DrawHouse has urged UK prize draw operators to prepare for VAT enforcement after the company said a number of operators have been contacted directly by HMRC about the VAT treatment of paid entries, both prospectively and historically. The comments were issued in London on 27 July 2026.
The B2B prize draw platform pointed to a Parliamentary Question earlier this year in which the Treasury confirmed HMRC’s view that paid entries into prize draws operating under the DCMS Voluntary Code are subject to VAT at the standard rate. “VAT and taxation are no longer a theoretical debate for the prize draw market; they are a live commercial issue being discussed by operators as a priority,” said Jamie Pinner, CCO at DrawHouse.
DrawHouse said the biggest commercial risk may be retrospective liabilities rather than future margin compression, particularly for operators that have reinvested profits into marketing, technology, hiring, and prize funds. “Adapting to a lower-margin future is one thing. Finding cash to settle an unexpected historic liability is a different ask entirely,” Pinner added. “If retrospective liabilities arise, that could force some operators to restructure, seek investment, partner with infrastructure providers, or exit the market altogether.”
The company noted that some tax advisors dispute whether current legislation supports HMRC’s position, and said alternative approaches are being discussed, including whether any VAT should apply to gross win rather than ticket sales. DrawHouse also claimed some larger operators run individual draws at gross margins of around 50–60%, and modelled that applying VAT to ticket sales could reduce margins by roughly 25–30% depending on input VAT recovery, taking a 50% draw closer to 35% in a conservative downside case.
Even under that scenario, DrawHouse argued prize draws could remain comparatively attractive versus sportsbook and casino products, which it said typically operate on single- or low-double-digit margins before related costs. It added that smaller and mid-sized operators would likely feel pressure first, potentially driving consolidation and increasing the appeal of shared infrastructure models. “Structural change creates winners as well as losers. If the market becomes more disciplined, more transparent, and more professional, that ultimately benefits serious operators and trusted infrastructure providers,” Pinner said.
