The guidance relates to the Gambling Act 2005, which comes into force on 1 September. It clarifies the distinction between games of chance, which are regulated as lotteries, and games of skill, which are unregulated.
According to the guidance, competitions that require an answer to one obvious question, such as "what is the capital of France?" may be reclassified as games of chance.
From September, operators of larger lotteries will require licences and will have to give at least 20 per cent of proceed to "a non-commercial beneficiary".
Tom Kavanagh, deputy chief executive of the commission, said: "Prize competitions and free draws remain free of statutory control, but operators who cross the boundary and operate as lotteries will be required to apply for operating licences or cease to operate."
The commission will have no regulatory responsibilities for prize competitions and free draws but will be expected to monitor the boundary between them and lotteries.
Rosamund McCarthy, a partner at solicitors Bates, Wells & Braithwaite, said the change would bring huge opportunities for charities.
"Charities need to be canny about this and negotiate the best deals they possibly can," she said. "They are entitled to 20 per cent of income as a minimum, but they actually need to negotiate much higher than that."