A trade promotion competition is a free-entry competition that a business conducts to promote their goods or services. Trade promotion competitions can be a great way to increase your customer base and generate excitement for a new product. However, there are a number of permits and regulations that you are required to follow if you wish to conduct a trade promotion competition. This article explains the rules around trade promotion competitions so that you are able to effectively and legally market your business.
What is a Trade Promotion Competition?
A trade promotion is a free-entry competition conducted to promote goods or services supplied by a business. The three elements to a trade promotion are that they are:
- free to enter;
- promoting goods or services;
- conducted by a registered business.
Trade promotions can be used by businesses to increase exposure of their goods or services and to entice consumers to buy their products.
Games of Chance vs. Games of Skill
Trade promotions can either be:
- games of chance; or
- games of skill.
In a game of chance, the determination of a winner cannot involve the consideration of any skill. Your selection of the winner must be purely based on chance.
In games of skill, there must be no element of chance at any point throughout the promotion. You will choose the winner on their performance of skills.
Laws and Regulations
The laws and regulations dealing with trade promotions differ between states and territories. Unfortunately, this means that you will have to check the laws of each individual state to ensure that you are not breaking any regulations. The table below sets out the relevant laws and regulatory bodies for each state and territory.
|State or Territory||Law||Regulator|
|New South Wales (NSW)||
|Australian Capital Territory (ACT)||
|South Australia (SA)||
|Western Australia (WA)||
|Northern Territory (NT)||
In Which States or Territories Do I Need a Permit?
Whether or not you need a permit to run your trade promotion will depend on the:
- type of trade promotion you are running;
- total prize value of the trade promotion; and
- states or territories in which you are conducting the trade promotion.
Games of skill do not require permits in any State or Territory. However, you must still ensure that you comply with the legal and regulatory requirements in each State and Territory.
For games of chance, you may need a permit in NSW, ACT, SA and the NT. The different requirements are explained below.
New South Wales
A permit is required if the lottery promotes a trade or business. For example, you will not need a permit for a draw at a staff Christmas party.
Australian Capital Territory
A permit is always required, unless the:
- total prize pool is less than $3,000;
- promotion is a private lottery;
- prizes or rewards consist of rebates, discounts and other allowances that are equally available to all customers;
- prizes or rewards consist of the granting of a refund that is equally available to all customers regardless; or if
- promotion involves a lottery which is conducted via a website hosted or advertised in the ACT.
You are only required to have a permit for a “major trade lottery”. This is where the total prize pool value is greater than $5,000.
You are only required to have a permit for a “major trade lottery”. This is where the total prize pool value is greater than $5,000. Furthermore, the Northern Territory has a piggyback scheme where no permit will be required if you hold a permit in any other State or Territory.
Applying for Trade Promotion Permits
The trade promotion permit application process in NSW, the ACT, the NT and SA can be a relatively straight forward process. However, you will need to have organised all the relevant information. Your terms and conditions will first need to be compliant with the requirements in each state or territory. This is crucial because it is common for regulators to refuse to issue a permit until any non-compliant terms and conditions be amended. To ensure that your terms and conditions are compliant, cross-check with the relevant laws or ask a legal professional for advice.
If you are planning on running a trade promotion competition, you will need to check the relevant laws for each state. You may need to acquire a permit if your promotion will be in:
- New South Wales;
- the Northern Territory;
- the Australian Capital Territory; or
- South Australia.
To avoid delays, make sure that your terms and conditions are fully compliant before commencing the permit application process. If you have any questions about trade promotion competitions, contact LegalVision’s advertising compliance lawyers on 1300 544 755 or fill out the form on this page.
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