(AsiaGameHub) –   A new white paper from the Rokker consultancy group indicates that prize draw competitions, characterized by low customer acquisition costs and rising appeal among crucial millennial demographics, are highly complementary to the traditional iGaming sector.

According to the ‘The Evolution of Prize Draws’ report released last week, Rokker stated the UK prize draw market generates £1.3 billion in annual revenue, featuring 7.4 million active players and more than 400 operators.

Information referenced in the white paper indicated that 88% of prize draw entrants also engaged in commercial gambling and lotteries within a 12-month span, representing a significant cross-selling opportunity.

Furthermore, the product’s primary audience includes both men and women aged 25 to 65, encompassing a large millennial and Gen Z demographic that is often not fully catered to by iGaming.

“Engagement is generally motivated by affordable entry fees, aspirational prizes, and entertainment value instead of decisions based solely on odds. Consequently, prize draws offer iGaming operators and affiliates a way to reach a complementary, less saturated audience segment, with the potential for more economical customer acquisition,” the white paper stated.

M&A opportunity as Flutter invests in prize draws

The report also pointed to a rise in merger and acquisition activity in recent years, as major prize draw operators have attempted to consolidate the already crowded market. Notable transactions include Flutter’s 2024 funding of a prize draw startup through its Gaming Innovators contest.

Subsequently, in 2025, the iGaming leader invested in the prize draw platform Rafflee, which debuted in the UK that same year.

The German lottery brokerage Zeal Network has also made considerable investments in prize draws and runs several products in its domestic market.

During Zeal’s FY25 earnings call in March, CEO Stefan Tweraser informed analysts that the company was evaluating investments in more social lotteries and potential prize draw ventures beyond Germany.

Voluntary code comes into force in May

In the UK, prize draw operators are not subject to conventional lottery regulations. A voluntary code was established in November by the Department for Culture, Media and Sport (DCMS).

While the code, which is scheduled to take effect in May, will offer guidance for operators, the DCMS stressed that it is not a law and carries no legal obligation. It also does not supersede current rules on matters like consumer law, advertising, and data protection.

The established lottery industry has long advocated for prize draws—which have surged in popularity—to be governed by the same regulatory structure outlined in the Lotteries Act.

Andrew Rhodes, the departing CEO of the Gambling Commission, has previously indicated that prize draws might be cannibalizing traditional lottery sales.

The white paper also underscores the 0% tax rate applicable to prize draws as a further incentive for iGaming operators to explore this area, especially when contrasted with the substantial 40% tax burden on iGaming in the UK.

“Although adhering to the voluntary code will probably lead to extra expenses, it serves as a form of ‘protection fee’ that helps the industry prevent stricter oversight from the Gambling Commission, thereby increasing the appeal of businesses to prospective investors,” the report said.

Rokker is of the view that the market is currently well-suited for investment because of its highly fragmented state and its current position outside the regulatory scope of the UK Gambling Commission, a situation that may change.