The prize draws and competitions (PDC) sector in the UK is undergoing notable transformations, particularly in how businesses are bought and sold. The recent enactment of the Voluntary Code of Good Practice for Prize Draw Operators coincides with the establishment of the Prize Competition Council, the sector’s first dedicated trade body, which launched this month. These milestones indicate a drive towards greater organization, accountability, and appeal to sophisticated buyers.
As an advisor in this sector, I have witnessed a significant shift in deal-making practices before and after the introduction of the Voluntary Code. Previously, this marketplace was characterized by entrepreneurial initiatives without a government-sanctioned framework or a dedicated industry body, leaving operators with a limited understanding of what buyers would assess during due diligence.
Despite the market’s ongoing activity, deals like the 2025 acquisition of Click Competitions by Winvia Entertainment showcased a growing interest even then. However, the compliance environment today is markedly different. The Voluntary Code became fully operational in May 2026, and since then, its influence has rapidly emerged, with buyers already adopting its standards as benchmarks ahead of its official implementation.
The formation of the Prize Competition Council is a crucial development in enhancing institutional maturity. Though its direct impact on transactions may not yet be measurable, its inception marks an important phase in the evolution of the PDC sector.
A new layer of scrutiny from buyers has emerged as well. Prior to the Voluntary Code, due diligence primarily examined corporate structures, contracts, and regulatory histories. While some sector-specific inquiries were made about entry routes and competition structures, the depth of compliance assessment was inconsistent, lacking an external point of reference for defining quality.
The arrival of the Voluntary Code has prompted buyers to incorporate compliance inquiries directly into their due diligence processes. Questions now address preparedness for the Voluntary Code, evaluating elements such as self-exclusion implementation, customer spending controls, procedures for age verification, draw randomization, oversight, and how complaints are managed. These inquiries are integral and strategically structured, indicating a more serious approach to compliance assessment than in the past.
This evolving focus on compliance is crucial for sellers. Previously overlooked compliance gaps have transformed into key negotiating points that can significantly influence business valuations and buyer protections. A deficient free entry mechanism could lead to tighter contractual conditions and less favorable terms for sellers.
Another emerging area of concern is VAT treatment. In February 2026, HMRC announced that entries requiring payment in prize draws offering both paid and free routes are not eligible for VAT exemption, which places paid entries at the standard VAT rate of 20%. Subsequently, prospective buyers are increasingly scrutinizing past VAT handling and potential liabilities, making VAT another critical aspect of due diligence.
The Prize Competition Council's formation, established to maintain integrity and player protection within the industry, signifies that operators prefer not to operate in regulatory ambiguities anymore. Launched on July 1, 2026, the Council now represents over 50 operators who strive for recognized standards in the PDC sector. This swift institutional development follows closely behind the Voluntary Code’s implementation and highlights the sector's progression into greater maturity.
Government backing of the Voluntary Code, along with unified industry representation through the Council, promises heightened interest from buyers, advisors, and policymakers. While it remains too soon to quantify the Council's influence on transaction dynamics, its establishment encourages a path toward increased transparency and professionalism in the marketplace. This shift tends to favor well-operated companies while raising challenges for those growing without adequate compliance frameworks.
As compliance costs rise, larger operators can more effectively manage these expenditures due to their wider operational base and in-house resources. For smaller companies, however, the increased compliance burden can be daunting, leading them to reconsider their independence. Notably, ZEAL Network SE recently acquired SevenCanyon for about £33.8 million, citing its regulatory experience and compliance capabilities as competitive advantages in the UK prize draw market.
