It has identified a "small but growing" number of home owners who have opted to use prize competitions to sell their homes.
But it warned that some owners may be committing a criminal offence if the prize competitions fall foul of the Gambling Act 2005.
The schemes work by offering tickets in online competitions which sees a lucky winner "buying" a home outright.
Making a profit from a lottery is illegal, but not from a prize competition - and it is the different between the two which can cause potential problems for home owners.
The commission states that a prize competition must ask a degree of knowledge or skill that will deter a significant number of people and that the question must be sufficiently challenging to ensure that there are clear winners.
The warning comes as the latest gloomy housing survey revealed that property prices have declined at their fastest rate in more than 50 years.
The average price of a home dropped to less than £173,000 in September, from almost £200,000 a year earlier, Halifax said.
The credit crunch has made it harder and more expensive for buyers to find affordable mortgages.
Tom Kavanagh, deputy chief executive of the Gambling Commission, said: "Homeowners considering such schemes as an alternative to selling their house risk committing a criminal offence if they cross the boundary and stray into offering an illegal lottery.
"Lotteries are the preserve of good causes and cannot be operated for private gain," he added.
