Trade promotions: out with permits, in with authorities


Posted By on 8/07/20 at 11:02 AM

By Victoria Pearson (Paralegal) and Amelia Edwards (Special Counsel)

The long awaited regulatory reform for New South Wales trade promotions has finally arrived. While some of the thornier changes in the draft regulations did not make the final cut (for example, it is still permissible to require entrants to a trade promotion to join the promoter’s marketing database), there are some significant changes which will affect anyone wishing to run NSW based or national promotions.

The changes in the Community Gaming Act 2018 and the introduction of the Community Gaming Regulation 2020, which came into effect on 1 July 2020, replacing the Lotteries and Art Unions Act 1901 and the Lotteries and Art Unions Regulation 2014, reflect the desire of NSW Fair Trading (and no doubt promoters) to remove some of the unnecessary red tape contained in the old framework.

KHQ Lawyers - changes in trade promotions for NSW

What are the changes?

The permit is dead, long live the authority

The familiar concept of an activity-based permit has been replaced by a duration-based authority, which can be granted for a 1, 3 or 5 year period. The benefits here are twofold:

  • An authority holder will be able to run multiple trade promotions under a single authority rather than having to apply for an individual permit each time.
  • The application fee will depend on the length of the authority rather than the value of the prize pool.

When is an authority required?

An authority will only be required when the total prize value for a single trade promotion exceeds $10,000.

Once an authority has been granted, a promoter may run multiple trade promotions during the time period governed by the authority.  For each trade promotion where the total prize pool exceeds $10,000, the promoter must lodge a copy of the full terms and conditions with NSW Fair Trading at least 10 working days before the commencement date of the promotion.  This is a key timing requirement which differs from the permit regime, under which Fair Trading routinely issued permits within 48-72 hours.

The reason for these changes is to streamline community gaming and reduce the regulatory burden on those operating promotions with lower value prizes. Introducing a threshold below which permits/authorities are not required brings NSW in line with the other states and territories that still require permits, and is a boon for promoters who frequently run trade promotions with smaller prize values.

Amending the terms and conditions

While amendment applications are no longer required, if there are any material changes to the terms and conditions, promoters must notify NSW Fair Trading of the details in writing as soon as reasonably practicable after the change occurs, and include a copy of the amended terms and conditions, with marked-up changes.

In circumstances where a promotion has already been advertised, promoters will also need to take reasonable steps to notify entrants of any changes.

Changes to how promotions are run

The new regulation introduces an amended rules scheme that gives promoters more freedom to set their own conditions to gaming activities. For example, promoters are now free to determine the manner in which winners of prizes are notified and announced, and there is no prescribed time frame by which this must be done. Previously, winners had to be notified in writing within 2 business days of the draw and a public announcement made for prizes valued at more than $500.

 New requirements for terms and conditions

The regulations set out a number of additional requirements that promoters will now have to cover in the terms and conditions, including:

  • the method that will be used to resolve disputes about the conduct of the promotion or the claiming of a prize; and
  • a public notice where there is no prize winner or the prize winner cannot be found.

The terms and conditions must also now prohibit any person who is involved in the management of any benefiting organisation from participating in the promotion. This change may impact retailer incentive promotions (ie promotions designed to encourage retailers to increase sales of key products) based on chance.  However, there are various skills based mechanics which promoters of such promotions could utilise instead.

If you have standard terms and conditions that you use for your promotions, we recommend that these be legally reviewed to ensure that they comply with the new requirements.

Consent required from all benefiting parties

Promoters are now required to obtain the written consent to the conduct of the trade promotion from a person who is authorised by the business benefiting from the gaming activity to provide that consent. While in most cases the benefiting party is the promoter, there will be promotions that include a third party benefiting from the promotion, such as a participating retailer for a purchase to enter promotion.

Previously, written consent was only required where the brand name of the benefitting business was used in the title of the promotion, however this is now required regardless of whether this is the case, and also regardless of whether an authority is actually required.

Any benefitting organisation must also be clearly stated in the terms and conditions, in addition to the promoter’s details.

Independent scrutineers required for prize draws

For all trade promotions for which an authority is required, the determination of prize winners is to be carried out in the presence and under the supervision of an independent scrutineer, unless an exemption is granted by the regulator.

Promoting to children

Advertising material cannot depict children participating in a promotion, even where the promotion is directed to children.

New fairness and accountability provisions

New penalties have been introduced in order to encourage general fairness, accountability and transparency, requiring promoters to conduct gaming activities in a manner that a reasonable person would consider fair and impartial.

Of particular interest is the requirement that participation in a promotion cannot be limited in a way that is unfair, or discriminates on the basis of a physical or other characteristic that is irrelevant to the gaming activity. Notably, the term “irrelevant” may create some ambiguity when it comes to determining what characteristics are relevant to the promotion. In the spirit of transparency, we recommend that any physical or other characteristic required for participation are clearly outlined in the terms and conditions, and in particular in the short form terms and conditions included in any advertisements supporting the gaming activity.

What do these changes mean for national promotions?

Promoters running a national trade promotion will only need to apply for state and territory permits if the total prize pool value is $3,000 or above.

However, even if an authority is not required (because the prize pool is less than $10,000), promoters must still ensure their terms and conditions of entry cover the additional requirements set out in the NSW regulations.

Key takeaways

When running a trade promotion open to NSW residents, there are three key requirements to consider:

  • If the prize value is greater than $10,000, you must apply for an authority and nominate the duration of the period to be covered by the authority (1, 3 or 5 years).
  • Make sure your terms and conditions are up to date and comply with the new regulations.
  • Fairness and transparency is key – when in doubt, spell it out.

If you have any questions about how these regulations apply to you or if you need help running a trade promotion, contact us for an obligation-free chat.

Amelia Edwards

Amelia Edwards Special Counsel

Since joining us in 2014, Amelia has developed broad commercial experience and interests working across the firm’s practice areas and on secondment. She holds a Bachelor of Arts (Anthropology)... Read More