A Guide to Trade Promotion Lotteries in Australia

1 GTLAW.COM.AU

2020

A GUIDE TOTRADE PROMOTION LOTTERIESIN AUSTRALIA

A Guide to Trade Promotion Lotteries in Australia

2

‘GAME OF CHANCE’ OR ‘GAME OF SKILL’

TRADE PROMOTION LOTTERIESThis guide is designed to provide businesses with a high-level overview of the laws and regulations governing trade promotion lotteries in Australia. For the purposes of this guide, any reference to a ‘lottery’ is to a trade promotion lottery, unless the context requires otherwise. Trade promotion lotteries are a subset of trade promotions, which are themselves a subset of competitions. A trade promotion is a competition that is: + free to enter; + conducted by a business; and+ which promotes the business’ products or services.Whether or not a trade promotion is considered to be a trade promotion lottery will depend on whether it is a “game of chance” or a “game of skill”.

Game of Skill To be considered a game of skill, a trade promotion must not have any element of chance and the winner must be selected based on their ability to meet the relevant criteria stipulated as part of the competition. For example:

This type of trade promotion would not constitute a trade promotion lottery and is therefore not considered further in this guide. However, such trade promotions generally will not require a permit.

This type of trade promotion would constitute a trade promotion lottery.

Game of Chance A game of chance simply involves a winner being selected from a pool of entrants through the use of a ‘luck’ based method, e.g. rolling a dice or drawing a ticket. For example:

Essay writing competition – tell us in 50 words or less why you love our product

Product naming competition - come up with a catchy product name

Promotional video competition - submit a 20 second video explaining why you love pizza

A Guide to Trade Promotion Lotteries in Australia

2

What if the competition involves both skill and chance?Where a competition involves both an element of skill and chance, such as requiring participants to select the correct answer to a question and then drawing the winner at random from those who have answered correctly, the competition will be deemed to be a game of chance under Australian law.

Enter to win – enter in this specific code at sample.com.au for your chance to win

Vote for your favourite photo to win

A raffle is a form of game of chance, but will only constitute a trade promotion where it is free to enter

A Guide to Trade Promotion Lotteries in Australia

3

Which laws apply?

NSW Lotteries and Art Unions Act 1901 (NSW), Lotteries and Art Unions Regulation 2014 (NSW) and Licensing and Registration (Uniform Procedures) Act 2002 (NSW)

VIC Gambling Regulation Act 2003 (VIC) and Gambling Regulations 2015 (VIC)

WA Gaming and Wagering Commission Act 1987 (WA) and Gaming and Wagering Commission Regulations 1988 (WA)

QLD Charitable and Non-Profit Gaming Act 1999 (QLD), Charitable and Non-Profit Gaming Regulation 1999 (QLD) and the Charitable and Non-Profit Gaming Rule 2010 (QLD)

SA Lottery and Gaming Act 1936 (SA) and Lottery and Gaming Regulations 2008 (SA)

ACT Lotteries Act 1964 (ACT)

NT Gaming Control Act 1993 (NT) and Gaming Control (Community Gaming) Regulations 2006 (NT)

TAS Gaming Control Act 1993 (TAS)

REQUIREMENTS FOR TRADE PROMOTION LOTTERIES: A SNAPSHOT All trade promotions, whether a game of chance or skill, will need to comply with the Australian Consumer Law and the Privacy Act. Further information can be found on page 12 of this guide. Trade promotion lotteries are subject to additional requirements, which differ from state-to-state. The following table sets out at a high-level the relevant laws, permit requirements and regulatory authorities relevant to trade promotion lotteries for each state and territory. Where charities or not-for-profit organisations are looking to conduct a trade promotion, or where an organisation is looking to conduct a trade promotion for charitable purposes, slightly different requirements may apply. Further infor-mation can be found on page 12 of this guide.

NSW

QLD

NT

SA

WA

VIC

TAS

ACT

Who is the regulatory authority?

NSW NSW Fair Trading

VIC Victorian Commission for Gambling and Liquor Regulation

WA Department of Racing, Gaming and Liquor and Gaming and Wagering Commission

QLD Office of Liquor and Gaming Regulation

SA Consumer and Business Services

ACT ACT Gambling and Racing Commission

NT NT Department of Trade, Business and Innovation

TAS Department of Treasury and Finance

No

No

No

Yes

Yes – but a permit is automatically

granted when the lottery complies with

regulationsYes – when the

prize pool is worth over $5,000

Yes – when the prize pool is worth

over $5,000

Yes – when the prize pool is worth over

$3,000

Does this state require a permit?

A Guide to Trade Promotion Lotteries in Australia

4

NSW

Which laws apply?Lotteries and Art Unions Act 1901 (NSW), Lotteries and Art Unions Regulation 2014 (NSW) and Licensing and Registration (Uniform Procedures) Act 2002 (NSW).There are additional requirements that apply to permits in NSW.

Who is the regulatory authority? NSW Fair Trading.

When is a permit required?A permit is required for any game of chance that promotes an Australian business (holding an ABN), regardless of the size of the prize pool.

How do you get a permit?The application form to obtain a permit can be found here. This needs to be lodged online or by post to NSW Fair Trading. Different restrictions and fees apply depending on the type of lottery (e.g. whether for a single lottery or multiple) – click here for details. The general processing time for a permit application (or for varying an already granted permit) is 28 days.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ using all avenues to personally notify the winner (either in person, by mail or telephone) within 2 days of the prize being drawn;

+ if the prize value exceeds $500, a public announcement must be made by print or electronic media (e.g. newspaper or website);

+ retention of records for 3 months after the draw, or where there are multiple permits, 12 months after the expiration of the permit (these records include details of how the lottery was run, the prizes awarded, the dates the prizes were awarded, the prize retail value and the contact details of the prize winner);

+ delivering the prize within 6 weeks after the close of the lottery (unless the T&Cs provide for a longer period); and

+ where the prize money exceeds $2,000, paying the amount via cheque or electronic transfer.

What are the consequences of non-compliance? The maximum penalty for a breach of these requirements is a $2,200 fine. There are, however, fines of up to $22,000 or 5 years imprisonment for falsification of records and misappropriation of funds or prizes.

What is required for the permit application or prior to the lottery?An application for a permit must include details of the terms and conditions (T&Cs) and any sample entry form, tickets or advertising materials. There are extensive rules surrounding what is required in the T&Cs - click here for more information and some examples.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in NSW:

+ entry to the lottery must be free (except ordinary retail costs of purchasing goods and services if they are part of the promotion);

+ no prize in the lottery can be a prohibited prize, for example tobacco, a firearm or the provision of cosmetic surgery;

+ the lottery must not breach the specific requirements surrounding liquor prizes (e.g. all entrants must be over 18 years old and certain volume requirements);

+ where a ‘multiple lottery permit’ is acquired for the lottery, there are different caps on the value of each individual prize and the total prize pool – see here;

+ an independent scrutineer will be required for draws of over $10,000 in value (the scrutineer must complete a statutory declaration stating their independence);

+ any prizes unclaimed for 3 months should be sold under the direction of the Minister; and

+ all lottery rules must be clearly advertised.

A Guide to Trade Promotion Lotteries in Australia

5

VIC

Which laws apply?Gambling Regulation Act 2003 (VIC) and Gambling Regulations 2015 (VIC).

Who is the regulatory authority? Victorian Commission for Gambling and Liquor Regulation.

When is a permit required?A permit is not required to run lotteries. However, the lottery must still comply with certain conditions (outlined below).

What is required prior to the lottery?The T&Cs for entry must be made available to all entrants before entry. These T&Cs should include:

+ key dates of the lottery; + how the entrant’s information will

be used; and + any other requirements.

Any promotional material associated with the lottery should also include these details.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ the winner must be notified in writing;

+ records must be retained for 3 years after finalisation of the lottery;

+ the winner’s name must be published for all prizes over $1,000 in or on: – a newspaper circulating

generally in Victoria; – the internet (for a minimum of

28 days); and/or – if the lottery was advertised

solely through a trade journal, promotional magazine or similar publication, in that publication; and

+ the prize must be paid or transferred to the winner within 28 days after the draw.

What are the consequences for non-compliance? The maximum penalty for breaching a requirement is a $9,671.40 fine (for a first offence) or a $16,119 fine (for a second or subsequent offence). The actual penalty incurred will depend on the requirement breached.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in Victoria:

+ entry must be free (other than usual telephone or postage costs which do not exceed the amount determined by the minister from time to time, or the retail value of the goods or services to be purchased as a condition of entry);

+ the lottery must not require the use of a gaming machine to enter;

+ prior written consent must be obtained from the person whose trade or business is being promoted;

+ details of the lottery (including the closing date, drawing details, details where the identity of winners will be published etc.) must be included on each ticket and all promotional material;

+ the winner must not incur a cost to accept the prize (other than trivial amounts); and

+ the physical presence of the winner at the drawing of the lottery must not be a requirement (unless the lottery is only available in the premises where the draw will happen within 24 hours of commencement).

Note there are extra requirements for lotteries involving scratch and win cards, substituting prizes and substituting winners.

A Guide to Trade Promotion Lotteries in Australia

6

Which laws apply?Gaming and Wagering Commission Act 1987 (WA) and Gaming and Wagering Commission Regulations 1988 (WA).

Who is the regulatory authority? Department of Racing, Gaming and Liquor and the Gaming and Wagering Commission.

When is a permit required?A permit is automatically granted when the lottery complies with the Western Australian permit conditions (outlined below). Where a lottery does not comply with the Western Australian permit conditions, the business must apply for a permit.

What is required for the permit application or prior to the lottery?If the lottery is to be conducted via audio, visual or electronic media, a copy of the T&Cs must be lodged with the Gaming and Wagering Commission before the lottery commences. The T&Cs must state the method of determining the winner.

What steps are required after drawing the lottery?After the lottery is drawn certain additional steps must be taken, including:

+ retaining records of the lottery for 12 months;

+ making all reasonable attempts to give the prize to the winner; and

+ if the winner cannot be located, informing the Gaming and Wagering Commission of this.

What are the consequences for non-compliance? The maximum penalty is a $10,000 fine or 2 years imprisonment; however, the actual penalty incurred will depend on which requirement is breached.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in WA:

+ entry must be free (other than usual telephone or postage costs which do not exceed the amount determined by the minister from time to time);

+ cosmetic surgery or medical procedures cannot be a prize;

+ the lottery cannot last for more than 12 months;

+ the draw must be held within 1 month after closure of the lottery;

+ all advertising (including tickets, entry forms, audio or visual media or online media) must include a description of the prizes available and T&Cs; and

+ if practicable, members of the public must be given the opportunity to witness the prize draw. Otherwise, audit records that confirm the prize draw must be made available to the Gaming and Wagering Commission or a Police Officer on request.

WA

A Guide to Trade Promotion Lotteries in Australia

7

Which laws apply?Charitable and Non-Profit Gaming Act 1999 (QLD), Charitable and Non- Profit Gaming Regulation 1999 (QLD) and the Charitable and Non-Profit Gaming Rule 2010 (QLD).

Who is the regulatory authority? Office of Liquor and Gaming Regulation.

When is a permit required?Lotteries (also referred to as “category 4 promotion games” in Queensland) do not require a permit.

What is required for the permit application or prior to the lottery?Prior to commencing the lottery, the T&Cs must be made readily available to all entrants. To see what these should include, click here.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ making every reasonable effort to contact the prize winner and deliver the prize;

+ if a prize is not claimed and the person holding the lottery becomes aware that they cannot deliver the prize to the winner, they have 7 days to advise the Office of Liquor and Gaming Regulation;

+ retaining records of the lottery for a minimum of 5 years;

+ delivering the prize within a month of the date when the winner was drawn (unless agreed otherwise); and

+ if the prize is not claimed within 3 months, conducting a redraw.

What are the consequences for non-compliance? The maximum penalty for not complying with these requirements is a $26,110.00 fine, however, the actual penalty incurred will depend on which requirement is breached.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in Queensland:

+ entry must be free (other than usual telephone or postage costs which do not exceed the amount determined by the minister from time to time, or the retail value of the goods or services to be purchased as a condition of entry);

+ any item that has restrictions surrounding its sale (e.g. tobacco, surgery and weapons) are not allowed to be prizes;

+ when there is more than 1 prize, the major prize must be drawn first and then all prizes must be drawn in descending order of number and value;

+ a prize worth more than $5,000 must be insured;

+ the lottery must be drawn within 1 year of commencement; and

+ any advertisements must state the costs associated with telephone calls or postage etc. to enter the lottery.

There are further specific requirements for instant result tickets, such as scratch cards etc. For more information click here.

QLD

A Guide to Trade Promotion Lotteries in Australia

8

Which laws apply?Lottery and Gaming Act 1936 (SA) and Lottery and Gaming Regulations 2008 (SA).

Who is the regulatory authority? Consumer and Business Services.

When is a permit required?There are three categories for lotteries (also referred to as trade promotions in South Australia). These categories have different requirements.Minor LotteryIf the total prize pool is less than $5,000 and there is no instant scratch or ‘break open ticket’ used, no permit is required. If the prize is drawn electronically, however, you will need to obtain an electronic draw system approval number. Major LotteryIf the total prize pool is more than $5,000 and there is no use of instant scratch or ‘break open tickets’, a major lottery permit (also known as a trade promotion licence) will be required. In addition to this, you will need to obtain an electronic draw system approval number if the prize is drawn electronically. Instant Prize LotteryWhere an instant scratch or ‘break open ticket’ that reveals a hidden number, letter or symbol is used, an instant prize permit (also known as an instant prize trade promotion permit) must be applied for (regardless of the size of the prize pool).

+ an independent scrutineer is required for draws over $20,000 in value; and

+ no illegal or dangerous goods (e.g. tobacco, firearms, weapons or cosmetic surgery) can be offered as a prize.

Note also that there are comprehensive requirements for advertisements relating to lotteries – click here for details.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ the winner must be notified in writing within 14 days of the prize being drawn;

+ for prizes over $250, the winner’s name must be published in a newspaper circulating around South Australia or on the company website (if advertised on the company website) within 30 days;

+ the name and address of the winner(s) must be forwarded to Consumer and Business Services within 14 days of drawing; and

+ tickets, entry forms and all records must be retained for 3 months.

What are the consequences for non-compliance? The maximum penalty for not complying with these requirements or acting dishonestly in connection with a lottery is a $50,000 fine or 2 years imprisonment. The actual penalty incurred will depend on which requirement is breached.

How do you get a permit?An application for a permit can be made online here. To apply for an electronic drawing system approval - click here. It generally takes 14 days to approve a permit application (or 5 days for an expedited application).

What is required for the permit application or prior to the lottery?Any application to run a lottery must include:

+ a copy of the T&Cs; + a copy of the proposed entry

form; and + any proposed advertisements.

There are additional documents required for an instant lottery, including:

+ details of the manufacture, packaging and storage of the instant prize tickets; and

+ a statement that the prizes, numbers, letters or symbols are hidden.

Where the prize is drawn by an electronic system, the approval number must be included (together with a letter confirming that the electronic drawing system has not changed since approval was granted), or, if the system has not been approved, proof of application for an electronic drawing system number.

What are the requirements to run a trade promotion lottery?For all lotteries:

+ entry must be free (other than usual telephone or postage costs which do not exceed the amount determined by the minister from time to time, or the retail value of the goods or services to be purchased as a condition of entry);

SA

A Guide to Trade Promotion Lotteries in Australia

9

Which laws apply?Lotteries Act 1964 (ACT).

Who is the regulatory authority? ACT Gambling and Racing Commission.

When is a permit required?A permit is only required when the prize pool is worth over $3,000.

How do you get a permit?An application for a permit can be completed online here. It generally takes 7 working days for the permit application to be processed.

What is required for the permit application or prior to the lottery?When the application for a permit is lodged, a copy of the rules or T&Cs of the lottery must be included. For a list of what is required to be covered in the T&Cs – click here.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ notifying the winner directly (by email, mail, fax or SMS) within 21 days of the draw;

+ making the results publicly available within 7 days of the draw;

+ not charging a delivery or administrative fee to the winner; and

+ retaining records of the lottery for 12 months after the lottery is drawn.

What are the consequences for non-compliance? The maximum penalty for not complying with these requirements or misappropriating funds or prizes is an $8,000 fine for an individual or a $40,500 fine for a corporation. The actual fine incurred will depend on which requirement is breached.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in the ACT:

+ entry must be free (other than usual telephone or postage costs which do not exceed the amount determined by the minister from time to time, or the retail value of the goods or services to be purchased as a condition of entry);

+ tickets and entry forms must include full details of the manner in which the results of the lottery will be made known;

+ if there is more than 1 prize, the major draw must be drawn first;

+ where the prize includes travel, all relevant travel information must be stated (including details of the location, class of travel, number of people included, inclusion of transfers, date which travel has to be taken by, etc.);

+ the lottery must be drawn within 1 year of commencement; and

+ if a prize is not claimed within a ‘reasonable period’, the person running the lottery must conduct a redraw.

Note that there are additional requirements where the prize involves liquor or gambling – for more information click here.

ACT

A Guide to Trade Promotion Lotteries in Australia

10

Which laws apply?Gaming Control Act 1993 (NT) and Gaming Control (Community Gaming) Regulations 2006 (NT).

Who is the regulatory authority? NT Department of Trade, Business and Innovation.

When is a permit required?A permit is not required for a minor lottery which has a total prize pool worth $5,000 or less.A permit is required for a major lottery which has a total prize pool worth more than $5,000.

How do you get a permit?An application can be made by sending (or submitting in person) a lottery form to a Territory Business Centre. The application generally takes 10 days to be processed.

What is required for the permit application or prior to the lottery?When lodging an application for a permit, copies of the entry forms, the relevant T&Cs and advertising materials must also be lodged. The T&Cs should contain, among other things:

+ where the prize is not available directly to Northern Territory winners, details surrounding this; and

+ the place, date and time of the promotion.

What steps are required after drawing the lottery?After the lottery is drawn, certain additional steps must be taken, including:

+ publishing the names of the major prize winners in a newspaper circulating in the Northern Territory (or in accordance with the T&Cs if they state otherwise);

+ if the prize remains unclaimed for 3 months, selling the prize and depositing the proceeds (or if the prize is money, depositing it) into the Community Benefit Fund; and

+ retaining records of the lottery for 2 years (or 7 years in the case of a major prize), including details of the entries, prizes, publication of winners and evidence of the prize being awarded.

What are the consequences for non-compliance?The maximum penalty for not complying with these requirements is a $12,710 fine or 2 years imprisonment. The actual fine incurred will depend on which requirement is breached.

What are the requirements to run a trade promotion lottery?To run a compliant lottery in the Northern Territory:

+ entry must be free (except the ordinary retail costs of purchasing goods and services if they are part of the promotion);

+ liquor cannot be a principal prize; + no part of a prize can consist of

illegal or restricted goods (e.g. firearms or tobacco); and

+ any promotional material must include: – the lottery T&Cs; – the permit number; – the time period and major

dates for the draw; – details of how the winners are

determined; and – how winners will be notified.

NT

A Guide to Trade Promotion Lotteries in Australia

11

Which laws apply?Gaming Control Act 1993 (TAS).

Who is the regulatory authority? Department of Treasury and Finance.

When is a permit required?Permits are not required to run trade promotion lotteries in Tasmania, as the Act specifically excludes trade promotion lotteries from its remit. Accordingly, trade promotion lotteries are lawful in Tasmania without a permit.

What are the consequences for non-compliance?The maximum penalty for not complying with these requirements is a $95,400 fine for a first offence and a $159,000 fine or up to 2 years imprisonment (or both) for a second or subsequent offence. The actual penalty incurred will depend on which requirement is breached.

What are the requirements to run a trade promotion lottery?To run a compliant trade promotion lottery in Tasmania there cannot be a cost of entry (except the ordinary retail costs of purchasing goods and services if they are part of the promotion).

TAS

11

OTHER REQUIREMENTS In addition to the specific state and territory laws, when conducting any trade promotions (whether a game of chance or skill) the following general requirements will also apply.

A Guide to Trade Promotion Lotteries in Australia

12

PrivacyBusinesses running trade promotions must comply with the Privacy Act 1998 (Cth) and other applicable state and territory privacy laws when collecting, using and disclosing personal information obtained from competition entrants. Importantly, businesses should gain the consent of entrants to reuse their personal information, including identification information such as name, date of birth and address, for a secondary purpose such as future marketing. If personal information is not dealt with in accordance with the privacy laws, penalties will apply. Additionally, competition entrants should be able to easily access and review a privacy policy that describes how the business will use their personal information.Australian Consumer Law (ACL)Failure to comply with the consumer protection requirements under the ACL may lead to pecuniary penalties:

+ Misleading or deceptive conduct is prohibitedBusinesses must ensure the representations they make when advertising the trade promotion and the terms and conditions applicable to it are not misleading or deceptive. Additionally, the ACL stipulates that the competition prize must be provided within the time specified or a reasonable time after the offer was made.

+ Unfair terms are prohibitedTrade promotions constitute standard form contracts under the ACL, and as such if the terms are deemed ‘unfair’ they will be void. A term will be deemed ‘unfair’ if it would cause a significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the business, and would cause detriment if it were relied upon - considering the transparency of the term and the contract as a whole. Unfair terms may also be considered unconscionable conduct under the ACL, particularly as trade promotion terms cannot usually be negotiated and can be varied unilaterally by the offering business.

+ Consumer guarantees imposedBusinesses must ensure they comply with consumer guarantees when providing prizes. If the winner is acquiring the goods or services for personal, domestic or household use, or the prize is less than $40,000, there is an implied guarantee that they are of acceptable quality, fit for purpose, supplied within a reasonable time and rendered with due care and skill.

Terms and conditions (T&Cs)The trade promotion should have properly constructed T&Cs that are clear, accurate, and reveal all conditions applicable to the trade promotion. These should be displayed clearly and accepted by the entrant prior to participating in the trade promotion. The T&Cs should not exclude or restrict a guarantee provided under the ACL – however, they can be used to qualify certain of the guarantees where this is permitted by the ACL. Furthermore, the T&Cs should specifically reflect state or territory-specific regulatory requirements, as they are occasionally reviewed by regulatory authorities to ensure compliance with regulations prior to issuing permits.

For more information on any of the above, please contact one of the G+T key contacts overleaf or your regular G+T contact. Where charities or not-for-profit organisations are looking to conduct a trade promotion, or where an organisation is looking to conduct a trade promotion for charitable purposes, slightly different requirements may apply. Please contact Darren Fittler, overleaf, for more information.

"They are known to be - and are - very innovative, utilising new technologies, better ways of working and thinking outside the box. You always get a holistic response and an all-round solution, and that's where Gilbert + Tobin stand out."Chambers Asia Pacific 2020

A Guide to Trade Promotion Lotteries in Australia

13 GTLAW.COM.AU

KEY CONTACTS

CHARLES COOREYPartnerT +61 2 9263 4019 E ccoorey@gtlaw.com.au

DARREN FITTLERPartnerT +61 2 9263 4567 E dfittler@gtlaw.com.au

LESLEY SUTTONPartnerT +61 2 9263 4296 E lesutton@gtlaw.com.au

NIKHIL SHAHConsultantT +61 2 9263 4048 E nshah@gtlaw.com.au

SAMANTHA KARPESLawyerT +61 2 9263 4506 E skarpes@gtlaw.com.au