Spot Check: Thinking of running a competition?

Competitions can be an excellent marketing tool – a great way to promote your business, attract new customers or generate interest in a product.

But competitions, where they involve an element of chance, are often regulated as a type of ‘lottery’. In this spot check we’ll look at how a little forward planning can save some unwanted pain down the track.

Permits

The first point to make about competitions, is that you’ll generally need at least one permit. You won’t always need one (we’ll explain why below) but as a regulated gaming activity, competitions generally require at least one permit. Why at least one? Well that brings us to the second important point …

State’s rules

Competitions are regulated on a State by State basis. This means that if your competition is open to people in Victoria, NSW and Queensland, you’ll need a permit from the Victorian, NSW and Queensland gaming authorities.

Permits take time

It can take up to 28 days to process permit applications in some States. This is where a bit of forward planning is essential – you’ll need to know which States your competition is being run in and apply early for permits. We seen plenty of marketing plans frustrated because the marketing department didn’t realise permits were needed or how long they would take.

Trade promotion lotteries

Remember how we said you won’t always need a permit? If your competition fits within the exception of a ‘trade promotion lottery’ and has a total prize pool below the statutory cap, you won’t need a permit.

A trade promotion lottery is one which is aimed at promoting a business and which fits the specific definitions set out in gaming laws. But remember also how each State has its own gaming laws? This means you’ll need to check that your competition fits the definition of a trade promotion lottery under the laws of each State that you’ll be running it in.  You’ll also have to check what the statutory cap for the total prize pool is under the relevant State law.

In Victoria, you won’t need a permit for a trade promotion lottery if:

• the total prize pool is less than the statutory cap of $5,000,
• the entry fee is no more than the prescribed amount (currently the cost of a premium SMS), and
• the promotor meets other prescribed conditions.

The ‘other prescribed conditions’ deal with providing certain information (closing date, eligibility, etc), publishing winners’ details and record keeping. People often forget about these additional obligations but if you don’t do them, you won’t fit under the exception and your competition will be illegal.

Conclusion

• Don’t forget that competitions that involve an element of chance are often a regulated activity. And don’t forget each State has different regulations.
• Chances are you’ll need a permit. Make sure to apply early.
• If you don’t have a permit, make sure your competition fits into the definition(s) of a trade promotion lottery with a total prize pool below the statutory cap.
• Don’t forget that while a trade promotion lottery won’t need a permit, there are still particular obligations that you must comply with.