Running a competition? Strict rules apply


Often, businesses conduct competitions and give away prizes as a way of attracting new customers and rewarding existing ones.  Most competitions are run as random lotteries that promote the goods or services supplied by a business, and offer a chance to win a prize. 

These types of competitions are known legally as Trade Promotion Lotteries.  Certain laws apply and a permit is required from the NSW Department of Gaming and Racing.
In order to obtain a permit you must complete an application form, provide a copy of any advertisements promoting the competition, information about the prize or prizes, the proposed start and finish dates of the competition, and full disclosure of all terms and conditions or rules of the competition.

When working out the competitions terms and conditions, you should think carefully about the following questions in order to be compliant:
a. Who can participate in the competition?  It is inappropriate for business directors, managers and employees, including their immediate families to participate in the competition.  A child can enter a competition, except where a minimum age is prescribed by law.  For example, liquor prizes cannot be awarded to a person under 18.
b. What are the start and closing dates for the competition?  You cannot end the competition before the advertised closing date.
c. What are the prizes and how much are they worth?  Some prizes, such as tobacco, weapons and cosmetic surgery are prohibited.  Other prizes, including money, are allowed and there is no restriction on prize value.
d. When, where and how the prizes will be drawn.  You must clearly advertise the date, time and location of draw and the how the winner will be drawn.  If more than one prize is offered, the major prize should be drawn first, then the other prizes in descending order of number and value.  If there is a chance there will be an unclaimed prize, you should incorporate a second chance draw into the terms and conditions.
e. How will the entrants enter the competition?  Do they enter by way of entry form or coupon?  Must an entrant purchase a product or service to be eligible to enter
f. How will the winner be notified and the prize awarded?  You should notify the prize winner within 2 days of the draw and give the prize winner their prize within 6 weeks after the close of the competition.  If the value of the prize is $100 or less, the prize winner can be notified by telephone, mail or email.  But if the value of the prize is more than $100 you must also publish the results.

Finally, you need to keep complete records of the competition and your records may be inspected by authorised representatives from the Department of Gaming and Racing. 

So if you are going to run a competition to promote your business, you need to obtain a permit and be aware of how to stay compliant.  The department does impose severe penalties if there are any infringements of the rules!