What is the Difference Between a Raffle and a Trade Promotion Lottery?

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Table of Contents

• What is a Trade Promotion Lottery?
• What is a Raffle?
• Other Charitable Fundraising Games
• Fundraising Regulation
• Key Takeaways
• Frequently Asked Questions

If you are looking for novel ways to promote your business, you may have considered running a raffle or lottery. However, it is essential to understand that although the concept of these games of chance operates similarly, they are regulated differently and serve different purposes for the community. This article will explore the different community gaming models and permit requirements for raffles and trade promotion lotteries.

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What is a Trade Promotion Lottery?

A trade promotion is a free-entry competition that businesses conduct to promote goods or services supplied by a business. Trade promotions:

• are free to enter;
• promote goods or services; and
• are conducted by a registered business.

Additionally, there are two main types of trade promotions, which are:

• games of skill; and
• games of chance.

Trade promotions are commonly games of skill – specifically lotteries or random number generators, where entrants can purchase a product or service and enter the draw to receive a prize. Although, you may need a permit or authority to operate this type of promotion, depending on which state and territory you operate your business in. Furthermore, if the dollar value of the total prize pool is significant, you may also require a permit.

In Australia, most states and territories do not require a permit. Although, in those that do, the requirements can vary. If you are running a trade promotion across Australia, you should comply with each state or territory’s requirements for permits and authorities. 

What is a Raffle?

Similarly, a raffle is also a game of chance. However, these are usually for charity fundraising purposes. In some states, they are referred to as ‘draw lotteries’. Entrants will generally pay for an entry ticket to enter a raffle or draw lottery, and the winner will be selected randomly. However, to operate a legally compliant raffle, other conditions may apply depending on state regulations. For example, in NSW, the raffle or draw lottery must:

• be conducted on behalf of a charitable organisation;
• share a minimum of 40% of gross proceeds must go to the charity; and
• have a maximum prize value of $30,000.

In NSW, if the prize is over $30,000, you will likely require a community gaming authority. However, it is important to note that fundraising laws differ in each Australian state and territory. 

In some states, including NSW, registered clubs may conduct promotional raffles. However, the primary purpose is attracting or entertaining patrons and receiving minimal profits. For example, a meat or vegetable tray raffle at a club.

Other Charitable Fundraising Games

There are several other gaming activities that businesses can use to raise money for charity. We outline the details of these in NSW below:

Fundraising Regulation

In some cases, the above gaming activities fall within the scope of the charitable fundraising rules. In NSW, the Charitable Fundraising Act 1991 (NSW) (the Fundraising Act) regulates charitable fundraising. The Fundraising Act also sets up the fundraising permit scheme and governs fundraising appeals for charitable purposes. Under section 5 of the Act, ‘fundraising appeal’ is defined as soliciting or receiving money or property for a charitable purpose. Examples of common fundraising activities can include:

• requesting donations;
• selling merchandise; or
• holding events.

However, this can be extended to all activities where there is a representation that the proceeds will benefit the public or a section of the public rather than be for private benefit. In some cases, this could include trade promotion lotteries or draw lotteries.

Key Takeaways

Running a trade promotion can be an effective way to:

• generate interest in your brand; 
• engage new customers; or 
• drive sales. 

Although, you should be aware of your record-keeping and auditing requirements, as the rules around trade promotions and games of chance are important and can be tricky to navigate. For instance, sometimes you may need a community gaming authority and a fundraising permit.

If you need assistance understanding raffles and trade promotion lotteries, our experienced disputes lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions