varied and there was no external benchmark against which a buyer could measure what โgoodโ looked like.
That picture changed when the Voluntary Code arrived. In my experience, buyers operating in this sector are increasingly including a dedicated layer of compliance enquiry on top of the standard legal framework.ย That means specific questions on Voluntary Code preparedness โ e.g. self-exclusion tools and how theyโre implemented, customer spend controls and their calibration, credit card limits, age verification for all players rather than just winners, draw randomisation and independent oversight, complaints handling procedures and proactive monitoring systems for player harm indicators.ย
These are not peripheral follow-ups.ย They are structured questions asked at the outset and buyers are using the Voluntary Code as a ready-made framework to assess whether a business is genuinely prepared for greater scrutiny.
That shift matters enormously for sellers. Compliance gaps that might previously have been dealt with through disclosure are now more substantive negotiating points. A poorly implemented free entry mechanism, for example, could affect valuation and drive buyers towards harder contractual protections โ i.e. more targeted warranties and more onerous indemnities.ย
VAT an emerging due diligence priority
VAT treatment is also receiving increased attention.
In February 2026, a Treasury minister stated on behalf of HMRC that paid entries to prize draws offering both paid and free entry routes are not eligible for VAT exemption and that paid entries are subject to VAT at the standard rate of 20%.
As a result, buyers are increasingly investigating historic VAT treatment and any resulting exposure.ย While the industry’s VAT position remains the subject of debate, it has become a specific due diligence focus in these transactions.
Institutional maturity and the Prize Competition Council
Alongside the Voluntary Code, the sector has seen the formation of the Prize Competition Council โ the PDC sectorโs first dedicated trade body, established to uphold standards of integrity, transparency and player protection across the industry.ย Its formation signals something important: operators are no longer content operating in a regulatory grey area and are actively seeking to shape their own standards and reputation.
The timing underlines just how new this development is.ย The Prize Competition Council officially launched on 1 July 2026, bringing together more than 50 operators under a single trade body and electing its first board of directors for an initial two-year term. For a sector that until recently operated without any collective representation, the arrival of a dedicated trade body within months of the Voluntary Code coming fully into effect marked a rapid move towards institutional maturity.
Government involvement in developing the Voluntary Code, combined with collective industry representation through the Prize Competition Council, is likely to attract greater attention from buyers, advisers, policymakers and other stakeholders.
While it remains too early to assess the Council’s direct impact on transactions, its creation reinforces the direction of travel: greater transparency, higher standards and a more professionalised market. That is broadly positive for well-run operators, but it raises the stakes for those who have grown without building the compliance infrastructure to match.
Why bigger operators will keep winning
The economics of compliance are becoming increasingly significant.ย Meeting the Voluntary Codeโs standards โ i.e. implementing self-exclusion tools, spend monitoring, complaints procedures and responsible marketing policies โ all require meaningful investment.ย Larger operators can spread those costs across a broader base.ย They have the technology, in-house expertise and operational scale to absorb new requirements without it materially affecting their margins.
For smaller operators, the picture is more challenging. Compliance costs are proportionately higher, the internal resource harder to justify and the risk of getting something wrong is just as real. That creates a structural incentive, particularly for founder-led businesses, to consider whether continuing independently makes sense or whether a well-timed exit to a larger acquirer represents a better outcome.
ZEAL Network SEโs recent acquisition of SevenCanyon, announced earlier this month, illustrates this. ZEAL, the market leader for online lotteries in Germany, explicitly cited its compliance capabilities and regulated market experience as a strategic asset in entering the UK prize draw market, acquiring SevenCanyonโs platforms (including 7days Performance and Redline Competitions) for approximately ยฃ33.8 million.ย The company publicly indicated that it expects the UK market to move towards more formalised rules and higher standards, and presented its regulatory experience as a competitive advantage in that environment.
Winvia Entertainment, which now operates BOTB, Click Competitions and Rev Comps alongside its proprietary technology platform, reflects the same trend. The company has publicly stated its ambition to build a leading position in the UK prize draw market through disciplined acquisitions and organic growth. Its reported scale has increased significantly, with net revenue rising from ยฃ38.1 million in 2024 to ยฃ170.3 million in 2025, reflecting both acquisitions and organic growth.
The future
The combination of regulatory evolution, increasing compliance costs and the appetite of well-capitalised buyers creates favourable conditions for continued consolidation.ย The market remains highly fragmented and the gap between well-prepared operators and those who are not is widening.
For operators thinking about an exit, the message is simple: the market is active, buyers are sophisticated and motivated and the standards they apply are increasingly well-defined. Getting ahead of the compliance curve is no longer just good practice, it is a prerequisite for a clean, value-maximising transaction.
Having advised on transactions both before the introduction of the Voluntary Code and more recently as the sector has evolved, I have seen first-hand how buyer expectations have changed. The emergence of the Voluntary Code and the launch of the Prize Competition Council signal that the PDC sector is entering a new phase of maturity and institutionalisation. Buyers are already responding to that change through the standards they apply in due diligence and deal negotiations. Sellers who respond just as quickly are likely to be best positioned to achieve premium valuations and successful exits.
Ben Gale is a partner at Quastels, specialising in mergers and acquisitions, private equity and corporate transactions.ย He has developed a niche specialism advising operators in the online prize draws and competitions sector and has acted on several notable transactions in this rapidly evolving space, including advising the sellers on the sales of Click Competitions and Rev Comps to the Winvia Entertainment Group.
This article is intended for general information purposes only and does not constitute legal advice. The issues and scenarios discussed are illustrative and do not reflect any specific transaction or matter advised on.