This fact sheet covers - nfplaw.org.au · Territories, (eg, an online trade promotions lottery), you may need to comply with the relevant laws for ... spinning wheels, purchase-to-enter

Trade promotion lotteries and games of chance

© 2014 Justice Connect. This information was last updated on August 2013 and does not

constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.

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This fact sheet covers:

What is a trade promotion lottery?

When a permit is needed and how to get one

Online trade promotions

National trade promotions

Trade Promotions Checklist

This fact sheet summarises some of the legal issues to be aware of when conducting “trade

promotions”. A trade promotion lottery occurs when an organisation, whether it is a business,

community or charitable organisation, promotes its products or services or purpose by offering prizes

to winners selected by an element of chance (like a random draw).

The information in this fact sheet primarily covers the laws of trade promotions in Victoria. Trade

promotion and other gambling activities in Victoria are governed under the Gambling Regulation Act

2003 (Vic) and the Gambling Regulation Regulations 2005 (Vic) (Victoria’s Gambling Laws). The laws

are overseen by the Victorian Commission for Gambling and Liquor Regulation (VCGLR), and in most

cases, to run a trade promotion, an organisation or business will need a licence.

Each Australian State and Territory has its own rules relating to trade promotion lotteries and other

gambling activities and there are differences across jurisdictions. If you plan to conduct trade

promotion lotteries or minor gambling activities where entrants can enter from different States or

Territories, (eg, an online trade promotions lottery), you may need to comply with the relevant laws for

each State and Territory.

This fact sheet covers trade promotions lotteries only. Please refer to the Fundraising and Raffles

and minor gaming pages for further information relating to those activities and requirements

in Victoria.

Legal information for Victorian community organisations

http://www.nfplaw.org.au/fundraising

http://www.nfplaw.org.au/raffles

http://www.nfplaw.org.au/raffles




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A trade promotion lottery is defined as a lottery run by a business, community or charitable

organisation where they:

offer prizes to promote their product, services or community or

charitable purpose, and

the process of choosing a winner includes an element of chance.

Each state has rules about who can run trade promotion lotteries,

and how they must be run.

Examples of trade promotion lotteries include: drawing a winner

from a barrel or “instant win” competitions, spinning wheels,

purchase-to-enter competitions, “scratch and win” cards, prize pool

sweepstakes, 1900 telephone calls and footy tipping competitions.

If you are running a promotion, read the information in the fact sheet and complete the Checklist at

the end of the document to assist you in identifying whether you need to get permits and meet other

legal obligations.

What is a process that involves an element of chance and how

is this different from a “game of skill”?

If the game contains a random selection of entrants at any point in the activity, or if it is dependent

upon the outcome of a sporting activity, then it is considered to have an element of chance and is

considered a “lottery” and a trade promotions lottery permit will be required if the total prize value is

more than $5,000 (see below).

A “game of skill” is one in which there is no element of chance at any point in the game or

competition. As a general guide, “games of skill” are competitions or processes that determine a

winner that require a participant to submit something or answer a question in order to win or be

selected for a prize, usually selected by a judge or panel of judges (eg, essay writing competitions such

as “In 100 words or less, tell us why you consider...”). These are not considered trade lottery

promotions and do not require a permit.

While an organisation does not need to obtain a permit to conduct a promotion that is considered a

“game of skill”, the organisation still needs to take care that all entries are judged individually on their

merit and the winner is selected based on merit. Care should also be taken to ensure that the “game”

or test of “skill” for the promotion is one that is a true test of skill so that participants cannot

potentially enter the same answer (eg, asking participants to answer factual questions to determine a

winner could mean several participants can obtain the correct answer such as “Who is the prime

minister of Australia?”).

Trade promotion lotteries

include: drawing a winner from a

barrel or “instant win”

competitions, spinning wheels,

purchase-to-enter competitions,

“scratch and win” cards, prize

pool sweepstakes, 1900

telephone calls and footy tipping

competitions.




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Can our organisation sell a product or require purchase to

enter?

There must not be an entry fee charged to the public to participate. However, this does not prevent a

person from being required to purchase a product or service to be eligible to enter a trade promotion

lottery. In Victoria, any cost to enter or participate in a trade promotion lottery (for example, by

telephone call, SMS or postage), must not exceed 60 cents.

What about members’ draws?

Members' draws are considered trade promotion lotteries in Victoria. Members' draws are usually

conducted by community organisations and clubs and involve the drawing of a member’s number from

a pool of numbers. An organisation or club conducting a members’ draw will need to comply with the

terms and conditions for conducting a trade promotions lottery which should be available at the place

of entry and to all members.

The conditions of entry can only require the member to be present at the draw if the entry and draw

are to occur on the same day. If members enter by buying goods or services throughout the week, then

it cannot be a requirement for the member to be present at the time of the members’ draw.

There are two types of registrations required to conduct promotions:

general trade promotions permit, and

declaration as a community or charitable organisation (if your group falls into these categories).

General trade promotions lotteries permit

A permit is required in Victoria when the total retail prize value for the trade promotion lottery is more

than $5,000. The “total retail” prize value is the recognised retail price regardless of whether the prize

has been purchased at a discounted price or donated.

If the total retail prize value is $5,000 or less, a permit is not needed in Victoria.

However, all trade promotions lotteries (even ones where a permit is not required) must continue to

meet the other regulations and requirements for conducting the trade promotion (see below).

Organisations requiring a trade promotion lottery permit will need to make their application 28 days

before they start the promotion. The application form and permit fee should be lodged with the

Victorian Commission for Gambling and Liquor Regulation (VCGLR). If you are a community or

charitable organisation, you will also need to apply to VCGLR to be “declared” a community or

charitable organisation in Victoria to conduct trade promotion lotteries and other minor gaming

activities (see below).




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It is important that you complete all questions in the form and include the terms and conditions (rules)

for the conduct of the trade promotion lottery as part of the permit application.

A trade promotion lottery permit can cover a lottery which is promoting more than one organisation but

each organisation needs to provide its details in the application for the permit.

The organisation applying for the trade promotion lottery permit must nominate a person over 18

years of age (nominee) to be responsible for the conduct of the trade promotion. VCGLR will approve

the nominee. The nominee needs to give their consent to VCGLR completing a relevant criminal

history check. If the nominee changes (eg, resigns, or is dismissed) you must nominate another

person to be responsible for the trade promotion lottery and notify VCGLR as soon as possible.

If approved, the trade promotion lottery permit will be given for the period of the trade promotion

lottery, up to a maximum period of one year.

As the most common cause of processing delays for trade promotion lottery permits are

unanswered questions, unclear terms and conditions (rules) or the terms and conditions (rules) not

containing all the required information, it is important that you take extra care in reviewing and finalising

these as part of the permit application. See below for more information on terms and conditions.

If a trade promotions lottery permit holder does not have a person who has been approved by the

VCGLR, the directors, or members of the committee of management, of the permit holder are all

separately responsible and liable under the Victoria’s Gambling Laws as permit holder.

The nomination of a nominee does not exempt the organisation from any legal action should there be a

breach of its conditions relating to its trade promotions lottery permit.

Declaration as a community or charitable organisation to

conduct trade promotions

Community and charitable organisations may conduct trade promotion lotteries, as well as other minor

gaming activities (such as raffles, fundraising events (eg, casino night), bingo, selling lucky envelopes)

to promote the purpose of their organisation, but to do so, the organisation must be “declared” by the

VCGLR to be a community or charitable organisation. All requirements for a trade promotion lottery

apply to community or charitable organisations running promotions.

This fact sheet covers trade promotions lotteries only, however, the Declaration of a Community or

Charitable Organisation also permits the organisation to undertake other fundraising and minor gaming

activities. Please also refer to the other fact sheets titled “Fundraising” and “Raffles & other minor gaming

activities” for further information relating to those activities and requirements in Victoria.




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What kinds of organisations can be declared?

To be eligible as a “declared” community or charitable organisation, an organisation must be

conducted in good faith and:

be established as a not for profit organisation, and

be a community or charitable organisation, a sporting or recreational club or organisation

conducting the activity for the purposes of a political party.

An organisation may be declared as a “community or charitable organisation” if it is conducted for any

philanthropic or benevolent purpose, including the promotion of art, culture, science, religion,

education or charity.

Types of organisations that may be declared as a “sporting or recreational club or organisation”

include Apex, Lions, Rotary or other types of social or recreational clubs such and other special

interest social or recreational clubs (eg, vintage car clubs).

The application for declaration can take up to 21 days to process. Once the organisation has been

declared a community or charitable organisation by VCGLR, the declaration will last for 10 years from

the date of approval (unless earlier revoked by VCGLR or renounced by the organisation).

Accompanying information

If you are a recognised service club or association, your application for declaration must be

accompanied by a request from the President (or equivalent) on club letterhead as well as supporting

documentation.

Organisations having a philanthropic or benevolent purpose must provide supporting documentation

that includes:

a copy of the organisation’s constitution, memorandum and articles of association, or rules under

which the organisation operates. These must demonstrate that the organisation is not run for profit

and prohibits distribution of profits (and assets and property on winding up) to members

a copy of the purpose of the organisation (eg, relief of poverty, education, religion or other

purposes beneficial to the community)

a list of members for the past 2 years

copies of statements of income and expenditure, balance sheets for the past 2 years

copies of minutes of meetings from past 2 Annual General Meetings

copy of Certificate of Incorporation (if applicable), and

evidence of endorsement by the Australian Tax Office as an income exempt charity, an income tax

exempt fund or a deductible gift recipient (if applicable).

Even after VCGLR has “declared” a community or charitable organisation, the organisation will still

need to apply to VCGLR for a permit to conduct a trade promotions lottery and apply for a minor gaming

permit to conduct raffles, fundraising events or sell lucky envelopes.




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Yes, the permit will be issued by VCGLR subject to conditions:

which appear on the face of the permit, and

general conditions relating to conduct of the trade promotion lottery.

Conditions can only be changed (except those set down in Victoria’s Gambling Laws) by application to

and approval from VCGLR. For example, VCGLR needs to approve a change to the closing date for

entry to the lottery. To obtain VCGLR approval for a change in a condition of the permit, the

“Application for Amendment to a Trade Promotion Lottery” form would need to be completed.

All trade promotions lottery must be conducted in accordance with the “terms and conditions” lodged

with the organisation’s permit application. These must be approved by VCGLR. The terms and

conditions must be consistent with the requirements of Victoria’s Gambling Laws and should be as

simple to understand as possible.

The terms and conditions must include the following information:

how to enter

conditions of entry

start and closing dates

when and where the lottery will be drawn (date, time and location)

details and values of all prizes

how winners will be notified

details of newspaper/journal in which winner’s names will be announced (if required)

details of any additional purpose that the personal information collected from participants will be

used for.

If further assistance is required when developing the terms and conditions, or advice on whether they

meet the requirements of Victoria’s Gambling laws, contact the Minor Gaming Unit of VCGLR on 1300

182 457 or email [email protected]

Any changes to the terms and conditions, once a permit has been issued, must be approved by the

VCGLR before they are applied or advertised.

There are also specific requirements for certain prizes (eg, any motor vehicle, motorcycle, boat, trailer

or horse float prize must include all on road costs).

Some other specific requirements for trade promotions include:

Names of winners of prizes worth more than $1,000 must be published. Such prize winners can

be published:

in a newspaper circulated in Victoria




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on a website for a minimum of 28 days

in a trade journal, promotional magazine or a similar publication (if the lottery was advertised in

that)

Records in relation to a trade promotion lottery must be kept for at least 3 years

Specific conditions relate to ‘scratch and win’ card promotions

VCGLR will refuse a permit application to conduct a trade promotions lottery if it decides that the

conduct of the proposed trade promotion lottery is “offensive or contrary to the public interest”. The

VCGLR has issued guidelines and examples about what this may mean. This list is not an exhaustive

list and VCGLR may consider other factors not on this list to be “offensive or contrary to the public

interest”.

In particular, a trade promotion lottery permit application could be rejected if it does not comply with

other laws and codes, for examples the Australian Consumer Law, Victoria’s Gambling Laws, the

Firearms Act 1996, the Prostitution Control Act 1994, the Liquor Control Reform Act 1998, the

Tobacco Act 1987, and related regulations and codes about topics such as such as responsible

gambling, alcohol, and advertising.

A non-exhaustive list of things a trade promotion lottery must not involve or promote includes:

allowing or encouraging minors to participate if the goods or services being promoted by the trade

promotion or the prizes would be illegal for them to purchase

promoting cigarettes, tobacco or tobacco products

promoting firearms (except by a licensed firearms dealer)

promoting prostitution services other than as permitted by law

misrepresenting goods or services

promoting unconscionable conduct

involving anything that would cause alarm or distress to children, or expose them to behaviour,

language or depictions inconsistent with applicable law and industry codes

breaching a person’s privacy

promoting goods or services that are a danger to safety or non-compliant with safety standards

inducing a person to open a betting account, or

advertising gaming machines outside an approved gaming venue.

https://assets.justice.vic.gov.au/vcglr/resources/8aa2284d-283e-479c-b222-eefc8c3dad42/tradepromotionlotteriesguidelines.pdf




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Websites such as social media platforms sometimes have their own guidelines for trade promotions.

Make sure you have a look at them before conducting a trade promotion online.

For more information go to our page on Social Media at www.nfplaw.org.au/socialmedia

If you plan to conduct a trade promotion lottery online using social media (such as Facebook, Twitter,

YouTube), it is important to make sure that you comply with the social media websites’ promotions

guidelines in addition to the relevant State and Territory authority requirements for trade promotion

lotteries (see below). You will need to carefully check these guidelines as they may contain specific

requirements on how you can conduct your trade promotion and how it is associated with the social

media organisation, or could require you to disclose certain information to, or obtain certain things

from, entrants.

Facebook has a number of guidelines that must be followed if conducting a promotion (such as a

contest or sweepstake) using its website. When using the Facebook as a promotional tool, you must:

ensure that your trade promotion lottery is lawful

include an acknowledgement that the promotion is not sponsored, endorsed or administered by, or

associated with, Facebook

include a release of liability for Facebook for each entrant or participant

let entrants or participants know that they are disclosing information to you and not to Facebook.

The Facebook promotions guidelines also prohibit certain activities in conducting your promotion,

including you must not:

condition entry or registration to the promotion upon taking any action other than liking a Page,

checking in to a Place, or connecting to the app (for example, you cannot require a person to post a

photo on the Page wall to enter)

use Facebook’s features or functionality as a registration or entry mechanism. For example, the act

of liking a Page or checking in to a Place cannot automatically register or enter a promotion

participant

notify winners through Facebook, such as through Facebook messages, chat, or posts on profiles

or Pages

use Facebook’s trade marks, trade names, copyrights or other intellectual property in connection

with the promotion

Unless you follow Facebook’s guidelines, you run the risk of Facebook removing your advertisement

and/or disabling your account. For a full list see: http://www.facebook.com/page_guidelines.php

http://www.nfplaw.org.au/socialmedia

http://www.facebook.com/page_guidelines.php




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Different states have different laws. You may need to get more than one permit if the trade

promotion will be in a different state or a few different states.

This fact sheet has focused on the laws in Victoria but it is important to remember that each state has

different laws and different bodies that control trade promotions lotteries. If you plan to conduct a

trade promotions lottery where entrants can enter from different State or Territories (eg, an online

trade promotions lottery), you will need to conduct that trade promotions lottery in accordance with

each of the relevant laws for each State and Territory.

Conducting national trade promotion lotteries is complex as the relevant laws in each State and

Territory vary. Each State and Territory has a different government agency that regulates this activity

with slightly different rules and requirements.

For example, in NSW an organisation may apply for a trade promotion permit that covers either a

single trade promotion or multiple trade promotion eg, where there are many promotions during the

life of the permit. Additionally, in NSW the trade promotions lotteries permit conditions stipulate that a

permit holder cannot represent that a trade promotion lottery is conducted for, or in conjunction with,

an appeal for funds for a not for profit organisation. As such, if a not-for-profit organisation (including a

charity) is associated with the application, it needs to make a trade promotions lottery – special

conditions processing application to set aside this condition.

If there is a link to a fundraising appeal for a not for profit organisation (including a charity) in

connection with a trade promotion application in NSW, the applicant must give NSW Office of Liquor,

Gaming & Racing the following supporting information with its application:

a letter from the not for profit organisation consenting to the link with the trade promotion lottery

an assurance that the proceeds of the fundraising appeal will not be used to fund the conduct of,

or prizes in, the trade promotion lottery

an assurance that the proceeds of the fundraising appeal will be banked intact into the account of

the benefiting organisation.

The NSW Office of Liquor, Gaming & Racing will consider each application on its merits, and may need

to seek additional information in setting aside the condition a permit holder cannot represent that a

trade promotion lottery is conducted for, or in conjunction with, an appeal for funds for a not for profit

organisation.

If an organisation wants to run a national trade promotion or trade promotions in different states, they

may need to apply for more than one permit.

The links to the relevant state authorities are provided here:

ACT - http://www.gamblingandracing.act.gov.au/

NSW - http://www.olgr.nsw.gov.au/promos_trade_promos.asp

NT - http://www.nt.gov.au/justice/licenreg/

http://www.gamblingandracing.act.gov.au/

http://www.olgr.nsw.gov.au/promos_trade_promos.asp

http://www.nt.gov.au/justice/licenreg/




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QLD - http://www.olgr.qld.gov.au/

SA - http://www.olgc.sa.gov.au/

TAS - http://www.treasury.tas.gov.au/

WA - http://www.rgl.wa.gov.au/

http://www.olgr.qld.gov.au/

http://www.olgc.sa.gov.au/default.asp?page=lottery.lottery.htm&menu=lottery

http://www.treasury.tas.gov.au/

http://www.rgl.wa.gov.au/




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The following list is not an exhaustive list of all activities that an organisation needs to consider to

conduct a trade promotion lottery for a not for profit organisation, but represents an initial checklist of

ideas for a person contemplating conducting a trade promotions lottery to consider.

CHECKLIST

Is the contest, competition, promotion etc is considered a “trade promotion lottery”? Is it

a “game of chance” or “game of skill”? What is the value of prizes worth (eg, above

$5,000)? Do you need to apply for a permit? Beware – the threshold for obtaining a

permit may vary in different States and Territories.

Does your organisation need to be declared as a community or charitable organisation?

Is the promotion to be conducted wholly in Victoria or could it involve participants

entering outside of Victoria? If it involves participants outside of Victoria, other State and

Territory gambling laws may apply and further permits may need to be applied for.

Will the promotion be advertised or run online or via a social media website? Beware,

this may indicate that you are conducting a national promotion and each State and

Territory gambling laws may apply to the promotion if anyone in Australia can participate.

Also consider the specific rules of the online website you conduct your promotion

through.

Are there any exemptions, special permits and/or rules for not for profit organisations

conducting such promotions? Different States and Territories may have different

processes and rules to Victoria.

Are there special rule or restrictions that apply to the type of prizes being offered?

Beware – nearly all States and Territories prohibit or restrict prizes or promotion of

alcohol, gambling (especially to minors), cigarettes or tobacco products, misleading

conduct (eg, you don’t have the prizes in your possession to give to the winner etc) as

well as certain prizes (eg, a car may require the promoter to pay on road costs).

Have you appointed an organiser for the promotion (nominee)? Note: consent to police

checks may be required.

Have you drafted the promotion terms and conditions or rules? Do they comply with

minimum requirements (eg, contain start and closing dates, how to enter, no separate

charge for entry etc.)?




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Related Not-for-profit Law Resources

The Not-for-profit Law Information Hub (www.nfplaw.org.au) has further resources on the following

topics

Fundraising

Events

Communications and advertising

Tax (including resources on Deductible Gift Recipient endorsement)

Other Related Resources

Victorian Commission for Gambling and Liquor Regulation

Application Forms for Victoria go to “Trade Promotion Lottery”

Legislation

Gambling Regulation Act 2003 (Vic)

Gambling Regulation Regulations 2005 (Vic)

A Not-for-profit Law Information Hub resource. Access more resources at www.nfplaw.org.au

© 2014 Justice Connect. You may download, display, print and reproduce this material for your personal use, or

non-commercial use within your not-for-profit organisation, so long as you attribute Justice Connect as author and

retain this and other copyright notices. You may not modify this resource. Apart from any use permitted under the

Copyright Act 1968 (Cth), all other rights are reserved.

To request permission from Justice Connect to use this material, contact Justice Connect at PO Box 16013,

Collins Street West, Melbourne 8007, or email [email protected]

http://www.nfplaw.org.au/

http://www.nfplaw.org.au/fundraising

http://www.nfplaw.org.au/events

http://www.nfplaw.org.au/comms

http://www.nfplaw.org.au/tax

http://www.vcglr.vic.gov.au/

http://www.vcglr.vic.gov.au/home/resources/forms/gambling+forms

mailto:[email protected]

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This fact sheet covers - nfplaw.org.au · Territories, (eg, an online trade promotions lottery), you may need to comply with the relevant laws for ... spinning wheels, purchase-to-enter