Giveaways & Competitions

A lot of people don’t realise that it’s against the law to run a lot of the competitions and giveaways you see on facebook and around the place.

No, the governments can’t even let you freely give stuff away without making it complicated!

Unfortunately giveaways (usually considered a “Sweepstakes”) are actually considered forms of gambling in some states/countries.  You have to comply with the regulations for everywhere you accept entries from.   Some locations may require a permit to be issued to make the competition/giveaway legal.  So if you run a competition/giveaway and allow entries from people worldwide, then you need to know and comply with the regulations from every single state/territory WORLDWIDE.  Don’t know what those are or how to find them?  Me either!  But ignorance to the law is unfortunately no excuse.  It is unlikely you’ll be caught, but just be aware that if you run a giveaway, it’s likely to be an illegal one unless you restrict entries only to people you know you’re allowed to have as entrants.

Generally speaking, promotions where a contestant can win something fall into 3 categories:

  • “Sweepstakes”  – Giveaways and any sort of prize draw where every contestant theoretically has the same chance to win, and the winner is chosen randomly (“from a hat”, “lucky draw” etc.).  Sometimes known as a “game of chance”.
  • “Contests” – Also known as a competition, and is where the winner is chosen from the entries due to some measure of merit. Eg the best story or photo.  These are sometimes known as a “game of skill” because there is an element of judging involved to win the prize.
  • Lotteries” – Generally speaking these are where you pay money to enter, however under some laws the entry fee may include non-monetary things – known as a “consideration”, and as such it is possible that requiring an entrant to subscribe to a newsletter or fill out a survey could be considered enough of a “consideration” to qualify it as a Lottery.

Therefore something like a “like this post to go into the draw to win this pad” where you use something like random.org to select the winner at random, is a “Sweepstakes”.  If you do a “Help me name this fabric print, best answer wins” and you choose the answer you like the best (or have voting and the winner of the vote wins), it’s a contest.  If you do a “Sign up to our newsletter to go in the draw to win a pad“, then that could be considered a lottery.

Sweepstakes and lotteries seem to be the most likely to require permits under gambling regulations.  Contests might not.  It depends on the state and often how much value the prize has.

In addition, facebook has some regulations.  Basically you cannot make the contestant use their own friends or timelines as part of the entry.  So no tagging friends or posting to your wall.

Facebook terms and conditions for promotions/giveaways/competitions

  • You can have people comment on your post/photo to enter.
  • You can have a requirement that they “like” a post to enter.
  • (You cannot have the requirement that they “like” your page to enter) – this is no longer mentioned in their terms so may be ok now
  • You cannot have them tag someone else to enter.
  • You cannot have them share a post/photo to their fb timeline
  • You cannot have them do anything that requires them to post on their timeline.
  • You must also include something that says the promotion is not endorsed by facebook
  • You must also have “A complete release of Facebook by each entrant or participant

Sample of a disclaimer text (thanks to rafflecopter) – This promotion is in no way sponsored, endorsed or administered by, or associated with Facebook. You understand that you are providing your information to the owner of this Facebook page and not to Facebook.


The following is not legal advice, but a summary of information gathered online.  Check with the relevant authorities before making any decisions on conducting a giveaway or promotion


 

Your promotions/competitions should disclose the following within their rules:

  • The name of the person conducting the promotion
  • Eligibility requirements (if there are any age/location etc. restrictions)
  • How winners are chosen
  • Description and the retail value of each of the prizes
  • The closing and drawing dates
  • The order in which prizes will be drawn (if not drawn in descending order of value)
  • How prize winners will be notified
  • Whether results will be published and, if so, the way in which they will be published
  • Whether the prize will jackpot or be redrawn if the winning player is not present
  • Whether the game involves a round in which players are eliminated.

Further information


Australia

A business doing a giveaway is called “trade promotions” and sometimes “trade promotion lotteries”.  NSW ruins the fun by requiring a permit for any value of prize if the winner is chosen at random.  The other states/territories allow a giveaway for our purposes without needing a permit.  So basically to legally run a giveaway in Australia you have to exclude entries from NSW or make it based on skill rather than random draw (and in doing so still meet NSW regulations on a competition).  The gambling regulations for other states do not mention regulations for games of skill – so I presume this means they do not require a permit? I’m not sure.  You would have to make sure the voting/selection process was very clear to avoid any disputes.

“Guess how many jellybeans in the jar” where the first correct entry is a winner, would seem to be an example of a competition that may not require a permit in Australia.

“Like this facebook post to go into the draw to win these pads” – is a trade promotion and doesn’t require a permit if you exclude NSW entries and you’re not from the ACT or advertising in the ACT

  • Victoria – You cannot charge an entry fee, however you can require a purchase to enter.  The winner cannot incur any fees to receive their prize (eg can’t be required to pay for postage).
  • NSW – Requires a permit for any “game of chance” (random) draw, regardless of the value of the prize.  Skill based competitions do not require a permit, but does have regulations on how the competition must be run and the winners decided.
  • SA – If the value of all prizes is under $5000, and the prize is not instant win (eg scratch cards), then no permit is required.
  • ACT – A permit is not required for an exempt lottery and it seems that any lottery where the prizes total less than $3000 and/or the lottery is conducted on a website that is not hosted in the ACT and the lottery is not advertised in the ACT.  Skill based competitions do not require a permit.
  • NT – You do not need a permit if the prize pool is under $5000
  • QLD – Trade promotions are a category 4 and do not require a permit so long as entry is free (or if a purchase is required, the cost is not above the market value) and the winner is chosen by chance.
  • WA – Trade promotions do not require a permit if the entry is free or is via purchasing an item that is at normal market price.
  • TAS – Trade promotions do not require a permit if the entry is free or is via purchasing an item that is at normal market price.