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The U.K. Office of Fair Trading, however, has determined some of them to be illegal. On July 1st, 2005, the Office of Fair Trading in England declared that two matrix schemes were a form of illegal lottery, pulsematrix.com and phones4everyone (at themobilematrix.com). [http://www.oft.gov.uk/News/Press+releases/2005/118-05.htm] In the UK some matrix sites may claim that they declare themselves to be a private lottery, and thus operate legally. Other opponents of matrix schemes declare this not to be so.
Lotteries and Amusements Act 1976 ("the Act")
3. Under the Act, which covers only Great Britain, all lotteries which do not constitute gaming are declared to be unlawful, unless they are:
(a) small lotteries incidental to an exempt entertainment;
(b) private lotteries;
(c) society lotteries;
(d) local authority lotteries;
or (e) part of the National Lottery. [http://66.102.9.104/search?q=cache:pXT2wd9F-6oJ:www.colchester.gov.uk/servedoc.asp%3Ffilename%3DPPlotteryinfo.pdf+The+Lotteries+and+Amusements+Act+1976+Section+4&hl=en&gl=uk&ct=clnk&cd=18]
The rules for private lotteries are below:
A private lottery is one in which the sale of tickets is confined to either:
(a)members of one society established and conducted for purposes not connected with gaming, betting, or lotteries;
(b)persons all of whom either work or reside on the same premises.
(c)for persons all of whom work on the same premises.
Some matrix schemes operated through websites claim that they operate as a private lottery. Their reasoned arguements for this are shown below:
''The members are those people who have bought something at an internet website, such a software CD. The website constitutes the clubhouse, as this is where the members of the club meet. Straight after the purchase the members are placed into the lottery, which is advertised on the website (clubhouse). Tickets are not legally needed to be produced, but often they are sent as email confirmations. The monies raised from the sale of the tickets is split between prize fund and the club fund, usually with an 80% split in favour of the prize fund. '' [http://www.cyberama.info/index.htm]
Others dispute this, pointing out that advertising outside of the club is not allowed. It is hard to prove either viewpoint as this arguement has not been tested either in a court, by the Office of Fair Trading or by the Department of Trade and Industry.
It is worth noting that there have been no cases in criminal courts. All court cases to date have been in the civil court system, and so it is still unclear whether matrix schemes operate within the law.
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