‘You’ve just won a million dollars! Just send us your credit card details and we’ll send you your winnings!’ This text message was just sent to my phone. Between curses at how these people get my details, I delete it. The sad reality is that these fraudulent competitions and promotions are on the rise, and as a result so is regulation. If you haven’t the right paperwork or licences in place for your competition, you could run into serious trouble. But when does a competition actually require approval?
The laws on ‘lotteries’ differ in each state, and the law applies not only to the state in which you are running the competition, but also where entrants are likely to be from. So, for example, if someone from NSW enters, NSW laws apply to them.
In WA, you must apply to the Gaming and Wagering Commission for a permit when your competition is classified as a ‘lottery’.
A lottery covers any competition that people have to pay to enter, whether that be buying a raffle ticket or similar. Where a cost is not incurred, or if the customer has to purchase a certain product to enter (and the cost is no different to normal) then it’s classified as a trade promotion and does not need a licence. In the case where you are asking people to send, SMS or email their details or competition entry, again it does not need approval so long as the cost to the customer does not exceed 55 cents.
Whilst you wipe your brow as it seems trade promotions are ‘safe’, there are quite comprehensive guidelines which dictate their operation. For example, it is very important that you draft terms and conditions for your competition, and ensure people have the opportunity to read them prior to entering. The terms and conditions should also specify the opening/closing dates of your competition, how the winner is to be notified, and when. The winner must be drawn and notified within a month of the competition closure.
You need to also make sure the prize you describe as part of your promotion is actually what you give people in the end.
Finally, make sure you keep records of your competition, terms and conditions, entrants and the winner for up to 12 months, in case of any auditing that may be requested at random.
This is just a general guide, but I encourage you to visit the WA Department of Racing, Gaming and Liquor’s website prior to conducting any competition and familiarise yourself with the trade promotion lottery general conditions (or view the current regulations here).
Next time you’re planning a competition or lottery, avoid the spam pile and the legal action by doing your homework first.