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Running a competition – legally

You!  For taking the time to understand your obligations when running a competition.

I am often asked questions about the laws that apply to running competitions.  Which is great, because the majority of competitions that I see offered by small business, especially on social media don’t comply with the laws.  What laws you ask? Well there are laws in each State that relate to trade promotion, and Facebook also has terms and conditions that apply to competitions.

State gaming laws

Each State has laws in relation to ‘trade promotion lotteries’.  These are essentially competitions that are designed to promote a trade or business.  A competition will be considered a ‘trade promotion lottery’ when there is no element of skill involved to win.  A game of skill is exempt from the laws.

What is a game of skill?

I am often asked this question as there is benefit for a business to be able to rely upon the exemption by having a competition that is not a ‘lottery’. If there is anything random or up to chance in the way that a person can win the competition, then it is considered a lottery.  I often suggest that you consider this from the entrant’s perspective.  Do I know what I have to do to win the competition?  For example, throw 5 balls into the hoop and you win.  In contrast, if I submit a photo or ‘like’ a Facebook page, to have my name randomly selected from a hat, there is no skill involved.

Competition Terms (Victoria)

The Law also states that you must have competition terms that include information such as:

  • the competition closing date
  • details of where and when the competition will be drawn
  • the name and date of where the winner’s information will be published
  • eligibility requirements.

Social media has no boundaries, so unless you are going to limit the eligibility of entrants based on where they live, your competition will need to comply with the laws of each State and Country that it is open to.  On that note, you will need to also ensure that you aren’t offering a prize or promoting goods or services that are illegal in another country.

Facebook Terms

Facebook competitions must comply with Facebook’s Statement of Rights and Responsibilities and Advertising Policies.  Facebook competitions must also include:

  • terms and eligibility requirements
  • a statement where each entrant releases Facebook from any responsibility or liability connected to the competition
  • acknowledgements that the promotion is no way sponsored, endorsed or administered by or associated with Facebook.
  • Competitions should not be shared on private timelines.

“Share this on your page to enter” does not comply with Facebook’s rules.

What do you do with the information?

If you intend to use the information provided by an entrant for any purpose other than the competition, then you must inform people of how you will use their information.  You can only use the information of a competition entrant for the purpose of the competition unless you have stated otherwise.  You must also keep records of competitions for a minimum of three years.

These are the key aspects important to know for running trade promotions in Victoria.  You should check your relevant state consumer agency for more information, and also check Facebook’s terms for any updates to their rules.

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