A promotional competition is a competition held for the purpose of promoting your business and bringing your brand to a wider audience. Promotions and competitions can be a fantastic way to not only engage with customers, but to also market and promote your business. In making sure that your promotion complies with legal requirements, your Terms and Conditions will not only define how the competition will run, but whether it is being run legally. However, you must first decide what kind of promotion you are going to run, as the legal requirements differ for each type. There are two categories of promotional competition in Australia, known as a ‘game of skills’ and a ‘game of chance’.
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Game of Skills
A game of skills competition is a competition that involves no element of luck or chance, for example, a marathon or a photography competition. These games require someone to demonstrate certain skills or talents and prizes are awarded based on merit.
Game of Chance
A game of chance, on the other hand, is a competition that depends partly or solely on the luck of the entrants. Winners are normally chosen at random, by way of a draw. An example of this would be a lottery or or a raffle.
Legal Requirements
There are various restrictions and requirements you must adhere to in order to legally run a promotional competition. The rules around this vary in different states, so you may or may not need a license to run one.
Generally, a ‘game of skill’ promotional competition does not require permission from the regulating body, but a ‘game of chance’ promotional competition may require a permit in some States. In New South Wales, promotional competitions are governed by NSW Fair Trading.
Terms and Conditions
In the event that you do have to apply for a license to run a promotional competition, it is important to demonstrate through the Terms and Conditions of your competition that your competition is fully compliant with the regulations and that it is a ‘fair and honest’ game.
In some States, there may be certain requirements that need to be specified in the Terms and Conditions. Below are some common areas that may be covered in your Terms and Conditions:
Eligibility and Conditions of Entry
The first condition that should be considered is who can enter your competition. Apart from deciding who your targeted customers are, there may also be rules and regulations that limit the conditions of entry for your competition. For example, in Western Australia, the Gaming And Wagering Commission Regulations 1988 provides that there be no cost to enter a trade promotion lottery.
Time Clauses
It is the normal course that a promotional competition usually involves other advertising strategies, which combine to maximise commercial effect. The duration of a competition may be determined by the overall marketing campaign. However, time restrictions on competitions are imposed by some regulations. Usually there is a requirement for the competition organiser to ensure that there is sufficient time for people to enter the competition. There may also be specific requirements for the overall period the competition can run. For example, the Gambling and Racing Commission of the ACT indicates the periods in which to determine the result and notify the winner.
General Terms
There should also be general business clauses included in your Terms and Conditions, such as Liability Clauses and Privacy Policy, wherever they are applicable.
Although these clauses may not be essential in obtaining a permit from the regulating bodies, they are vitally important as they are the key terms that will affect your promotion campaign. For example, a proper privacy clause may allow you to analyse your customers’ data and base future marketing campaigns off of this information; a promotions clause may also enable you to advertise your business with photos of the prize winner. If you’re not sure what general terms should be used in your Terms and Conditions, you should consult a business lawyer for advice.
There are several steps that you may need to take before running a promotional competition, especially if you are running a ‘game of chance’. You must check the relevant rules and guidelines in your State, and obtain the required license (if any) before you commence the promotion.
A great first step is ensuring that the Terms and Conditions of your competition comply with the relevant legal requirements.
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