A trade promotion competition is a free-entry competition conducted to promote goods or services supplied by a business. The definition is multifaceted and contains three limbs. Firstly, the competition must be free to enter meaning the promoter cannot sell entry tickets or require entrants to provide anything of intrinsic value. An exception to this is that the promoter can require entrants to purchase goods and services at their normal retail value as a precondition to entry. Secondly, the competition must be run as a genuine promotion of goods and services. Thirdly, a business (namely, an entity with an ABN or ACN) must conduct the competition. We set out below the permits required to run a trade promotion as well as the different types.
Games of Chance vs. Games of Skill
Trade promotion competitions come in two varieties:
- Games of luck/chance; and
- Games of skill.
In a game of chance/skill, all entrants have an equal chance of winning based on an element of “chance”. For example, a draw may be conducted by using a computer pick generator that randomly selects a winner from a pool of contestants. In a game of skill, on the other hand, the winner is decided on set criteria, e.g. by a panel of judges.
State legislation regulates trade promotion competitions with the relevant legislative instruments as follows:
- ACT: Lotteries Act 1964 (ACT) & Lottery and Gaming Regulations 2008 (ACT);
- SA: Lottery and Gaming Act 1936 (SA) & Lottery and Gaming Regulations 2008 (SA);
- NSW: Lotteries and Art Union Act 1901 (NSW);
- VIC: Gambling Regulation Act 2003 (Vic) & Gambling Regulations 2015 (VIC);
- NT: Gaming Control Act 1993 (NT) & Gaming Control (Community Gaming) Regulations 2015 (NT);
- WA: Gaming and Wagering Commission Act 1987 (WA);
- TAS: Gaming Control Act 1993 (Tas); and
- QLD: Charitable and Non-Profit Gaming Act 1999 (Qld).
Do You Require a Permit?
Whether or not a promoter needs to take out a permit to run a trade promotion depends on the following:
- The type of promotion they are running;
- The total prize value; and
- The states in which they are hosting the promotion.
Game of skill competitions do not require trade promotion permits in any state or territory within Australia, regardless of the value of the prize pool. However, all states and territories must set out terms and conditions that the promoter must comply with to conduct a game of skill trade promotion competition. For example, to run a game of skill in the state of Victoria, the promoter must ensure that:
- The competition is not run in a manner that is offensive or contrary to the public interest;
- All information designed to induce entry into the promotion is published;
- The winner of the competition does not incur a cost in accepting the prize;
- The winner of the prize is advised of their fortune in writing; and
- The information of entrants is not used for purposes other than to conduct the competition (unless clearly stated).
On games of chance, Victoria, Tasmania, Queensland and Western Australia do not require permits. Promoters, however, must still abide by certain state trade promotion rules. In the ACT, a permit will be required if the total prize pool exceeds $3,000 and there is print advertising or online advertisements of the competition via a website or application.
In NSW, a promoter will require a permit if the lottery promotes a trade or business. In the Northern Territory and South Australia, a permit will only be needed if the competition falls within the definition of a “major prize lottery”. A major prize lottery is one which has a total national prize value of $5,000 or more. Note that the Northern Territory also has a piggyback scheme whereby no permit will be required if the promoter holds a permit in another state or territory. In circumstances where a permit is required, it will be valid for twelve months.
Applying For a Trade Promotion Permit
A promoter to apply for a trade promotion permit must submit the required form, competition terms and conditions and the prescribed fee with the state regulatory authority. In circumstances where the competition winner will be drawn using a random electronic draw system, additional documentation may need to be supplied or retained for auditing purposes (depending on the state or territory). If the total prize pool of the competition exceeds $10,000 and is hosted in New South Wales or, exceeds $20,000 and is hosted in South Australia, an independent person may also need to scrutinise the draw.
Running a trade promotions competition can be an excellent way to boost sales for your business. But before you advertise your competition, you should ensure that you have all the relevant permits, have filled out the correct forms and have paid the required fees.
If you would like to apply for a trade promotion permit, require your competition terms and conditions to be reviewed or drafted, or if you have any questions about trade promotions, get in touch with our competition and consumer lawyers on 1300 544 755.