Did somebody say “fun”? Then call the “fun police”! If your organisation is considering any kind of competition, inhouse counsel should be involved to advise on legal considerations.
Footy season (and all those tipping competitions!) is coming to an end, but then the horse racing begins, and the ever-popular Melbourne Cup Sweeps. Towards the end of year, there are often functions and events with door prizes or “best dressed” competitions. So, it is a good time for a reminder on what you need to keep in mind as inhouse counsel.
There are differing laws across each Australian jurisdiction which must be taken into account to run a competition fairly – and legally.
The “who”
Who can participate in the competition? If it is external, ie open to the public at large, that raises quite difficult and complex considerations. We would suggest that you obtain specialised legal advice on that and we have included a contact at the end of this article
If it is internal, the risk analysis is slightly different. However, you still need to consider:
- Where are your people located? This is so you can check the laws in that particular jurisdiction.
- Are you allowing family members and friends of your employees to participate? If so, you may need to consider age restrictions (eg for footy tipping, participants must be 18 years or older).
The “what”
What do you have in mind?
Tipping competitions are considered to be minor fundraising activities in WA and games of chance in NSW and Queensland. As a result, there are limits on entry fees and the size of prize pools in these jurisdictions. Tipping competitions are considered to be games of skill in Victoria and qualify as private lotteries in the ACT if all entrants work in the same premises (and all proceeds are used for the provision of prizes). Consequently, the limitations mentioned above do not apply in these jurisdictions.
Many types of activities may be caught by the relevant legislation such as gold coin donations, raffles and lucky door prizes.
For this article, we are going to focus on sweeps. This is where all funds are distributed back to participants (ie all money in, goes back out).
What is a “Melbourne Cup Sweep”?
This is a lottery where participants are allotted a horse running in the Melbourne Cup. Prize winners are usually determined by the horse’s placing in the race – such as first, second or third – or last!
Technically, it does not have to be the Melbourne Cup. A sweep can be run for any race.
Calcutta Sweepstakes
There are more stringent requirements in the case of “Calcutta Sweepstakes” which involve both a lottery and an auction.
According to the Victorian Gambling and Casino Control Commission, “Calcutta Sweepstakes” are lotteries in which the winner is determined by the outcome of a sporting contingency, such as the Melbourne Cup. There is no prescribed format but it would usually involve a lottery draw and an auction open to all ticket holders.
A permit is usually required, and so this won’t be conducted by most organisations. Again, this is something which may be best for specialised legal advice.
The “when”
In WA, an interesting aspect of a Melbourne Cup Sweep is that it must be “spontaneous”. This means that you shouldn’t open up the sweep for entry until – say – no earlier than a week before race day. You’ll find that typically these things spring up on the day itself though, as people wait for “colours” and jockeys and track condition reports, as well as possible “scratchings”.
The “how much”
There are State based restrictions on the total prize pool. This is why participation in sweeps is usually in the amounts of $1, $2 or $5.
By way of example:
- In NSW a permit is required if the total value of tickets sold is over $20,000, though there are additional requirements where ticket sales exceed $5,000.
- In Victoria, the total value of prizes distributed cannot be more than $5,000.
- In Queensland, the value of tickets sold in the sweep must not exceed $2,000.
- In the ACT, all entrants must work in the same premises. Please refer to the Gaming and Racing sites listed below for further information.
You will need a plan for any scratchings (so you can ensure the prize pool is distributed out in its entirety) and the way in which money will be collected (cash is best – the use of credit cards for gambling is a no-no).
Tell me more
A game of chance is a game that involves luck (such as a chocolate wheel) or a combination of luck and skill (such as a guessing competition, where correct entries are drawn from a barrel).
A trade promotion is a free-entry scheme to promote the products or services of a trade or business which offers prizes to winners determined on the outcome of a lottery or game of chance.
You can avoid the need to obtain a permit for trade promotion lotteries and games of chance if the event is a game of skill. If prize winners are selected genuinely and purely on the basis of skill, involving no element of chance, an event will not constitute a lottery or game of chance and the various State and Territory laws governing lotteries and games of chance will not apply.
Examples of games of skill include:
- a quiz where the answers are not clearly obvious or given away; or
- a contest requiring someone to express the benefits of a certain product in 25 words or less where each entry is genuinely assessed for merit by qualified and expert judges.
Useful sites with more information
We suggest taking a look at some of the government websites as a starting point.
- ACT – Gambling and Racing Commission – http://www.gamblingandracing.act.gov.au/
- NSW – Liquor & Gaming NSW – https://www.liquorandgaming.nsw.gov.au/
- Queensland – Business Queensland – https://www.business.qld.gov.au/industries/hospitality-tourism-sport/liquor-gaming/gaming/not-profit-charitable/competitions-raffles-bingo
- Victoria – Commission for Gambling and Liquor Regulation – https://www.vcglr.vic.gov.au/
- WA – Department of Local Government, Sport and Cultural Industries – https://www.dlgsc.wa.gov.au/racing-gaming-and-liquor
What else?
As we’ve said above – the rules can be complicated, and so a follow up article may be required down the track (pardon the pun).
Other things to think about include:
- Fundraising, the status of the charity, tax deductibility (eek!), and any licensing considerations
- Ethical concerns around the purpose or type of competition
- Restrictions on any goods or services offered as prizes (eg alcohol)
- Responsible gambling
Good luck, and may the best “horse” win!
If you want a particular topic covered by the Pulse series, please reach out to the Inhouse Counsel Series editor, Yasmin Milligan, via LinkedIn.
If you are in need of legal advice in this area, please reach out to your usual KWM contact or contact Scott Bouvier or Lauren D’Ambrosio who will be happy to assist your business.
