Businesses in Australia use promotional techniques to promote their goods and services. Using a competition to promote your business is called a trade promotion lottery or competition. If you plan to operate a trade promotion, you must understand the regulatory framework in the location where your trade promotion will take place. Note that each state and territory’s requirements for the conduct of competitions vary slightly. Therefore, you should consider whether your competition is Australia-wide or specific to certain states or territories. Some states and territories require sign-off (permits or an authority) to run a promotion. You can familiarise yourself with each regulator’s website to keep track of current rules. This article will provide a short overview of the permit and authority requirements of each state or territory.
Promoting a Good or a Service
The purpose of the promotion must be to genuinely promote your business’ goods or services. This means that you cannot conduct a stand-alone lottery. Rather, entry into the lottery must be contingent on purchasing a good or a service that your business sells.
For example, say you run a hardware store, and you want to increase your revenue by running a promotion. The terms state that upon purchasing a product, like a hammer, the client enters into the trade promotion.
In the example above, what is critical is that the customer enters the promotion by purchasing your product. They are not paying to enter the promotion.
Game of Chance or Skill?
When running a lottery or competition, you should think about how you will determine your winner. You are more likely to require a permit or an author if you select winners at random. A winner you choose based on judging criteria can be done without a permit.
A game of chance provides all competition entrants with an equal chance of winning. It involves someone randomly pulling the winner from a pool of entrants. Games of chance are also known as a ‘game of luck’.
On the other hand, a game of skill asks entrants to perform skill-based activities as a precondition to enter the trade promotion. The competition terms and conditions must state the judging criteria. An elected panel of judges might choose the winner against the criteria, or the public might vote on the ‘best’ entrant. Further, there is no chance involved in determining the winner.
Terms and Conditions and Consumer Fairness
Drafting trade promotion terms and conditions is an essential element of conducting a trade promotion. Make your terms and conditions available wherever the promotion is advertised.
Additionally, they must be made available to entrants at the time of entering. To ensure that you operate a transparent and fair competition, the terms and conditions guide can set out the promotion’s rules. Both you and the entrants must comply with the terms and conditions.
Furthermore, all trade promotions should carefully abide by state or territory regulations and the Australian Consumer Law (ACL). You should also take care not to engage in conduct that could mislead or deceive competition entrants.
Permits and Authorities
| Location | Permit Required? | Regulatory Body |
| New South Wales (NSW) | Yes, you need an authority if the lottery promotes a trade or business and the total prize pool exceeds $10,000. You can use one authority across multiple trade promotions. You must submit your trade promotion terms and conditions for each separate competition at least 10 days prior to the start of the competition. | Apply for your authority at NSW Fair Trading. |
| Victoria | No. | The Victorian Commission for Gambling and Liquor regulates lotteries. |
| South Australia (SA) | Yes, you need a permit if the lottery is a ‘major trade lottery’ where the total prize pool value is greater than $5,000. You also require a permit for a ‘scratch and win’ style promotion, regardless of the prize pool value. | Apply for your permit at Consumer and Business Services. |
| Western Australia (WA) | No. | The Department of Racing, Gaming and Liquor regulates lotteries. |
| Queensland | No. | Business Queensland regulates lotteries. |
| Tasmania | No. | The Department of Treasury and Finance regulates lotteries. |
| Northern Territory (NT) | Yes, you need a permit if you are running a ‘major trade lottery’ where the total prize pool value is greater than $5,000. You do not need a permit in the NT if you hold a permit in another state or territory. | Apply for your permit at Licensing Northern Territory. |
| Australian Capital Territory (ACT) | Yes, you should consider permits in the ACT, but exceptions apply. Trade promotions require a permit where the total prize pool exceeds $3,000. | Apply for your permit at the ACT Gambling and Racing Commission. |
Key Takeaways
Running a trade promotion can be an impressive way to generate interest in your brand, engage new customers, and drive sales. Nevertheless, you should be transparent and fair in the way you run your promotion. Additionally, you must make sure you comply with any relevant trade promotion regulations that apply in your state or territory. Trade promotion terms and conditions and the rules around permits and authorities are essential but can be tricky to navigate. However, you should note that you do not need to hold a permit or authority for a game of skill.
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Frequently Asked Questions
A trade promotion lottery is a free-entry lottery where chance determines the award of a prize. The lottery can also be referred to as a sweepstake, competition, contest, game of chance or giveaway.
Any business with an Australian Business Number can conduct a trade promotion lottery.
A Game of Skill is where the winner is judged or voted and selected for their skill on set criteria. In contrast, a Trade Promotion Lottery is based on chance and luck.
No. According to Facebook’s terms, you cannot use a personal Timeline to promote a business e.g. “share on your Timeline to enter” or “share on your friend’s Timeline to get additional entries” is not permitted.
