Trade promotions – what do I need to know?

by | Jul 10, 2017 | Business Law, Featured

Trade promotion regulations differ from state to state as do trade promotion permits so it’s important to do your homework.

Competitions aimed at promoting your brand or your business are called trade promotions. If you are planning to run a trade promotion on a national or even just a local level there are many things you will need to consider, especially since the States and Territories operate independently of each other when it comes to trade promotion regulations. For example, each State and Territory has different thresholds in respect of the value of the total prize pool of a trade promotion indicating if and what type of permit is required.

In addition, you need to assess how you are going to determine the outcome of your promotion as this may also impact on whether or not you will be required to apply for trade promotion permit.

Game of skill or game of chance?

Game of skill are trade promotions where, in order to win a prize, participants must either answer a question or do something showing some sort of “skill”. The prize winners are determined by a judge deciding which answer is the most creative or which entrant shows the most skill.

Game of skill competitions do not require trade promotion permits in any State or Territory within Australia regardless of the value of the total prize pool. However, you are still required to comply with any laws applicable in each State or Territory and appropriate terms and conditions are required.

Game of chance competitions, on the other hand, are competitions where chance or probability is taken into account when determining the winner(s) of a trade promotion.

If you are thinking of running a game of chance competition you must not only comply with relevant State and Territory laws and have appropriate terms and conditions in place but must also, in several States and Territories, apply for trade promotion permits depending on the value of the overall prize pool for the competition.

In some States or Territories, it is easy to obtain a trade promotion permit as permit applications can be lodged online and not much information is required. In other States, however, obtaining a trade promotion permit can involve difficulty and delay and promoters are often forced to push back the commencement date of their promotion which then ultimately requires a lot of going backwards and forwards between the different States and Territories.

Recent changes in Victoria

The State in which it has been the most difficult to obtain a trade promotion permit was Victoria which required applicants to fill out lengthy forms and individual employees who are in charge of conducting the trade promotion to provide private declarations and statements.

However, recent changes to the Gambling Regulation Act 2003 (Vic) have, as of 20 June 2015, removed the requirement for businesses conducting a trade promotion lottery in Victoria to apply for a trade promotion permit.

Thus, Victoria follows in the footsteps of Queensland, Western Australia and Tasmania in which trade promotion permits are not required regardless of the value of the total prize pool of the trade promotion.

The changes to the Gambling Regulation Act 2003 (Vic) do however not remove the requirement for businesses to comply with mandatory conditions.

Under these mandatory requirements, businesses must:

  • ensure the lottery is conducted in a manner that is not offensive or contrary to the public interest;
  • ensure that all information designed to induce entry into the promotion including the closing date, details of the draw, eligibility requirements and publishing dates are communicated to potential entrants;
  • ensure, in a game of chance competition, that each ticket in a draw has a random and equal chance of being drawn;
  • publish winners names for prizes worth more than $1,000, and notify all winners in writing;
  • include in the conditions of entry details of the purposes for which entrant information will be used (other than to conduct the lottery);
  • award prizes within 28 days;
  • ensure prize winners are not required to incur any cost to accept a prize;
  • make provision for alternative winners if the original winner cannot be readily identified;
  • only substitute an advertised prize if the winner agrees in writing and the substituted prize is of the same or greater value than the original prize; and
  • keep records in relation to finances, entries and prizes for three years.

Finally, if the promotion is being conducted by a third party, that third party must obtain the consent of the business being promoted, and conduct the lottery primarily to benefit that business.

New South Wales & Australian Capital Territory

Similar provisions to those set out above also apply in both New South Wales and the ACT.

However, in both New South Wales and the ACT, businesses must apply for trade promotion permits for games of chance but not games of skill regardless of the value of the total prize pool of the competition.

Further, permit costs vary depending on the value of the total prize pool.

South Australia:

In South Australia, a permit is required where promotions have an element of chance and the total national prize pool exceeds $5,000.00.

Northern Territory

In the Northern Territory businesses are not required to apply for a trade promotion permit so long as a trade promotion permit was issued in any other State or Territory.

If no other trade promotion permit was issued elsewhere in Australia, then businesses are required to apply for a trade promotion permit if the total prize pool in the Northern Territory for the competition exceeds $5,000.00

How we can help

If you are looking to run a trade promotion, we can assist you in drafting the terms and conditions for such promotion, review any artwork such as posters, flyers and entry forms to ensure they are compliant with applicable State and Territory laws and apply on your behalf for all necessary trade promotion permits.