When you are running an online competition to promote your business, you should decide whether your game is one of skill or luck. This will define what regulations your competition will be governed by.
For a game of skill, you do not usually have to apply for permits but you should ensure that you draft extensive terms and conditions that comply with state regulations and Australian Consumer Law. This is something a business lawyer can assist with.
Having clear terms and conditions which set out how entries are accepted and defines each parties obligations and limitations will help protect your business and minimise the chance of disputes arising at a later stage.
Game of skill or game of luck?
A game of skill is where the person is chosen by judges and assessed on their entry against a set of specific criteria. You should ensure that your terms and conditions set out the criteria for winning the prize. If the submission involves skill but the process of choosing is random, then it may be considered a game of luck. If you are unsure of whether your competition is a game of skill or a game of luck, you need to review the specific state gaming laws. If you require any assistance with this, you should contact a business lawyer and seek assistance.
If you are running an online competition, it is more than likely that you will require your entrants to submit some sort of image or creative work. If this is the case, then your terms and conditions need to make this clear upon entering the competition i.e. the entrant grants you a license to use the intellectual property associated with their image or creative work, and gives you rights to use the image or creative work for advertising and promotional services. To give effect to such terms and conditions, you need to ensure that your entrants are aware that when they enter into your competition, they are accepting your terms and conditions and the terms and conditions of the online platform that you are using to run the competition.
You should be aware that when running a game of skill, you are not obligated to provide reasons to the entrants as to why they did or did not win. However, you should have records of the judging process and how the winning entries were selected to ensure that the winners were chosen in a fair and ethical way.
If you are offering prizes for your competition, you must ensure that you comply with all applicable regulations. You must ensure that the prize is available or a replacement is available for collection or delivery. The replacement must be reasonable, as it would be provided to a consumer. You must make an effort to deliver the prize and take precautions to ensure it is delivered properly. Penalties may apply if you advertise that there is a prize and you do not make that prize available, or if you provide a prize that is significantly different.
You should also check your prizes against the relevant state regulations. Most states have specific regulations about what can and cannot be offered as a prize; and there are regulations in relation to prizes of alcohol, weapons and other dangerous items.
If you are planning on running a game of skill and are unsure about what regulations apply and what your terms and conditions should cover, we recommend that you speak to an experienced business lawyer. The lawyers at LegalVision work with businesses of all sizes that are looking to run online competitions, and can advise you on legal issues related to running a competition. If you’re in need of legal advice, contact us on 1300 544 755 and speak with one of our business lawyers today.