TRADE PROMOTION LOTTERIES
Promotions conducted by businesses that contain any element of chance in the determination of winners (e.g., via a draw, instant win, etc.) are known as “trade promotion lotteries” and will require a permit number, in each of the below states, as described:
- New South Wales regardless of the total prize pool;
- ACT only if the total value of prizes exceeds $3,000;
- South Australia if: (i) the winners are determined by a draw and the total prize pool is more than $5,000; or (ii) if there is an instant win element in the promotion, regardless of the total prize pool. The SA lottery department has verbally advised that only instant win mechanics involving scratch cards, prizes hidden inside packaging, etc., will be regarded as instant win promotions, whereas instant win mechanics conducted electronically (e.g., via SMS, MMS, Internet, etc.) will be regarded as draws and only require permits if the total prize pool is over $5,000. However, we have not had this clearly confirmed in writing to date;
- Northern Territory only if the total value of prizes exceeds $5,000 and a permit is not being obtained in any other State/Territory;
- VIC, QLD, WA and TAS do not currently have permit systems in force, although they do have legislation which governs the conduct of trade promotion lotteries.
LIMITED OFFERS WHERE A PRIZE IS AWARDED TO THE FIRST ‘X’ ENTRIES RECEIVED
Special considerations apply to promotions where the first entries received will receive the same gift until stock of the gift run out, as the various lottery departments have different policies regarding whether these promotions involve chance in determining the winners and therefore whether permits are required.
- South Australia: A permit will be required in SA if the total value of all gifts exceeds $5,000;
- Australian Capital Territory: A permit may be required in the ACT, depending on whether the ACT lottery department considers that there is chance in the order of processing claims. For example, if consumers are required to post in claims, then a permit will be required in the ACT as the promoter would have no way of determining which claims received in the same day’s mail arrived “first.” Conversely, if consumers submit their claims via a website or the prizes are awarded on the spot at the time of purchase, a permit will not be required in the ACT as the ACT lottery department considers that there is no chance involved in determining the order in which claims are received;
- New South Wales: A permit will also be required in NSW if consumers are not made aware prior to submitting a claim or prior to completing any element of the claim process (e.g. purchasing a product) whether they will receive a gift.Generally speaking, in the case of a limited offer in NSW, if there is a two-step process required to redeem a gift then a permit will be required. For example, if consumers are firstly required to purchase a product at a shopping centre and then visit the information desk to be eligible to claim a gift, a permit will be required. A permit is required in this instance as the claimant would not know at the time of purchase whether all gifts have been claimed or not.If there is only one step required to submit a claim, then in a majority of cases a permit will not be required. For example, if consumers must complete and submit a form online to claim, a permit would not be required as long as the website is disabled once the maximum number of claims permitted has been received.
- A permit will not be required in NT if: i) all gifts are the same (and therefore have the same value), and the number of gifts to be awarded is clearly set out in all advertising material; ii) the total value of gifts is $5,000 or less; or iii) a permit is being obtained in any other State/Territory.
- VIC, QLD, WA and TAS do not currently have permit systems in force, therefore no permits are required in these States.
For promotions where there is a specific prize pool for each individual outlet/store/venue, and no major prize shared across all outlets, it may be possible to treat each outlet as running a separate promotion, provided that the various promotions are not advertised collectively.
A permit will not be required in SA if the total prize pool in each outlet is $5,000 or less (unless the promotion is an instant win promotion that would otherwise require a permit in South Australia).
If the promotions across several outlets are advertised collectively (e.g., in press advertisements, catalogues, radio advertisements, etc.), permits should be obtained in SA based on the total prize pool across all outlets in each respective State.
A game of skill is one in which the distribution of prizes is not dependent on chance. Every entry in a game of skill must be individually judged according to the criteria set out in the terms and conditions and advertising for the competition such as creativity, literary merit and artistic merit. A game of skill does not require lottery permits nor need it comply with the other requirements relating to trade promotion lotteries as set out in the lottery legislation.
Although games of skill are not regulated by the lottery legislation, games of skill must comply with the Competition and Consumer Act and relevant State fair trading legislation. In particular, care must be taken to ensure that promotional material relevant to the game of skill is not misleading or deceptive. Games of skill still also require adequate terms and conditions (often similar in form and content to those used for trade promotion lotteries) to ensure that entrants are informed of all relevant information and limitations.
Examples of a game of skill:
- “Describe in 25 words or less why you like our new product. The entry judged to be the best will win a holiday to Fiji.” “Send us your funniest holiday photograph. The funniest photo, as determined by the judges, will win a holiday to Fiji.” This criteria allows the judges to subjectively determine the winner with no possibility of more than one determined to be the “best”. Important: It is not enough that the entry criteria allow the judges to subjectively determine the winner, this must in fact occur ie if a promoter asks a question as set out above but then puts all entries into a draw then it is not a game of skill.
Example of what is not a game of skill:
- “Who won this year’s Best Actress award in the Oscar’s?” or “Fill in the blanks: R_GBY L_ _GUE” The above are not games of skill, as it is possible (if not likely) that more than one entry will contain the correct answer. The question does not allow the promoter to distinguish entries and therefore determine a winner without resorting to a draw or chance element. Even if the terms and conditions say that it is the first correct entry drawn that wins the prize – it is still not a game of skill, it is a game of chance.
When setting up a game of skill, promoters should ensure that enough scope is given to entrants to guarantee (as much as possible) that all entries received are different and provide enough material so that judging can in fact take place. For example if a promotion centred around a new beer asks entrants to describe that beer in one word it would be likely that a number of entrants would submit “refreshing” or “cold” and therefore all identical entries would become indistinguishable. Further, if challenged it may be difficult for the promoter to justify how a one word entry is the “best” or the “funniest”.
This is generally something we can advise on early on. If we believe that your promotion or the questions you may have regarding your promotion, are outside SimplyCo’s expertise, we will recommend that you you speak to one of our colleagues at Anisimoff Legal.
You can read about each of the Lottery Departments Trade Promotion requirements here:
Liquor & Gaming NSW – NSW Trade Promotion Fact Sheet
Victorian Commission for Liquor & Gambling Regulation – VIC Trade Promotion Fact Sheet
ACT Gambling & Racing Commission – ACT Trade Promotion Fact Sheet
South Australian Consumer & Business Services – SA Trade Promotion Fact Sheet
Northern Territory Department of Business – NT Trade Promotion Fact Sheet
Queensland Business & Industry – QLD Trade Promotion Fact Sheet
Tasmania Department of Treasury & Finance – TAS Trade Promotion Fact Sheet
Western Australia Gaming & Wagering Commission – WA Trade Promotion Fact Sheet