By Nafsika Palbas

20 October 2015

A trade promotion lottery is a free lottery designed to promote a business’s products or services. This includes any scheme where prizes are given away by any means and there is an element of chance. An example is an online or in store competition where entrants submit their details to win a store gift voucher or products.

The approach in Victoria

From 20 June 2015 the Gambling Regulation Act 2003 (Vic) (“the Act”) was amended to remove the requirement for businesses, charities and community organisations conducting a trade promotion lottery to apply to the Victorian Commission for Gambling and Liquor Regulation (VCGLR) for a permit. This applies regardless of the value of the total prize pool.

Whilst a permit is no longer required, all trade promotion lotteries conducted in Victoria must comply with the mandatory conditions provided for in the Gambling Regulations 2015 (Vic) (“the Regulations”). These require a trade promotion lottery promoter to:

  • Ensure each ticket in a draw has a random and equal chance of being drawn.
  • Ensure the trade promotion lottery is conducted in a manner that is not offensive and that is not contrary to the public interest.
  • Ensure all information designed to induce entry into the promotion includes the closing date of the lottery, details of the draw, eligibility requirements of entrants (if any) and the name and date of the publication in which winners’ names will be published.
  • Publish winner names for prizes worth more than $1,000, and notify all winners in writing.
  • Keep certain records of the lottery for a period of three (3) years after the lottery is drawn.
  • Pay or transfer the prize to the winner within twenty eight (28) days of the draw.
  • Ensure the winner must not incur a cost to accept the prize (other than a trivial cost).
  • Make provision for alternative winners if the original winner cannot be readily identified.
  • Only substitute an advertised prize if the winner agrees in writing and the substituted prize is of the same or greater value than the original prize.
  • Not use the entrants’ information except in accordance with the purposes stated on the conditions of entry. If the entrants information is to be used for another purpose other than to conduct the lottery (i.e. to add the entrant to a marketing list), this must be stated.

If a trade promotion lottery is conducted with scratch and win cards, the conditions of entry must state the maximum number of scratch and win cards to be distributed and the total number and individual value of the prizes. They must also include a condition that printing errors and other quality control matters cannot be used as a reason for refusing payment of prizes.

Failure to comply with the Regulations

The VCGLR has advised that it is continuing to regulate trade promotion lotteries by actively monitoring compliance with the Regulations. If a business, charity or community organisation fails to comply, a penalty exceeding $9,100 as of 1 July 2015 may apply.

The approach interstate

Each State and Territory in Australia has its own regulations for trade promotion lotteries.

Where a trade promotion lottery will be conducted in multiple States and/or Territories (for example, an online lottery through a business’s website or online store) it is imperative that you understand the different regulations and ensure that your conditions of entry are compliant.

 

If you have any questions relating to these issues, please contact Nafsika Palbas or a member of our Business Law team.

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