LegalVision receives some interesting questions from our clients about trade promotion lotteries including, whether you can donate unclaimed prizes which have been subject to a re-draw to a charity, or whether you must redraw the lottery until you dispose of the prizes. This article will outline the law surrounding trade promotions and unclaimed prizes, and whether you can donate these unclaimed prizes to charity.
What’s the Law Surrounding Trade Promotion Lotteries?
Different states have slightly different laws around trade promotion lotteries. For instance, in the state of South Australia, the Lottery and Gaming Act 1936 (SA) (the Act) and the Lottery and Gaming Regulations 2008 (SA) (the Regulations) governs trade promotion lotteries.
The Act and Regulations hold that you must promote and conduct any trade promotion lottery in a manner that presents a true, accurate and complete picture of the competition.
Accordingly, the Act and Regulations prescribe transparency measures that you as the promoter must comply with in running the trade promotion. Consequently, promoters usually draft detailed trade promotion terms and conditions which set out, amongst other things:
- The condition(s) of entry;
- Eligibility requirements (i.e. age restrictions);
- The period over which the competition will be run (promotion period);
- The opening and closing date of the competition;
- Relevant draw dates and the draw method;
- Unclaimed prize procedures;
- Particulars of the prize/s to be awarded;
- Information about what the promoter will publish about the winner and in what medium.
The Regulations hold that promoters must afford minor prize winners a reasonable opportunity to claim their prize. Furthermore, the Minister has the power to refuse to grant a trade promotion licence if the terms and conditions do not allow winners a reasonable opportunity to claim their prize.
For this reason, promoters should implement procedures for unclaimed prizes. An unclaimed prize procedure outlines the circumstances under which a promoter will declare a prize forfeited, return it to the prize pool and make it subject to a redraw.
Major prize draws are also subject to the unclaimed prizes provisions. In particular, promoters must preserve the prizes until they are claimed or distributed. However, where prizes remain unclaimed for three months or more, promoters are required to give notice of this to the Minister. The Minister will then issue directions as to how the promoter should dispose of the prize.
Donating Unclaimed Prizes to Charities
In agreement with the above laws, there are some steps that promoters should take before they donate unclaimed prizes to charity. We recommend the following:
- It is always prudent to have an unclaimed prize procedure for both minor and major prize lotteries;
- Any unclaimed prize procedures must allow the original and any subsequent draw winner a reasonable opportunity to claim the prize;
- In the unlikely event that a prize remains unclaimed after a redraw, the promoter should inform the minister of this fact and advise the minister that they wish to donate the prize to charity.
If you require assistance in drafting or reviewing trade promotion terms and conditions, applying for a trade promotion licence or if you simply have further queries regarding unclaimed prizes, get in touch with our contract lawyers on 1300 544 755.