Understanding Trade Promotion Competitions

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 can 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:

1. free to enter;
2. promoting goods or services; and
3. conducted by a registered business.

Additionally, trade promotions can be used by businesses to increase the 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.

Firstly, in a game of chance, the determination of a winner cannot involve the consideration of any skill. Consequently, you must select the winner purely based on chance.

Secondly, in games of skill, there must be no element of chance at any point throughout the promotion. Therefore, you will choose the winner based on their performance of skills.

Laws and Regulations

The laws and regulations dealing with trade promotions differ between states and territories. As a result, 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.

In Which States or Territories Do I Need a Permit?

Whether or not you need a permit or authority 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 or authorities in any state or territory. However, you must still ensure that you comply with the legal and regulatory requirements in each state and territory.

On the other hand, for games of chance, you may need a permit in ACT, SA and the NT, and you may need an authority in NSW. The different requirements are explained below.

New South Wales

In other states and territories, you may need a permit to conduct a single promotion. However, in NSW, there are new requirements. You must instead apply for an ‘authority’ to conduct trade promotions where the total prize pool exceeds $10,000. You can apply for an authority of either one, three or five years. Once you receive your authority, any time you wish to conduct a trade promotion during your authority period, and where the total prize pool exceeds $10,000, you must apply to notify the NSW regulator of your upcoming promotion. 

Once you have received your authority, you must then notify the NSW regulator of the details of your upcoming promotion. This includes the total prize pool, the rules for entry, and the start and end dates. 

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.

South Australia

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.

Northern Territory

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 or authority 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 you amend any non-compliant terms and conditions. To ensure that your terms and conditions are compliant, cross-check with the relevant laws or ask a legal professional for advice.

Key Takeaways

If you are planning on running a trade promotion competition, you will need to check the relevant laws for each state. As a result, you may need to acquire a permit or authority if your promotion is 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.

Frequently Asked Questions