So you want to know how to start a raffle business?
Starting a competition business is a great way to escape the rat race, become your own boss, and earn a profitable side income.
These businesses are attractive because they can be set up with with relatively little initial investment, low overheads, and can be run by one-person part time.
This niche is highly competitive. You’ll notice these sites are popping up everywhere, because everyone wants to make a quick buck.
And in addition, there are some extra legal loopholes you’ll need to jump through that you won’t face in other ecommerce businesses.
Many of them fail within the first 6 months.
So here’s my guide on how to start a successful competition business, avoid failure and create a profitable raffle website.
I’ve found other guides which are mostly surface-level articles written by bots purely for SEO reasons:
“how to create a comp website…step 1, start your competition business.”
Not very useful! 🤦♀️😂
This guide aims to be more indepth guide on how to start a competition business, to provide value to my clients. I will keep it updated over time.
Know your Goals
The first thing I ask my clients enquiring about a competition website:
Why do you want to start a competition business?
In times past, one full-time white collar job was enough to support a small family, buy a house, and do x3 trips a year abroad.
Not any more…
Nowadays people are struggling to make ends meet with a full-time job a sidehustle dropshipping CBD oil, and an OnlyFans account for “foot stuff”. 😂
Competition websites can be a great way to build a source of passive income, and also give a little bit back to your community or audience.
Running your own business is the best way to take control of your life and still earn an honest living.
But money isn’t everything. once you have a certain amount, you’re going to need a larger purpose.
Building your comp business around your community or audience is a good idea.
People like buying from people who have a purpose beyond just “making more money” 🤑
Your purpose will drive you forwards, when the going gets tough, and keep you motivated to improve when money is no longer the goal…
A well-automated website and competition business model can be easily run by one person a few days a week.
This gives you incredible personal freedom to focus your time on the big picture, or just on enjoying life.
But long before you achieve financial freedom, your comp business will likely be a sidehustle which gives you stability in this crazy economy that we now find ourselves in.
Stability means freedom from the stress of worrying about the next paycheck, or when your boss is going to replace you with someone cheaper.
Here’s your complete guide to successfully run raffles online
This is ONE free chapter of the guide, you can buy lifetime access to the full guide for just £6.
Please note, due to the volume of enquiries I receive, I ONLY book 1-1 calls with those who have already purchased the guide, which covers everything you need to know about starting a competition business.
Lottery competition business startup checklist
I will dive into each of these in this guide to starting a raffle business. The order is important. Most people do this ass-backwards.
The correct order is…
- Budget for all costs
- Pick your niche + audience
- Create a brand
- Set up a website.
- Create marketing strategy
- Plan your Launch
- Business setup
- Payment gateway providers
- Buy your first prizes
How to avoid failure
Some hard truths about starting a raffle business
I have worked with and seen literally hundreds of businesses come and go.
Startups have a very high failure rate. Competition startups have an even higher churn rate.
So here are the common things I’ve noticed in the ones that fail:
Manage your expectations for your lottery business
If you had a look at Dream Car Giveaways and thought you’d start your own business and in a month’s time you’d be driving about in a gold-plated Lamborghini, think again!
This a business like any other.
Like any business, it’s hard work and you are unlikely to be profitable in your first few months.
It requires time, effort and investment.
It CAN be incredibly lucrative and this business model has infinite scalability potential BUT….
If you’re going to do it, you have to do it right
Long-term mindset and commitment is key.
Make sure you’ve budgeted and planned for ongoing costs (which I’ll cover in this guide).
Most people are work-shy nowadays. There, I said it. I’m officially a Millennial now. 😂
Social media nurtures false expectations of shortcuts and easy money and overnight success. This is the 1% exception and does not reflect reality.
Most people are looking for a quick buck, and don’t want to invest in their own future.
Most people aren’t willing to put the work in for free for a few months in order to build a long-term income.
Hence why they fail.
If you are serious about growing a 6 figure business and are comfortable/able to work for yourself for free for a few months to build a passive source of income, then read on…
The business model
Your income comes from ticket sales, which customers buy in exchange for a chance to win real prizes.
Your prizes must be bought in advance (you can’t sell tickets for prizes that you don’t own yet.)
Your winners must be chosen completely at random, usually by a raffle machine, or online random number generator during a live draw on social media, for proof of authenticity.
The ticket prices will depend on the value of the prize, and the number of tickets on sale.
Large value prizes may be split into larger numbers of tickets to make tickets more affordable, or you may wish to decrease no. of tickets available to increase desirability or increase your customers’ chances of winning.
The 3 things you need for a successful raffle business
So now we’ve covered failure, let’s talk about the key to success.
Most people kickstart this process by calling competition web designers looking for a quote for a competition website.
You’ve just gathered the x3 cheapest quotes from people who only care about selling you a website.
You’ll also need to consider what happens before the website, and after the website.
So there are 3 things you’ll need to start and run a successful competition business:
1 Niched Brand
This is a step most people skip.
The competition niche is highly competitive. Pun intended 😂
The way you will stand out is not fancy competition rules or gizmos. This will only add friction to the buying process and reduce your sales.
The way you will stand out is a highly focused brand which targets a specific niche, and connects with your ideal audience.
I will cover this more later in the guide. But for now here’s a summary…
A powerful brands resonates with your target market, and gets your customer thinking “This is my kind of people, let’s do business”
2 A competition website
the best competition websites should be highly automated so that you can scale your business without needing to put in more of your time or hire staff. This is why running your competitions on Facebook isn’t viable.
Plus Facebook can and will shut down your account if they catch you selling through the page.
Your website must establish a level of ‘social trust’ so that people feel comfortable spending money.
A bodged job, or budget site means you will need to spend more money on ads, as less of your traffic will buy.
A good website will automate your business, and encourage high spend per customer
3 Marketing strategy
You can spend £10k on an amazing brand and website. But a good-looking website with no traffic is like a ferrari with no fuel:
It might look good, but it’s not taking you anywhere!
At launch, you MUST have a plan to drive traffic to the website to make ticket sales.
Here’s what happens when you don’t have all x3 things working…
❌ brand ✅ website ✅ marketing
you are trying to appeal to everyone which means appealing to no-one. You will spend all your money running innefective ads and fail to make profit. Game over.
✅ brand ❌ website ✅ marketing
You might be selling tickets, but you are tied to manual admin and answering messages all day. Eventually, one dark day, Facebook will shut your page down. Game over.
✅ brand ✅ website ❌ marketing
looks great, works great, but there are not enough people buying tickets. Game over.
That’s why you need all x3 parts working together.
This isn’t just for competition businesses. This applies for ANY business….
In fact, I feel so strongly about this, I’ve built my business, Design Hero, a 6 figure multi-award winning design agency, with an offer built around these 3 things.
I found that building a website my clients, or designing a brand wasn’t actually helping them grow the business. I had to offer all x3 things together to help them take the business to the next level.
Pick your niche
What is a niche?
A niche is as simple as your ideal customer. Your prizes will be a set of products that your ideal customer wants.
Pick ONE market vertical with a specific theme or angle. You can always widen this later.
Why you need a niche for a competition business
The more focussed your niche, the cheaper your marketing costs will be.
If you are giving away cash….
Everybody likes cash! that means you are running ads to every single person on earth.
If you are the competition site raffling collectable pokemon cards….
Well now, that’s a much smaller pool of people. Much easier to run a highly targeted ad, specifically aimed at one person. This ad will convert better. This means lower advertising costs.
How to choose your raffle niche
✅ Start as narrow as you can, and get wider as your site gets bigger. ie. electric mountain bikes > mountain bikes > biking gear > sports gear…
✅ Choose something you know about
✅ Something you are interested in
✅ Something that has a large enough market (this can be surprisingly small)
✅ Something people “fanboy” about (apple gear, mopeds, collectibles etc.)
❌ Something generic like cash or cars
❌ Something that appeals to absolutely everyone
❌ Something you know nothing about
❌ Something illegal or legislated
❌ Something complex
Examples of niches
- Bobblehead collectables
- Apple Gear
- 90’s sportscars
- Gym Equipment
Create a brand for your competition business
No, I’m not talking about your logo.
I’m talking about connecting with your customers so they choose you over all the other competition sites out there
When they feel you are the same type of person, they will feel a connection.
This is why your niche is so important:
The design of your website, your banners, your clothing, your social media posts will all be designed for your ideal customer in your niche.
“I already have a logo, is this the same as a brand?”
In a word: NO. A logo is not the same as a brand.
Your logo is a symbol for your business. But what is it symbolising?
If you want your business to really connect with customers, you’r going to need to design a brand identity
🤝 When customers know your brand, they trust you.
🧠 Humans are hard-wired to only trust people we know.
💸 And we only give our hard-earned money to people we trust!
☝️ And that’s the real reason why good branding is so valuable!
Here’s what a brand looks like for a competition site:
Your brand is how you communicate in your business across printed materials, the website, your emails, social media and more.
Set up a competition website.
The competition niche is very competitive (pun intended!). A generic raffle website template or a competition website builder is not going to cut the mustard!
The only way you’re going to stand out from the crowd is with a bespoke brand to target a specific niche, and a powerful, beautiful raffle competition website.
Most agencies specialise in one thing and one thing only.
That’s why when you pick up the phone to a raffle website designer, they only care about selling you a website.
Once that website is done, they’ll disappear and it’s up to you to sink or swim.
Here’s how to avoid that…
Why not to use Facebook to run online raffles
Facebook isn’t scalable or sustainable.
You’ll be sitting all day answering messages, whatsapps, queries, taking payments, checking payments etc.
Eventually FB will shut down your page for selling raffle prizes on your page. Game over!
Raffle Website functions
Your website should do all of the following…
- Sell prizes online
- Create and edit your own prizes, countdowns and discounts
- Take payments online
- Automate your admin and emails
- Run random ticket numbers
- Set quiz questions and answers
- Run promotions and sales online
- Keep customer records and enquiries
- Ingrate email and social marketing
- track site data for running ad campaigns
- Integrate influencer and affiliate marketing
- Automate your marketing and boost sales
- Build trust
- Increase profit
Finding a web designer for your raffle website
Where to find a web designer for raffle competition websites….
🔎 Job boards
Avoid Fiverrr or PeoplePerHour like the plague. All day long I answer enquiries from people who have paid £600 on fiverr for a website template which doesn’t work isn’t fixable.
🔎 Footer links on other websites
🔎 Shortcut…Me 😂
How to spot red flags
⚠️ Warning. The competition niche is rampant with digital cowboys and ripoff merchants. They see competition websites as easy money, and often get stuck and can’t finish the job, or dissapear when the going gets tough. Here are a few vetting Qs you can ask to root them out….
Not as big of an issue as most people think. This work is remote. I myself live in the middle of nowhere and work with enterpreneurs all over the world. BUT…. There are certain countries which carry higher risk of cowboys. Never work with developers in 3rd world countries. Never work with developers who outsource offshore (this is not the same as working remotely)
Are they willing to jump on the phone or do they just want to email you their prices?
On a call will they spend more than 20 mins answering your Qs?
Do they respond quickly by email? (If you are pitching them for work and they take a week to respond when money is on the table…not a good sign)
Have they asked you about your goals and intentions, or do they only care about selling you a website?
Do they offer ongoing support as well as just hosting?
What do their demos look like?
Can they provide more than X3 examples?
Do they offer payment plans?
How are the payments structured?
Expect prices to vary wildly.
Large London agencies will charge London prices.
Cowboys will charge dirt cheap.
Are they too cheap to be true?
Which brings us to…
Do not skimp on this part, you are building the foundation of your future income.
If you don’t have the budget, don’t be tempted by cheap templates or cowboys, just wait until you have the budget.
⮩ Hero section intro
⮩ Competitions / Categories
⮩ Promotion / CTA
Each comp page to have…
⮩ Media Gallery
⮩ Ticket picker
📃 Shop pages
⮩ Category pages
⮩ Competitions pages
⮩ Account pages
⮩ Shop backend
⮩ Manage Competitions
⮩ Manage coupons
⮩ Manage customers
⮩ Manage orders
⮩ Manage marketing and reports
📃 Terms and Conditions
- Email marketing
- Sms marketing
- Social sign-in
- Affiliate tracking and commission
If you aren’t a web designer do not try to do this yourself.
I’ve seen 10k websites disappear or get hacked, for the sake of saving £80/m
Remember you’re not just looking for hosting, you’re looking for support
Here’s what to look for when talking to your web designer about their support.
⚡ Super fast web hosting
🌐 domain + SSL (charged separately)
🔒 server security
💾 server backups
✉ branded business email
A good raffle website is only half the story; After launching your new online lottery website you must drive traffic to your website to sell enough tickets to be profitable. Competition business live or die by the strength of digital marketing after launch. Types of marketing: SEO, google ads, social media marketing and more.
Ways Drive traffic
Make sure you’ve budgeted for 3 months marketing.
types of digital marketing:
SEO and PPC both work on Google. For the competition niche, your customers will not be searching for the prizes on google.
The user intent will be an impulse buy so the best way to drive traffic will be through social media marketing.
There are two types of social media marketing that you will use to drive traffic to your raffle website.
Organic social media is just as it sounds:
natural traffic from your social media channel.
Organic traffic is high-quality traffic, but this will take a lot of time to build up.
This is why your brand niche is so important;
You can laser target your audience and product content that actually interests them.
Don’t just endlessly plug your latest prize.
You’ll want to post about 80% “value” content;
Things your audience will find entertaining or interesting.
Try to talk about your motivation for starting your business in the first place, and show the faces behind the team.
People like to buy from people they know and understand.
The other 20% can be sales posts, your latest prizes etc.
Don’t underestimate this step, and don’t leave it to a week before you launch.
It takes a long time to build up a social media audience;
Think months and years not weeks.
You may be able to repurpose an existing account or audience, but only if it is relevant to your brand niche.
Just because you have 10,000 followers who like your holiday snaps on Instagram, doesn’t mean any of them are interested in buying raffle tickets for supercars.
Paid social traffic is paid ads that are displayed across Meta (Facebook and Instagram).
The cheapest, easiest way to do this is boosted posts.
But advanced targeted ads are a far better option.
You can ask influencers and authorities to promote your products in return for a commission.
In fact you can even track the sales they make through your website.
In the past I have set up sites with affiliate tracking so you can automatically track and pay out affiliate commission on your raffle website.
Just as you can incentivize influencers, you can also give your customers bonuses for referring friends and family.
Don’t forget your existing audience.
it’s x5 cheaper to sell to existing customers than it is to chase new ones.
Don’t overdo this. too many emails = unsubscribes
Nobody likes being spammed!
This can be automated such as abandoned cart emails, nurture sequences, automatic emails for new competitions etc.
Same as above.
But don’t overdo this. Texts can be seen as invasive and spammy.
6 months out
The earlier you can start building your audience the better!
3 months out
Start building brand awareness on social.
announce launch date (keep it vague, you can say “launching Q2”)
1 month out
Announce the launch date.
Offer some kind of promotional giveaway or prize.
It would be a good idea to “soft launch” to test your site and launch and prizes with friends and family.
1 week out
Start ramping up the posts and any other marketing channels at your disposal.
It doesn’t stop here.
It’s important to keep in mind you will always be promoting and marketing this business.
Marketing is a flywheel activity: it takes a long time to get going, but then it’s easy to run once you have the funnel and ads optimized.
How to avoid being a gambling business
There are several things you can do to avoid being classed as gambling.
- Offer free postal entry. It’s a ballache so it’s unlikely people will take this route, but technically it means your competitions are free.
- Skill-based competitions. This is where your questions and answers come in. adding Question and answers to enter means your “raffle” is actually a skill-based quiz.
Disclaimer: I’m not a lawyer. I can only advise what my clients have had success with in the past. Laws change. I’ll try keep this up to date.
Even if your business is not classed as gambling, you will still need an RMG license in order to run ads on Meta (Facebook, Instagram, Youtube)
This typically takes a couple of weeks and you can apply online here.
This can be very simple and easy, but sometimes if you hit a snag it is very difficult to get hold of a human being at Meta, so this can take much longer.
Do this in advance to avoid any delays!
Raffle Business setup
Why have I left this to last?
because all of this can be done very quickly, sometimes in a matter of days.
The brand and website will be the things that take most of the timeline.
What do I need to start a lottery competition, raffle prize, or prize giveaway business?
Before you can start making money with competition websites , there are a few things you’ll need:
1. A legal business entity. This will be required for many of the business infrastructure elements such as payment gateways, insurance etc.
2. A payment gateway. This is how you take payments online for sales of lottery tickets. There are many different payment gateways, but many of the usual brand names dont process payments for competition businesses under gambling laws. We can advise the best paltforms for you to use.
3. A business bank account. Setting up your bank account for a competition business can also be hampered due to the nature of the business. Make sure you’re bank, isnurance and any other business infrastructure is happy with the nature of your business before proceeding.
4 Prizes. The raffle competition business market is already quite saturated. You may wish to increase your chances for success by focussing on a smaller, mroe specific niche such as travel, gadgets, fashion, electronics or cars. You MUST provide evidence of how you legally purchased your prizes through the business, your payment gateway provider will insist upon this.
Register on companies house as a Limited company
⚠ Do not operate as a sole trader.
A limited company will give you more protection. Setting up a limited company is quick and easy and can be done online.
A general insurance policy is a must for any business.
Make sure you have a policy which covers legal fees and cyber crime, cyber attacks, as hacking attempts are common in this niche.
You can get this online cheaply at places such as PolicyBee.
Competition businesses are classed as a “high risk niche”
Many of the “big five” will not support new competition businesses.
It can be hit or miss.
if you get turned away from one bank, don’t lose heart, just try again with another.
just in case, try to be vague about the business name and say your in entertainment or online shop haha
Payment gateway providers
Payment Gateway Providers allow you to process online payments such as card payments, Apple Pay, Google Pay etc.
Payment Gateway Providers will take a small slice of your action, before depositing the remaining money into your business bank.
They are all much the same (about 1%)
Similarly, Paypal and Stripe will not support new competition sites.
Buy your first prizes
You will need proof of purchase for your first few prizes in order to get your payment gateway account approved.
Don’t go nuts on the range rovers,
Start small, and work your way up.
At the outset you will be optimizing your ads and marketing, and you might now make ticket sales needed for profit.
Smaller prizes mean less risk.
Costs of setting up a raffle business
Outline of costs
Prices will vary depending on your requirements, and if you desire additional functionality or web development during the web design process.
Branding and website costs will be the biggest intial outlay.
Here’s a chart of what you should expect to budget for this.
You will find prices vary wildly.
The price will depend on your niche, the quality you are looking for in the design, the functionality…
But a word of warning:
Price is what you pay for it, value is how much it pays off!
Beware digital cowboys selling customized templates. Many of these sites, sub-£1,500 mark are complete garbage and not fit for purpose.
What about those £300 packages for competition websites I’ve seen online?
Just as many think competition businesses are “easy money”, many web designers think comp websites are easy to do and get stuck.
It will cost more to fix these than to do it right the first time, so they are false economy.
If I had a penny for every time I’m approached to fix these websites…I’d have 3p this week 😂
My professional advice:
I’ve seen many “budget lottery competition website” or “low cost raffle websites” advertised on Ebay, Gumtree and even Facebook marketplace for as little as £300 including a logo and hosting.
👿 BEWARE: you get what you pay for!
You’ve made it this far which shows more dedication than most…
Demos of competition sites
About the author
Who is Design Hero anyway?
Hi, I’m Nicholas Robb 👋
I run Design Hero, a multi-award-winning 6 figure agency.
I’m one of the UK’s leading provider of competition websites.
I’ve helped 100’s of businesses to scale, and I’ve seen why they succeed, and why they fail…
I’m on a personal mission to help solopreneurs build their own 6 figure lifestyle business and achieve profit, stability and freedom WITHOUT THE burnout.
I’ve written this guide as a shortcut to help you avoid pain and build a passive source on income quicker…
Want a free consultation?