Trade promotion lotteries are a great way to promote your business and engage customers with your brand and your latest products and services. If you want to run a successful trade promotion you should make sure that your competition complies with the relevant laws.
Does the lottery need to be free-to-enter?
Trade promotions must be free-to-enter competitions and be used to genuinely promote your company’s goods or services.
Entry to a trade promotion lottery is gained by purchasing goods or services at their normal retail value. This is different to a gratuitous lottery where entrants purchase tickets and raised funds are donated to charity.
Do I need a permit?
Yes. A lottery is a game of luck and you will need to apply for a trade promotion lottery permit. Permits come with a fee and can be issued for a business to conduct an individual lottery or multiple lotteries within a 12 month period.
Make sure you have a clear idea of how you are going to run the lottery before you submit your permit application. The application asks a number of detailed questions including the full prize structure to be won, the process for determining the winners and a copy of your terms and conditions.
What rules do I need?
You will need to have terms and conditions that meet requirements under the Australian Consumer Law. The terms will be a contract between your business and any person who enters. Make sure you include terms regarding the following:
- conditions of entry;
- closing date and time for entries;
- the place, date and time of the lottery draw;
- how prizes will be awarded;
- the method for claiming the prize;
- how winners are notified;
- how the results of the lottery will be published;
- procedure that will apply if the winner fails to claim their prize; and
- details of the prizes and their value.
You cannot impose a condition that could place some participants at a disadvantage. For example, if there is a condition that the participant needs to be on the premises and physically at the draw to claim a prize, they must be allowed time to get to the draw location from wherever they are in the premises.
When you promote your lottery you need to make sure the rules are clearly advertised and easily available to participants. This will minimise the likelihood of complaints down the track. It is a good idea to have the rules on a website from commencement of the lottery and on the back of the ticket.
Other tips for a successful trade promotion:
- Make sure you have plenty of time for each phase of the lottery (notifying applicants that the lottery has begun, publishing rules for the lottery, distributing tickets, collecting entries, closing entries, drawing winners, announcing winners and notifying winners)
- Major prizes should be drawn first. If you decide to conduct the draw in another manner, you need to make it clear in the terms and conditions and advertising material.
- If your total prize value is over $10,000, the draw and the announcement of the winner needs to be scrutinised by an independent person.
- Keep all entry forms and other records associated with the raffle for at least three months after the date on which the winners are decided.
- Make sure you notify the winners within 2 days and deliver their prizes within 6 weeks. Any unclaimed prizes need to be retained for three months and you need to make a reasonable effort to contact the winner and deliver any unclaimed prizes.
- If there is a high chance that a prize will not be awarded because of the nature of the lottery, your advertising needs to include an indication of the odds of winning the prize.
If you have any questions regarding a trade promotion or raffle, or would like assistance drafting the terms and conditions, please call us on (02) 9525 8688.