Browse topics

  • Governing law
    Name Law or Code?

    The Civil and Commercial Code of the Argentine Republic ('CC Code')

    Code

    The Commercial Loyalty Law (Law number 22,802 as amended)

    Law

    Customers' Protection Law (Law number 24,240 as amended)

    Law

    Personal Data Protection Law (Law number 25,326 as amended)

    Law
    Decree 961/2017 and Resolution 915/2017 (of the Secretariat of Commerce modified the regulations of the conditions for those who organizse or promote contests, draws and sweepstakes with the aim of simplifying certain formalities)

    Law

    Note: Prize promotions regulations in Argentina are the responsibility of each province. Argentina is subdivided into twenty-three provinces (provincias) and one autonomous city, the City of Buenos Aires.  Even though the provinces and the City of Buenos Aires exist under a federal system, they have their own constitutions, and local regulations. Organisers/sponsors must be aware of the applicable legislation for the provinces included within the territory.

    Last modified 8 Jan 2019

  • Extra-territoriality

    Yes. Even when a chance-based game or skill-based contest is solely online and no promotion takes place in Argentina, if it is open to Argentinean residents, it will be subject to the laws of our countrArgentinay. As a consequence, national regulators might enforce rules against organiszers/companies operating abroad.

    Last modified 8 Jan 2019

  • Skills competitions

    Yes, but ensure that:

    • The purchase of a product or service is not a requirement in order to be able to participate in the promotion; the elements required to enable a person to participate should be made available for free to anybody willing to participate;

    • No element of chance should be used to determine the winner of the promotion;

    • The Rules are available in Spanish; and

    • You disclose information regarding prizes, territorial scope and participation requirements.

    Last modified 8 Jan 2019

  • Prize draws

    Yes, but ensure that the purchase of a product or service is not a requirement in order to be able to participate in the promotion. The elements needed to enable a person to participate must be made available for free to anybody willing to participate.

    Last modified 8 Jan 2019

  • Selection of winners

    The terms and conditions of the promotion must be made available to the public and the process through which the winners shall be determined needs to be clearly established, including dates and place where the process will take place. It is suggested that the process be supervised by a Notary Public.

    If the awards are to be determined by chance, the mathematic adjudication used to determine the winner needs to be provided; if this is not possible, an approximate estimation of it needs to be provided.

    The names of the winners shall be published within ten (10) days, counted from the end of the promotion, by the same media used to promote the contest/promotion.

    The terms and conditions should indicate date and place where the prizes will be delivered.

    Last modified 8 Jan 2019

  • Judges

    There are no legal requirements in relation to judges and judging in skill competitions. However, the judging criteria should be clearly stated within the Rules and it´s advisable to include the list of judges.

    Last modified 8 Jan 2019

  • Prizes

    Prizes awarded must be as described in their marketing communications, or reasonably equivalent to the description.

    No forbidden and/or illegal goods should be awarded as prizes.

    Last modified 8 Jan 2019

  • Registration requirements and fees

    Note that in February 2018, the government of Argentina dissolved the National Lottery (LNSE). As a result, at least for now, Argentina no longer requires sweepstakes and contests to be registered. Prior to the dissolution, only promotions/contests in which the winners were totally or partially determined by chance – involving prizes greater than  6,666 Pesos (approx. US$148) – needed to be registered with LNSE and had to meet all the applicable requirements.

    With regard to skill-based contests, they do not require registration. However, the Official Rules must conform to local law. When a prize is awarded to a winner selected by chance a 31% special tax is levied. If the prize is cash, the entity awarding it must withhold and pay for the tax. If the prizes are goods the beneficiary must provide the entity awarding the prize the amount of money requested to pay for the special tax. Specific provincial taxes may apply in different jurisdictions.

    Last modified 8 Jan 2019

  • Other local requirements

    Promoters must provide certain and detailed information in relation to the prize promotion, including the essential characteristics of the prizes offered, and any other relevant terms.

    Conditions expressed in advertisements, brochures, circular letters or any other media are considered to be included in the contract concluded with the consumer, as binding terms.

    In such respect, Organiszers must comply with the requirements as established by Decree 961/2017 and Resolution 915/2017 of the Secretariat of Commerce.

    Last modified 8 Jan 2019

  • Timing

    For chance-based promotions, time is required to request the permit from the Provinces that regulate contests/promotions at a local level. Time and costs involved may vary depending on the Province.

    Note that Provinces regulating promotions/sweepstakes at a local level can be excluded in order to avoid compliance with local regulations.

    Last modified 8 Jan 2019

  • Translations

    Yes, the terms and conditions must be provided in Spanish.

    Last modified 8 Jan 2019

  • Penalties for non-compliance

    According to the Commercial Loyalty Law, the penalties for non-compliance are the following:

    • Fines from AR$500 (approximately US$11) to AR$ 5,000,000 (approx. US$111.000);

    • Suspension for up to 5 years from the providers registries that allow promoters to conclude contracts with the State;

    • Loss of concessions, tax or special credit benefits;

    • Closure of the facility for up to 30 days.

    According to the severity of the breach, and if it is convenient, publication of a notice of the penalty in the same media may occur.

    In case of fraud, criminal actions may be initiated.

    Last modified 8 Jan 2019

  • Restrictiveness of regulations

    Due to the recent dissolution of the National Lottery there are only a few restrictions on prize promotions in Argentine national regulations. However, as previously mentioned, some provinces like Mendoza, Córdoba, Salta, Neuquén and Tierra del Fuego have their own local regulations. In addition, forbidden acts under the Competence Defense Law must be avoided. Advertisements that contain false indications, lead or could lead to mistake and/or are abusive, discriminatory, or lead the consumer to behave in a dangerous or harmful way, must be avoided as well.

    Last modified 8 Jan 2019

  • Regularity of sanctions

    Fines and prison sentences are rarely imposed.

    Generally, in cases of breach, a complaint is submitted to the Consumer's Defense Office, where a monetary sanction can be applied to the non-compliant entity, and it can also be requested that the misleading advertisement be deleted.

    Last modified 8 Jan 2019

  • Key contacts
    Ignacio J. Randle
    Ignacio J. Randle
    Partner Estudio Randle [email protected] T +54 11 5252 0700
    Alejandro M. Massot
    Alejandro M. Massot
    Partner Estudio Randle [email protected] T +54 11 5252 0700

Penalties for non-compliance

What are the penalties for non-compliance?

Argentina

Argentina

According to the Commercial Loyalty Law, the penalties for non-compliance are the following:

  • Fines from AR$500 (approximately US$11) to AR$ 5,000,000 (approx. US$111.000);

  • Suspension for up to 5 years from the providers registries that allow promoters to conclude contracts with the State;

  • Loss of concessions, tax or special credit benefits;

  • Closure of the facility for up to 30 days.

According to the severity of the breach, and if it is convenient, publication of a notice of the penalty in the same media may occur.

In case of fraud, criminal actions may be initiated.

Australia

Australia

Australian Consumer Law(ACL)

The ACL applies nationally and in all States and Territories, promoting fair trading and the protection of consumer rights and interests. The three key elements of the ACL are:

  1. A prohibition on misleading and deceptive conduct: A court may award damages where a person is found to have engaged in conduct that is in breach of this provision of the ACL. Conduct can include the making of representations in terms and conditions for, or advertisements promoting, trade promotions so it is important to ensure they are accurate and correct.

  2. The imposition of a number of statutory guarantees in relation to the supply of goods and services (eg guarantees as to due care and skill; guarantees as to fitness for purpose; guarantees as to reasonable time for supply): The guarantees imposed under the ACL apply to goods and service which are ordinarily supplied for personal, domestic or household use or which are valued at under A$40,000 (approx. US$27,703), so the guarantees will apply to most prizes awarded. The guarantees generally apply even if goods or services are given away, including as prized. The guarantees, and consumers' rights and remedies for breaches of them, cannot be excluded, restricted or modified.

  3. The unfair contract terms (UCT) regime that applies to standard form consumer contracts: This regime will apply to trade promotions terms and conditions since they are standard form agreements that are presented on a 'take it or leave it' basis. A provision is unfair if, it would cause a significant imbalance in a party's rights or obligations under the contract, would cause detriment to a party if relied on, is not reasonably necessary to protect the legitimate interest of the party advantaged by them, having regard to the extent to which the term is transparent and the contract as a whole. The ACL and the ACCC note that provisions which are at risk of being unfair include asymmetrical liability regimes, unilateral amendment rights, broad termination rights in favor of one party only and provisions which reserve discretion in favor of one party only.

If a term is found to be unfair, it is void and unenforceable. While the UCT regime doesn't allow the ACCC to seek pecuniary penalties where a term is found to be 'unfair', the ACCC has successfully relied on other sections of the ACL prohibiting false and deceptive conduct to obtain pecuniary penalties from suppliers in connection with the inclusion of unfair terms in contracts (essentially on the basis that including a term which the supplier knows is likely to be contrary to law and unenforceable is misleading and/or deceptive). The maximum pecuniary penalty which can be awarded is currently the larger of:

  • A$10,000,000 (US$6,925,960);

  • Three times the value of the benefit received; or

  • 10% of annual turnover of the entity in the preceding 12 months, if court cannot determine benefit obtained from the offence.

So the possible consequences of including unfair terms are quite severe.

Privacy Act

The Privacy Commissioner is responsible for the enforcement of the Privacy Act and will investigate an act or practice if the act or practice may be an interference with the privacy of an individual and a complaint about the act or practice has been made. Generally, the Privacy Commissioner prefers mediated outcomes between the complainant and the relevant organization. Importantly, where the Privacy Commissioner undertakes an investigation of a complaint which is not settled, it is required to ensure that the results of that investigation are publicly available. Currently, this is undertaken by disclosure through the Office of the Australian Information Commissioner website of the entire investigation report.

The Privacy Commissioner may also investigate any 'interferences with the privacy of an individual' (i.e. any breaches of the Australian Privacy Principles) on its own initiative (i.e. where no complaint has been made) and the same remedies as below are available.

After investigating a complaint, the Privacy Commissioner may dismiss the complaint or find the complaint substantiated and make declarations that the organization rectify its conduct or that the organization redress any loss or damage suffered by the complainant (which can include non-pecuniary loss such as awards for stress and/or humiliation). Furthermore, fines of up to A$420,000 (approx. US$290,890) for an individual and A$2,100,000 (approx. US$1,454,450) for corporations may be requested by the Privacy Commissioner and imposed by the Courts for serious or repeated interferences with the privacy of individuals.

Australian Capital Territory

Penalties apply for various offences under the Lotteries Act, including fines and/or imprisonment for conducting lotteries that are not approved or exempt from approval. The maximum financial penalty imposed under the Lotteries Act is A$40,500 (approx. US$28,050).

New South Wales

If a party does not comply with a permit issued by the Office of Liquor, Gaming and Racing, the Office can take a range of actions, including:

  • Prohibit further fundraising or community gaming activities;

  • Refer the matter for legal or administration action; or

  • Take a range of specific investigation and enforcement activities against charities.

Penalties also apply for offences against the Lotteries and Art Unions Act, including severe penalties for serious offences such as misappropriation of funds or prizes or fraudulent conduct. The maximum financial penalty imposed under the Lotteries and Art Unions Act is A$5,500 (approx. US$3,809).

Northern Territory

Depending on the nature of the non-compliance and the findings of any investigations by the director, the outcome could include directions being issued by the director to either:

  • Invalidate the draw and direct another draw to be undertaken under the supervision of the director and under appropriate conditions;

  • Cancel the lottery or game of chance and undertake appropriate actions as required by the director;

  • Direct the organizer to adopt, vary or cease practice in the conduct of the lottery or game of chance.

Serious breaches of the act or regulations may result in severe penalties, including fines and imprisonment. Under the Gaming Control Act, the maximum penalty that can be imposed is a fine of up to A$13,175 (approx. US$9,125) as well as a term of imprisonment of up to 2 years.

Queensland

There are various penalty provisions in the Charitable and Non-Profit Gaming Act, including failure to comply with the rules of the promotion and failing to comply with various record-keeping requirements. A range of monetary penalties may be imposed depending on the breach (up to a maximum of A$26,110) (approx. US$18,084) as well as a term of imprisonment of up to 2 years.

South Australia

Penalties may be imposed under the Lottery and Gaming Act and Regulations. Serious breaches of the Act and Regulations may attract penalties up to 2 years imprisonment and more than A$10,000 (approx. US$6,926) in fines.

Tasmania

Penalties may be imposed for breaching the Gaming Control Act 1993, noting that trade promotions are not regulated. Serious penalties apply for conducting unauthorised lotteries, including large fines, some in excess of A$159,000 (approx. US$110,123) and imprisonment for up to 2 years for some offences, although these generally relate to gambling related activities and wagering.

Victoria

Monetary penalties apply for breaches of the Gambling Regulation Act. The maximum penalty for a first time offence is A$9,671 (approx. US$6,698). For subsequent offences, the maximum penalty is A$16,119 (approx. US$11,164). Other disciplinary action may also be taken, including suspension or withdrawal of the trade promotion permit.

Western Australia

Various penalties apply for breaching Western Australian trade promotions regulations. For example, monetary penalties apply for:

  • failing to ensure that every ticket or chance is included in the draw; and

  • failing to hold the draw within one month of the closure of the lottery.

Penalties can include fines up to A$10,000 (approx. US$6,926) or 2 years imprisonment

Austria

Austria

According to Art.168 Sec 1 Criminal Code the organization of a game in which profits and losses exclusively or predominantly depend on chance or which is expressly prohibited may result in monetary fines of up to 360 times the daily rates* of the conducting person's average daily income or imprisonment for up to six months.

(*The court determines a certain amount of the fine dependent on the economic capacity of the infringer. A daily rate for an individual may range from €4 – €5,000 (approx. US$4,400 – $5,600). Businesses conducting such games are subject to a monetary fine of up to 40 times the business's average daily profit (calculated by dividing the annual return by 360).)

Art.52 Games of Chance Act provides for administrative penalties when violating provisions of this Act.

The conduct of illicit draws is punished by the authority with a fine of up to €22,000 (approx. US$24,646).

The E-Commerce Act includes administrative penalties with a fine of up to €3,000 (approx. US$3,361) in Art. 26, when violating the information requirements (transparent and easy access to the conditions) applicable to prize promotions.

Unlawful conduct of promotional games may be determined as misleading practice under the Austrian Unfair Competition Act, especially if the announced prizes are not awarded.

In such cases civil claims for injunctive relief, for cease and desist and for damages can be filed as well as a claim for publication of the judgment can be made.

Additionally the confiscation of infringing products can be ordered by the authority according to Art. 53 Games of Chance Act.

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million, or

  • 4% of the promoter’s worldwide annual revenue.
Belgium

Belgium

In the case of prohibited games of chance:

  • In the case of unlawful operation of games of chance:

    • For individuals: fines from €800 (approx. US$896) to €800,000 (approx. US$896,223) and/or imprisonment from 6 months to 5 years;

    • For companies: fines from €24,000 (approx. US$26,887) to €1,600,000 (approx. US$1,792,450).

  • In the case of advertising, facilitating the operation or recruiting players for unlawful games of chance:

    • For individuals: fines from €208 (approx. US$233) to €200,000 (approx. US$224,056) and/or imprisonment from 1 month to 3 years;

    • For companies: fines from €4,000 (approx. US$4,481) to €576,000 (approx. US$645,281).

In the case of prohibited lotteries:

  • The perpetrators, administrators, agents or employees:

    • For individuals: fines from €400 (approx. US$448) to €24,000 (approx. US$26,887) and an imprisonment from 8 days to 3 months;

    • For companies: fines from €4,000 (approx. US$4,481) to €48,000 (approx. US$53,773).

  • Those who have distributed unlawful lottery tickets:

    • For individuals: fines from €208 (approx. US$233)  to €8,000 (approx. US$8,962) and an imprisonment from 8 days to 1 month or only one of these sanctions;

    • For companies: fines from €4,000 (approx. US$4,481) to €16,000 (approx. US$17,924).

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US$22.4m); or

  • 4% of the promoter’s worldwide annual revenue.
Brazil

Brazil

The main situations where Administrative Proceedings may be initiated and sanctions may be imposed are:

  • Promoting free distribution of prizes without prior authorization of SEFEL;

  • Non-compliance with the approved promotions terms and conditions;

  • Failure to deliver an accountability report to SEFEL, after the end of the promotion.

In those scenarios, the Brazilian legislation provides for the possibility of the following penalties:

  • Cancellation of the authorization;

  • Prohibition of free distribution of prizes for a period of up to two years;

  • Fine up to 100% of the total value of the prizes;

  • Fine of 10 to 40 times the highest minimum wage in force in Brazil (this can be doubled in the case of recurrence).

Such penalties may be applied independently or together, and may be combined with the suspension / cancellation of the Authorisation Certificate.

Canada

Canada

Violation of Canadian contest laws can be a criminal offence, which is punishable by a fine or by imprisonment of up to two years. There appear to be few cases where imprisonment has been imposed, but even for those without imprisonment, then court has issued fines and criminal records against the contest providers.

The consequences for misleading advertising under the federal Competition Act can include a penalty of up to CDN$10 million (approx. US$7,430,000) for a first offence. Typically penalties are much lower than the maximum, but still significant; for example, one contest provider was fined CDN$170,000 (approx. US$126,000) for running misleading contests.

The consequences for violation Canada's antispam legislation can include a penalty of up to CDN$10 million (approx. US$7,430,000) per occurrence. To date, the largest penalty issued under the legislation has been CDN$1.1 million (approx. US$817,000).

Chile

Chile

Criminal Code:

  • Art. 276: Authors, entrepreneurs, administrators, commissioners or agents of lotteries not legally authorized, will incur a fine of eleven to twenty monthly tax units (approx. US$750 to US$1,360) and will lose the movable objects placed in lottery.

    If objects placed in lottery are real property, the penalty shall be a fine of twenty-one to thirty monthly tax units (approx. US$1,430 to US$2,040).

    In cases of re-offending, imprisonment for a short period of time will also be applied.

  • Art. 277: Bankers, owners, administrators or gambling agents of luck, gambling or chance will be punished with imprisonment in any of its degrees and a fine of eleven to twenty monthly tax units (approx. US$750 to US$1,360)

  • Art. 278: Those who play at the referred places, will suffer the penalty of lesser imprisonment in their minimum degree or fine of eleven to twenty monthly tax units (approx. US$750 to US$1,360)

  • Art. 279: The money or effects put into gambling and the instruments, objects and tools destined for it will always be confiscated.

Law of Casinos:

  • Art. 51: Any person manipulating, modifying or altering the implements of the games or their development, to the detriment or benefit of the players or the operator, or substituting the material with which the game is played for the same purpose shall be sanctioned with a fine of 60 to 150 monthly tax units (approx. US$4,075 to US$10,200).

Law on protection of consumers rights:

  • Art. 24: Breach of this law will be sanctioned with a fine up to 50 monthly tax units (approx. US$3,400) In the case of repeat offences, the judge may, as much as, triple the original fine.
China

China

Violation of Anti-Unfair Completion Law, Law on the Protection of Consumer Rights and Interests, Cyber Security Law and related regulations

Sanctions are proportionate to the breach and routinely commence with requests to amend or terminate the non-compliant promotions. Fines ranging from ¥50,000 (approx. US$7,270) to ¥500,000 (approx. US$72,700) can be imposed against the promoter in breach depending on the circumstances. Also consumers who suffered from an infringement arising from an unfair competition can sue the promoter for compensation. Promoters who engage in fraudulent practice in the provision of goods or services must, on the demand of the consumers, compensate the consumers for their losses and damages (three times the value of the goods/services paid by the consumers but not less than ¥500 (approx. US$73)).

In addition, the penalties for non-compliance with certain requirements can be subject to a public announcement by the relevant authorities which can lead to brand and reputational damage.

Illegal lottery

If the promotion is deemed an illegal lottery, sanctions include criminal detention (1-6 months) or a prison term of up to 5 years, and/or a fine of up to 5 times the value of the illegal gains. In extremely serious cases, the sanctions will be a prison term of not less than 5 years plus a fine of up to 5 times of the illegal gains or confiscation of property.

Data privacy breaches

Sanctions in relation to data privacy breaches follow a graded approach - warning and requirement to comply, then possibly fines of one to ten times the value of the unlawful income  and confiscation of unlawful income; or fines of up to ¥1,000,000 (approx. US$145,450) if there is no unlawful income. In severe cases, the sanction could, for example, be suspension of the relevant business, revocation of the business license or the license to conduct the relevant business, and the closure of a website. Persons held responsible will be subject to fines from ¥10,000 (approx. US$1,450) to ¥100,000 (approx. US$14,545), and could be prohibited from engaging in relevant businesses and their conduct could be recorded in their social credit files. For illegal provision or sale of personal data to third parties, the responsible person could be subject to administrative detention with fines of one to ten times the value of the unlawful income and confiscation of unlawful income; or fines of up to ¥1,000,000 (approx. US$145,450) if there is no unlawful income, in cases where no criminal offense is committed. Where the illegal provision or sale of personal data constitutes a criminal offense, the responsible person will be subject to up to 7 years imprisonment, and potentially a concurrent fine will be imposed on the organization if applicable.

Colombia

Colombia

Considering that profits obtained from gambling activities and prize promotions (excluding promotions that are competitions where the winners are determined solely on the basis of skill) are considered as a state monopoly and that, therefore, such activities can only be performed by individuals or companies that are authorized, any prize promotion carried out without such authorization is considered illegal.

Article 312 of the Colombian Criminal Code establishes that exploiting a state monopoly without a governmental authorization entails a fine of between 500 and 1,000 times the monthly minimum legal wage (between US $138,019 and $276,038 approximately), and a prison sentence from 6 to 8 years.

Additionally, Coljuegos is entitled to impose fines on individuals or companies performing prize promotions without an authorization or with an authorization obtained unfaithfully. Such fines can be up to 200% of the value of the fees that should have been paid to Coljuegos for the exploitation rights.

Other authorities might impose other penalties due to the violation of specific regulations, such as the data protection law or the consumer protection law.

Czech Republic

Czech Republic

Prize promotions are in general supervised by the Czech Trade Inspection. Misleading the consumers in connection with prize promotions may lead to a fine of up to 5 million CZK (approx. US$220,000).

There is also a possibility that the personal data processing aspects of the promotion could breach the GDPR, which imposes fines of up to 20 million EUR (approx. US$22.4m) or 4 % of the entity's worldwide annual revenue.

If the prize promotion fulfilled the criteria of gambling as explained above, the entity operating such prize promotion without a permit could be fined with an administrative penalty of up to 50 million CZK (approx. US$2 million) if the entity is a company and up to 500,000 CZK (approx. US$22,000) if the entity is a private individual. Operation of gambling without a license may also trigger criminal liability.

Denmark

Denmark

Non-compliance with specific sections in the Danish Marketing Practices Act is punishable by a fine. When deciding on the penalty, emphasis is placed on the gravity, extent and the intended economic gain of the infringement.

Non-compliance with the Danish Marketing Practices Act can further result in an injunction from either the Danish Courts or in some cases the Danish Consumer Ombudsman. Non-compliance with such an injunction is punishable by a fine or a prison term of up to 4 months. Non-compliance can also lead to the payment of damages.

In cases where a prize promotion amounts to a lottery, a combination game or gambling a number of different criminal sanctions apply, e.g., non-compliance with the Danish Gambling Act by intentional or grossly negligent arrangement of games without a license is punishable by a fine or a prison term of up to 6 months. However, for repeated non-compliances or non-compliances of particularly extensive character the punishment is a prison term of up to 1 year. The Danish Gambling Act further sanctions the promotion of games that do not have the required license.

Non-compliance with tax legislation may result in fines and criminal liability.

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of (i) €20 million, or (ii) 4% of the promoter’s worldwide annual revenue.

Finland

Finland

National authorities can prohibit the prize competition and reinforce the prohibition order by imposing a penalty payment for non-compliance. The amount of the penalty depends on the nature and scope of the obligation imposed, the paying capacity of the addressee, and other issues affecting the matter. There are no maximum sanctions as such.

In 2000 the Market Court held the defendant liable to pay a penalty payment of €50,000 (approx. US$56,000) for non-compliance with the prohibition order of the Consumer Ombudsman. Moreover, the Market Court reinstated the prohibition order and imposed a penalty payment of €100,000 (approx. US$112,000) in a case of further non-compliance. The defendant had arranged a prize promotion. The Market Court considered that the prize promotion itself was the main subject of marketing instead of the marketed service. This amounted to a violation of the Consumer Protection Act.

Non-compliance with tax legislation may result in tax consequences and criminal liability.

In cases where a prize promotion amounts to a lottery or gambling (eg participation requires payment), specific criminal sanctions apply. Penalties vary between fines and imprisonment for up to two years.

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US$22.4m); or
  • 4% of the promoter’s worldwide annual revenue.
France

France

General prohibition of lotteries

  • Up to 3 years' imprisonment and a fine up to €90,000 (approx. US$100,800) for individuals and €450,000 (approx. US$504,100) for legal entities (or up to 7 years' imprisonment and a fine up to €200,000 (approx. US$224,000) for individuals and €1,000,000 (approx. US$1,120,280) for legal entities, if committed in an organized group).

  • Additional sanctions for individuals:

    • Loss of civil rights (eg right to vote and/or be elected to a public office);

    • Confiscation of the means used to commit the offense;

    • Publication of the decision;

    • Closing down of facility used to commit the crime, permanently or for up to 5 years; and

    • Prohibition from exercising certain activities.

  • Additional sanctions for legal entities:

    • Dissolution;

    • Closing down of facility used to commit the crime, permanently or for up to 5 years;

    • Confiscation of the means used to commit the infraction;

    • Publication of the decision; and

    • Prohibition for up to 5 years from obtaining or maintaining the license required to operate online gambling activities.

  • A fine up to €100,000 (approx. US$112,000) for individual ticket sellers, or for those individuals advertising the lottery and up to €500,000 (approx. US$560,100) for legal entities such as companies. The court may raise fine to four times the amount spent to advertise the lottery.

Promotional lotteries constituting misleading commercial practices

  • Up to 2 years' imprisonment and a fine up to €300,000 (approx. US$336,000) for individuals and €1,500,000 (approx. US$1,680,400) for legal entities such as companies.

  • The fine may be set, for individuals, at up to 10% of the average annual turnover during the three preceding financial years or 50% of the cost of the practice constituting the offense.

  • The fine may be set, for legal entities, at up to 50% of the average annual turnover during the three preceding financial years, or 250% of the cost of the practice constituting the offense.

  • Possible additional sanctions for individuals: prohibition from any or all of the following for up to 5 years:

    • Exercising the activity in the context of which the violation was made;

    • Exercising a commercial or industrial profession;

    • Managing or controlling a commercial/industrial business or a commercial company.

  • Possible additional sanctions for legal entities:

    • Prohibition for up to 5 years from:

      • Operating a business;

      • Operating one or more establishments involved in the violation;

      • Issuing securities to the public;

      • Submitting public procurement bids;

      • Issuing checks or using credit cards.

    • Placement under judicial control for up to 5 years;

    • Confiscation of the means used to commit the offense; and

    • Publication of the decision.

  • In addition, a Court may order the cessation of the misleading practice.

Promotional lotteries constituting aggressive commercial practices

  • Up to 2 years' imprisonment and a fine up to €300,000 (approx. US$336,000) for individuals and €1,500,000 (approx. US$1,680,400) for legal entities.

  • The fine may be set, for individuals, at up to 10 % of the average annual turnover during the three preceding financial years.

  • The fine may be set, for legal entities, at up to 50 % of the average annual turnover during the three preceding financial year.

  • Possible additional sanctions for individuals: prohibition from exercising a commercial business activity for up to 5 years.

  • Possible additional sanctions for legal entities:

    • Prohibition for up to 5 years from:

      • Operating a business;

      • Operating one or several establishments involved in the violation;

      • Issuing securities to the public;

      • Submitting public procurement bids;

      • Issuing checks or using credit cards.

    • Placement under judicial control for up to 5 years;

    • Confiscation of the means used to commit the offense; and

    • Publication of the decision.

  • In addition, a Court may order the cessation of the aggressive practice.

Promotional lotteries constituting simply unfair commercial practices

No specific criminal sanctions set forth in the Consumer Code.

Civil sanctions

Damages in case of unfair competition / parasitism claims.

Breach of data protection rules

Administrative sanctions

In case of non-compliance with the GDPR and/or French data protection act requirements, the French data protection authority (CNIL) may impose the following sanctions:

  • If the processing activities are likely to infringe the GDPR or the French data protection act: Formal warning (optional).

  • If the data controller or processor infringes the GDPR or the French data protection act, but the processing operations may be brought into compliance: Formal order, within a specified period (which may be set at 24 hours in cases of extreme urgency), to:

    • comply with a data subject's requests to exercise his or her rights;

    • comply with applicable data protection provisions;

    • rectify or erase personal data or restrict the processing and notify such actions to recipients to whom the personal data have been disclosed.

The CNIL may decide to make the order public.

  • Other sanctions, after a formal warning or in addition to a formal order:

    • Reprimand;

    • Injunction to comply with applicable data protection requirements or to comply with a data subject's request to exercise his or her rights, subject to a daily penalty of up to EUR 100 000 (approx. US$112,000) per day of delay;

    • Temporary or definitive limitation of processing, ban on processing or withdrawal of an authorization previously granted;

    • Withdrawal of a certification, or order to a certification body not to issue or to withdraw a certification;

    • Suspension of data flows to a recipient in a third country;

    • Total or partial suspension of the decision approving binding corporate rules;

    • Administrative fines - two thresholds:

      • up to EUR 10 000 000 (approx. US$11,202,800), or in the case of an undertaking, up to 2 % of the total worldwide annual turnover of the preceding financial year, whichever is higher, for certain categories of infringements (Note: these sanctions will apply e.g. in case of violations of the obligation to keep a record of the data processing operations that are implemented); and

      • up to EUR 20 000 000 (approx. US$22,405,600), or in the case of an undertaking, up to 4 % of the total worldwide annual turnover of the preceding financial year, whichever is higher (Note: these sanctions will apply e.g. in case of a failure to comply with the rights of the data subjects or in case of a violation of the rules governing data transfers outside of the EEA).
Note: the CNIL's president may refer a case to the CNIL's restricted committee, per an emergency procedure when (i) a violation infringes  human identity, human rights, privacy, public, or individual liberties; or the CNIL's president considers an intervention is urgent.

Criminal sanctions

Criminal sanctions of up to 5 years of imprisonment and a fine of up to EUR 300,000 (approx. US$336,000) for natural persons or up to EUR 1 500 000 (approx. US$1,680,400) for legal entities may also be imposed. In addition, companies may be subject to the following additional criminal sanctions:

  • Order that the data processed unlawfully be deleted;

  • Prohibition from (i) operating a business, (ii) operating one or several establishments having been involved in the violation, (iii) issuing securities to the public, (iv) submitting public procurement bids, (v) issuing checks or using credit cards;

  • Placement under judicial control;

  • Confiscation of the means used to commit the infraction;

  • Publication of the decision.

Civil liability

Any person who has suffered material or non-material damage as a result of an infringement of the above‑mentioned rules has the right to receive compensation from the data controller or data processor for the damage suffered.

When several individuals who are in a similar situation suffer a loss resulting from such a violation, a class action may be filed before a civil or administrative court having jurisdiction. Data protection class actions may only be brought by:

  • Associations that have been duly registered for at least 5 years and whose statutory purpose is the protection of privacy and personal data; and

  • Consumer protection associations recognized at national level and approved in accordance with Article L. 811-1 of the French Consumer Code, when the personal data processing affects consumers.

Individuals are not able to bring such class actions by themselves through their attorney.

Class action litigants are entitled to both seek injunctive relief and claim compensation for their material and moral losses. However, litigants may only claim compensation if what caused the loss occurred beforeafter May 24, 2018.

Germany

Germany

In the case of infringement of the provisions of the UWG, the consequences are predominantly of a civil law nature. Possible civil claims are e.g. injunctive relief (s.8 UWG), damages in the event of intent or negligence (s.9 UWG), and reimbursement of the costs of the warning letter (Abmahnung) (s.12 para. 1 sentence 2 UWG).

Note: The reimbursement of the costs for a warning letter generally range between €2,000 (approx. US$2,240) and €4,000 (approx. US$4,480).

Fines and penalty provisions only apply in very special cases (e.g. promoting) prize promotions via telephone towards consumers without the prior explicit consent, s.20 UWG or by public notices, sec. 16 UWG.

In case of non-compliance with s.8a RStV and the GWS (ie if the stake for a prize promotion on broadcast media exceeds €0.50 (approx. US$0.56)) this results in an administrative fine of up to €500,000 (approx. US$560,140), depending on the gravity of the offense (s.49 para. 1 sentence 2 no. 5 RStV). First time offenders with only a violation within one promotion may expect a fine of €5.000 (approx. US$5,600).

Breaches of the BDSG constitute an administrative offense punishable with an administrative fine of up to € 300,000 (approx. US$336,000), depending on the gravity of the offense.

Note: On 25 May 2018, the General Data Protection Regulation (GDPR) of the European Union came into force, which substantially increased the administrative fines for data protection breaches with fines of up to €20,000,000 (approx. US$22.4m) or 4% of the total worldwide turnover of the infringer from its preceding business year.

A breach of s.7 or 11 of the HWG constitutes an administrative offense with an administrative fine of up to €50,000 (approx. US$56,000) depending on the gravity of the offense).

Hong Kong

Hong Kong

Non-compliance with a condition of a license can result in a fine of $50,000 (approx. US$6,375) and imprisonment for 2 years.

Non-compliance will also be taken into consideration on any future application for a license.

In addition, the following penalties may be relevant under the Gambling Ordinance (note that this is not an exhaustive list):

  • $5,000,000 (approx. US$637,500) and 2 years imprisonment on summary conviction or $5,000,000 (approx. US$637,500) and 7 years imprisonment on indictment, for a person who promotes, organizes, conducts or manages, or otherwise has control of, an unlawful lottery;

  • $50,000 (approx. US$6,375) and imprisonment for 2 years for selling, disposing of or possessing with a view to selling, illegal lottery tickets; and

  • $50,000 (approx. US$6,375) and imprisonment for 2 years for printing, publishing or writing tickets, lists of prizes, tips, hints forecasts or announcements in relation to an illegal lottery.

The following penalties may be relevant under the Personal Data (Privacy) Ordinance (note that this is not an exhaustive list):

  • Upon the occurrence of a breach of the data protection principles under the Personal Data (Privacy) Ordinance, the Office of the Privacy Commissioner for Personal Data of Hong Kong may issue an enforcement notice to direct the data user to remedy the contravention. Failure to comply with the enforcement notice is an offence and offenders may be liable for a maximum fine of $50,000 (approx. US$6,375) and imprisonment of 2 years;

  • $500,000 (approx. US$63,750) and imprisonment of up to 3 years for using personal data in direct marketing without obtaining data subject's consent or providing personal data for use in direct marketing otherwise than for gain without data subject's consent; and

  • $1,000,000 (approx. US$127,400) and imprisonment for up to 5 years for providing personal data for use in direct marketing for gain without data subject's consent.

The Hong Kong Privacy Commissioner for Personal Data has been active in enforcing the direct marketing regime since it came into force in April 2013, and we have already seen a prison sentence and a community service order handed down for offences in connection with the direct marketing regime.

The following penalties may be relevant under the Trade Descriptions Ordinance (note that this is not an exhaustive list):

  • $100,000 (approx. US$12,740) and imprisonment for up to 2 years on summary conviction; or $500,000 (approx. US$63,750) and imprisonment for up to 5 years on indictment for applying a false trade description to goods or services.

The Trade Descriptions Ordinance is an important piece of law relating to consumer protection, and the Hong Kong Customs and Excise Department has taken rigorous enforcement actions against offenders.

Hungary

Hungary

In the case of infringement of the provisions of the Gambling Act in connection with prize draws, a fine within the range of approx. EUR 150 (approx. US$170) up to approx. EUR 1,500 (approx. US$1,700) may be imposed by GSA. If the provisions of the Gambling Act are otherwise infringed (e.g. conducting unlawful gambling activity), different amounts of fines can be imposed, depending on the type of infringement. The maximum fine (e.g. in the case of gambling activity without a license) is approx. EUR 310,000 (approx. US$347,000). Carrying out gambling activity without a license may involve criminal charges as well. Misleading consumers in connection with prize promotions may lead to consumer protection fines imposed by the Consumer Protection Authority or the Competition Authority.

Note: On 25 May 2018, the General Data Protection Regulation (GDPR) of the European Union came into force, which substantially increased the administrative fines for data protection breaches with fines of up to € 20,000,000 (approx. US$22.4m) or 4% of the total worldwide turnover of the infringer from its preceding business year.
India

India

The majority of the offences under the Key Prize Legislations are punishable with a fine of up to Rs 1,000 (approx. US$14) or a prison term of two years, or with both.

A violation of the relevant provisions of the Indian Penal Code, 1860, is punishable for a term which may extend to six months and/or a fine amounting to Rs 1,000 (approx. US$14).

Under the Consumer Protection Act, 1986, a person is liable for punishment under the applicable provisions, with imprisonment for a term ranging between one month to three years, and/or with a fine ranging between Rs 2,000 (approx. US$28) to Rs 10,000 (approx. US$140), or with both. However, the Consumer Protection Bill, 2018 has proposed enhanced penalties, with imprisonment for a term up to six months and/or a fine up to Rs 2,000,000 (approx. US$28,400), in case of failure to comply with any direction of the central authority proposed to be established thereunder. In case of failure to comply with any order made by the existing consumer protection forums (i.e. district commission, state commission and national commission), a person is liable for punishment under the applicable provisions, with imprisonment for a term ranging between one month to three years, or with a fine ranging between Rs 25,000 (approx. US$355) to Rs 100,000 (approx. US$1,400), or with both.

Under the Information and Technology Act, 2000, the maximum compensation/penalty payable to the person affected by a contravention is Rs 25,000 (approx. US$355).

Ireland

Ireland

The ASAI has limited sanctions. The ASAI Code is a non-statutory self-regulating code. The ASAI can publish case reports of the Complaints Committee. Promotions that breach the ASAI Code must be withdrawn or amended. If a member of the ASAI does not comply with an ASAI decision, that member may be subject to fines and/or suspension of ASAI membership. In practice, the ASAI does not issue fines.

Under the Gaming and Lotteries Acts a person who contravenes a provision of the Acts, for which a penalty is not specifically fixed, is guilty of an offence and on summary conviction is liable for a maximum fine of €127 (approx. US$142) and/or up to 3 months' imprisonment. On conviction the Court may order the destruction of any documents relating to the lottery.

Under the CPA, if a trader is convicted of an offence, the court can require the trader to pay damages to a consumer who has suffered loss and can impose a fine or penalty on the trader. The maximum fine for a first offence is €3,000 (approx. US$3,360) on summary conviction.

For data breaches under GDPR, organizations can be fined up to €20 million (approx. US$22.4m) or 4% of annual worldwide turnover, whichever is higher. Fines imposed under the ePrivacy Regulations currently range from €5,000 (approx. US$5,600) on summary conviction to €250,000 (approx. US$280,000) for conviction on indictment.

Italy

Italy

In the event of late delivery of the documentation to the Ministry of Economic Development promoters are subject to fines of between € 2,065.83 (approx. US$2,300) up to € 10,329.14 (approx. US$11,570).

In case of performance of prize promotions according to a mechanic different from the one outlined in the terms and conditions or notified to the Ministry of the Economic Development, fines of between € 1,032.91(approx. US$1,150)  and € 5,164.57 (approx. US$5,785) are applicable.

In the event of promotions contravening the requirements of the DPR, the applicable sanctions shall be between € 1,032.91 (approx. US$1,150) and € 2,582.28 (approx. US$2,900). This sanction is doubled if the prize promotion is carried out after the prohibition issued by the authorities. Also, if the promotion is qualified as illegal gambling, fines of between €50,000.00 (approx. US$56,000) up to €500,000.00 (approx. US$560,000) are applicable.

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of (i) €20 million (approx. US$22.4m), or (ii) 4% of the promoter’s worldwide annual revenue.

Japan

Japan

The CAA will investigate the activities of a retailer / promoter that it suspects is violating the AAUPMR. The CAA will give that retailer / promoter the opportunity to offer evidence in its favour and / or take measures to end the practices that the CAA views as violations. If a retailer/promoter refuses to cooperate with the CAA or provides false information to the CAA upon such investigation, the responsible individual of the retailer/promoter is punishable by up to one year's imprisonment or a criminal fine of up to ¥3,000,000 (approx. US$27,400) and the company employing the individual may be made subject to a fine of the same amount. If the CAA is not satisfied by the evidence and / or actions of the retailer it may issue a formal cease-and-desist order (CDO) to end the offending practice. Issuance of and compliance with a CDO is an involved process requiring the participation of the retailer / promoter. The enforcement hearings are often drawn out, involving multiple meetings with regulators and submissions of drafts of improvement plans.

CDOs are publicly published and can be damaging to the reputation of the retailer found in breach.

Violation of a CDO is punishable by up to two years imprisonment or a criminal fine of up to ¥3,000,000 (approx. US$27,400) for the responsible individual. In addition to the above sanctions on the individual, the company where employing the individual may be made subject to a fine of up to ¥300,000,000 (approx. US$2,739,000). However, fines and prison sentences are rarely imposed.

Luxembourg

Luxembourg

  • In the case of unlawful operation of games of chance:
    • For individuals: fines from 251€ to 25,000€ (approx. US$285 to US$28,400) and/or imprisonment from 8 days to 6 months;
    • For companies: fines from 502€ to 50,000€(approx. $570 to US $57,000).
  • In the case of having knowingly tolerated games giving rise to excessive stakes or bets on a regular basis in premises accessible to the general public; or having made an unauthorized gaming establishment known by ways of notices, announcements, posters or any other means of publication; or having knowingly received bets or distributed winnings on a regular basis in premises accessible to the general public without prior authorization; or, for the purpose of betting, having sold or offered for sale information on the chances of success of competitors involved in a sporting event:
    • For individuals: fines from 251€ to 15,000€ (approx US$285 to US$17,000) and/or imprisonment from 8 days to 1 month;
    • For companies: fines from 502€ to 30,000€(approx. US $570 to US $34,000).

These penalties can be doubled in the case of:

  • repeat offence within five years of a conviction under the same legal provision; or
  • the offence being committed against a person under the age of 21.

In any of the above cases, perpetrators may also be sentenced to the loss of some of their civil rights (e.g. right to vote, right to hold a public position, etc.).

  • In the case of installation in public places of any cash dispensers, consumer tokens and, in general, any device whose operation is based on skills or chance and which is intended to provide a gain or consumption against some kind of financial compensation:
    • For individuals: fines from 251€ to 15,000€ (approx. US$285 to US$17,000) and/or imprisonment from 8 days to 6 months;
    • For companies: fines from 502€ to 30,000€(approx. US $570 to US $34,000).

In the case of prohibited lotteries:

  • For organizers, administrators, agents or employees:
    • For individuals: fines from 500€ to 30.000€(approx. US$570 to US$34,000) and/or imprisonment from 8 days to 3 months;
    • For companies: fines from 1,000€ to 60,000€(approx. US$1,100 to US$68,000).

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US $22.7 million); or
  • 4% of the promoter's worldwide annual revenue.

It is uncertain whether such conditions remain applicable given the current status of the law (see Governing law). A number of operators on the Luxembourg market nonetheless continue to apply the principles of the previously applicable law as good practice.

Mexico

Mexico

The Gaming and Lotteries Law, establishes a penalty of imprisonment between 3 months to 3 years and a fine between MXN$500 (approx. US$26) and MXN$10,000 (approx. US$522) to any Mexican entity or individual that participates in the sale or circulation of lottery tickets or gambling that takes place abroad without the required authorization from the Ministry of Interior (Art. 12).

Further, the Gaming and Lotteries Law provides for 1 month up to 2 years imprisonment and a fine between MXN$100 (approx. US$5) to MXN$5,000 (approx. US$261) for people that knowingly lease a property to carry out illegal gambling or lotteries without the authorization from the Ministry of Interior.

The Ministry of interior has the ability to close down any entity offering any type of gambling, chance game or betting (illegally or without due authorization) (Art. 8 of the Gaming and Lotteries Law).

The Consumer Law via Profeco indicates different amounts for fines depending on the type of breach. However note that they can be as low as MXN$236.54 (approx. US$12) and high as MXN$7,948,063.22 (approx. US$415,340).

The Criminal Code provides that the same penalties as fraud shall be applicable when a person keeps the prizes or money due to a prize draw instead of transferring the same to the winner (Art.387, s.XI). The sentence for fraud can be between 3 days to 12 years of imprisonment and fines ranging from MXN$883.20 (approx. US$46 to MXN$10,603.2 (approx. US$554) (depending on the damage value; calculated on minimum wages) (Art. 386).

Netherlands

Netherlands

The Gaming Authority (Kansspelautoriteit, 'KSA') may impose administrative fines of up to €830,000 (approx. US$930,000) or 10% of the annual turnover of the year preceding the year in which the violation was committed for offering illegal games of chance.

In instances where the violation is considered an economic offence (i.e. if it is established that the violation was wilfully committed), the violation may be punished by imprisonment not exceeding two years.

In practice, fines between € 100,000 (approx. US$112,000) and € 500,000 (approx. US$560,000) on gambling providers, their directors and gambling software suppliers have been imposed by the KSA.

Furthermore, the Advertising Code Committee may issue a 'recommendation' for violations of the Advertising Code for Games of Chance, which means that the violator is recommended to discontinue the promotion in the form in which it is currently being or has been advertised.

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US$22.4m); or

  • 4% of the promoter’s worldwide annual revenue.
New Zealand

New Zealand

The Gambling Act provides for penalties for anybody who participates in unauthorized gambling (i.e. both promoters and participants).

Fines can be imposed of up to NZ$50,000 (approx. US$33,000) for organizations and up to NZ$20,000 (approx. US$13,000) for individuals. This includes anybody participating in remote interactive gambling and anybody who conducts the gambling.

Individuals involved in promoting unauthorized gambling may also face imprisonment for a maximum of one year.

The Gambling Act carries a fine of up to NZ$10,000 (approx. US$6,500) for advertising overseas gambling.

Nigeria

Nigeria

The National Lotteries Act establishes penalties of fines of a minimum of N100,000 (approx. US$275) for corporate bodies, and N20,000 (approx. US$55) for each director, manager and officer of such corporate bodies or imprisonment for a term or both. The Code of Advertising Practice establishes a cash penalty of a minimum of N500,000 (approx. US$1,380) for media houses, agencies and advertisers.

Norway

Norway

For the below penalties, the penalty is per breach.

LA: Applicable to lotteries:

Maximum fine: No maximum

Average fine: 10,000 – 100,000 NOK* (approx. US$1,140 – US$11,500)

Prison sentences: Maximum sentence of 3 years where gross negligence or wilful misconduct. A case relating to pyramid schemes led to prison sentences of 2.5 years and 1 year 9 months.

* This is dependent on the type of breach.

MCA (averages 2013 - 2016, 14 cases): applicable to prize promotions and lotteries:

Maximum fine: None. Actual highest fine currently is 1.5 Million NOK (approx. US$172,000).

Average fine total: 202,000 NOK (approx. US$23,100)

Personal fines average: 120,000 NOK (approx. US$13,734)

Fines to companies average: 250,000 NOK (approx. US$28,600)

Prison sentences: Not known to have been used in the last few years. Max available by law is 6 months imprisonment.

The government has suggested amendments to the MCA in order to give the consumer protection authority more power with regards to enforcing compliance and issuing fines.

Data Privacy

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US$22.4m); or

  • 4% of the promoter’s worldwide annual revenue. 

In 2018 the first fine issued under the new GDPR system was set at 1,5 MNOK (approx. US$ 172,000).

Broadcasting Act

Maximum fine: 2 MNOK (approx. US$229,000)

Average fine: Fine set based on how many have viewed the ad.

Prison sentence: Max six months in accordance with law.

Poland

Poland

If the prize promotion is considered to be a lottery, the party that organizes it without a permit must pay a penalty equal to 5 times the amount of a permit fee, which equals in total 50% value of the prize pool. In addition to the penalties imposed on the entity organizing the lottery, the Gambling Act provides for sanctions for individuals holding managerial positions – the relevant authority (head of the customs and tax office) may impose a fine up to approximately EUR 23,000.00 (approx. US$25,800) for organising gambling games (including lotteries) without a concession, permit or required registration. Furthermore, under the Fiscal Penal Code, running or organizing a lottery contrary to the law or a permit is subject to a fine (maximum fine = approximately EUR 1,636,363.6 (approx. US$1,833,000) – according to the current regulations and fine amounts applicable in 2019).

Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million (approx. US$22.4m); or

  • 4% of the promoter’s worldwide annual revenue
Portugal

Portugal

Breaching the applicable provisions in connection with prize promotions and skill competitions can be sanctioned as an infringement to the Game Law, being considered as administrative offense punished with fines from €250 (approx. US$280) up to €2500 (approx. US$2,800) per breach (if the offender is a natural person) or from € 2,500 (approx. US$2,800) up to €24,940.00 (approx. US$28,000) per breach (if the offender is a legal person). Ancillary penalties may also be imposed (e.g. the equipment used and any monies obtained may be seized, a ban on performing activities in the establishment for a period of up to 6 months may be applicable).

The failure to comply with data protections and privacy legal requirements and formalities may result in civil, criminal and administrative liability. At this stage there is still no law implementing GDPR in Portugal. In accordance with the last draft proposal of law made available (not yet approved and still in discussion in the Parliament), crimes may be punished with imprisonment up to 4 years (or daily fines for periods up to 480 days (the court determines an amount to be paid per day and the number of days for which the agent shall be punished), and administrative offenses may be punished with fines up to €20 000 000 (approx. US$22.4m) or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher. Failure to comply with the rules on sending direct marketing communications is punished as an administrative offense with fines up to €5,000,000 (approx. US$5.56m) per infringement. Ancillary penalties may also be imposed.

Furthermore and depending on the conduct, it may considered as a breach of general consumer provisions, including the Consumer Protection Act, Unfair Commercial Practices, Advertising Code, etc.

In general terms, unfair commercial practices and misleading advertising may generate civil and administrative liability and may be sanctioned with fines up to €3,740.98 (approx. US$4,200) per infringement (if the offender is a natural person) or up to €44,891.81 (approx. US$50,300) per infringement (if the offender is a legal person).

Ancillary penalties may also be imposed.

Romania

Romania

Under GO 99/2000, the non-compliance with the legal provisions might constitute a misdemeanor punishable by a fine which varies from RON 1,000 (approx. US$235) up to 5,000 RON (approx. US$1175), depending on the breach.  Finally, there is the possibility that the personal data processing aspects of the promotion could breach GDPR, which has maximum fines of up to the higher of:

  • €20 million; or

  • 4% of the promoter’s worldwide annual revenue.
Russia

Russia

Aside from the civil damage awards (in the case of any breach of the rules), there may be administrative (or even criminal) sanctions applied to an organizer.

The average sanction is an administrative fine of 200,000 Russian Rubles (approx. US$3,086). The maximum sanction for gross violations is 3 years imprisonment (applicable to officers of legal entities), but it is not likely to transpire in practice.

Saudi Arabia

Saudi Arabia

The ACFR Regulations provide that, where a commercial contest is launched without the appropriate license, the following penalties shall be applicable: 

  • A fine of up to SAR 50,000 (approx. US$13,328); or

  • Imprisonment of up to six months; or

  • Both of these penalties

In addition, there are a number of other penalties for violations of the ACFR that are more generally applicable, including a prohibition of sale and/or withdrawal and/or disposal of violating products, shop closures, travel bans, deportation of expats with no return, investigations by government authority officers and the public prosecutor, and publication of violations in the local newspaper.

The ACFR Regulations further provides that, the seller, whoever the product is distributed to on its behalf, managers of companies, cooperatives and establishments as well as the shops shall be liable for all violations of the ACFR, and each shall be subject to the penalties prescribed for violators. If any of them proves that the violation occurred due to reasons beyond its control, the penalty may be inflicted solely on the violator.

Singapore

Singapore

Offences under the CHGA are punishable by fines ranging from S$5,000 (approx. US$3,650) to S$200,000 (approx. US$146,000), and imprisonment for a term of up to 5 years (depending on the breach and the party committing it). In sentencing, the court will have regard to the scale of the gaming activities and the amount of the tickets involved. The penalty given depends on a case by case basis taking into account the facts of each case.

The provision of an unlawful remote gambling service, including the provision of an overseas remote gambling service with a Singapore-customer link, in violation of the RGA, is punishable by fines of up to S$500,000 (approx. US$365,000), or imprisonment for a term of up to 7 years or both (depending on the breach and the party committing it). As the RGA is a relatively new piece of legislation in Singapore, there is limited examples and precedence on enforcement.

For breach of the PDPA, the Personal Data Protection Commission (PDPC) may issue administrative fines of up to S$1,000,000 (approx. US$730,000) for violations. The PDPA also imposes criminal sanctions, including fines of up to S$100,000 (approx. US$73,000) and 12 months imprisonment. In calculating a financial penalty, the PDPC has a non-exhaustive list of aggravating and mitigating factors that it may consider.

This includes but is not limited to:

  • Failing to comply with a previous warning or direction from the PDPC;

  • A failure of the organization to actively resolve the matter with the individual in an effective and prompt manner; and

  • Intentional, repeated and/or ongoing breaches of the PDPA by an organization. This would include situations where the organization knew, or ought reasonably to have known, of the risk of a breach, or breach of the PDPA but continued with its operations without taking measures to minimize the risk or remedy the breach.
South Korea

South Korea

Potential penalties are as follows:

  • A Korea Fair Trade Commission (KFTC) corrective order

  • An administrative fine of up to 2% of relevant revenues, or up to ₩500 million (approx. US$420,000)

  • Up to three years’ imprisonment or a criminal fine of up to ₩200 million (approx. US$168,000)

Further, if the substance of the prizes were not accurately specified/advertised, then this could constitute a violation of the Fair Labelling and Advertisement Act, with potential sanctions of up to two years’ imprisonment and criminal fines of up to ₩150 million (approx. US$126,000).

However, it is worth noting that all of the KFTC enforcement actions involving prize promotions in the past ten years (the public records for which are accessible on the KFTC website) have been subject only to a corrective order without any fines or criminal referral.

Spain

Spain

The LJU establishes that for the infringements that sponsors could typically be liable for, fines ranging from €100,000 (approx. US$112,000) to €1,000,000 (approx. US$1,120,000) could be imposed. Higher fines could be imposed, however, depending on the specific circumstances of the case.

Sanctions under the new data protection regime for infringing data protection law can be very high (the fines could reach the higher of €20 million (approx. US$22.4) or 4% the global turnover of the infringing company or its group, in the most aggravated cases).

Sweden

Sweden

Operation or promotion of unlicensed gambling activities

The operation or promotion of unlicensed gambling activities is punishable by fines or imprisonment of up to six years.

The Swedish Gambling Authority may also issue orders and prohibitions under penalty of fines. Please note that there are no set limits for the fines, the Swedish Gambling Authority may determine an appropriate amount intended to have a deterrent effect.

In relation to licensed gambling operators, the Swedish Gambling Authority may also issue a fine between SEK 5,000 (approx. US$520) and a maximum of 10 % of the license holder's turnover in the preceding financial year.

Violations of the Swedish Marketing Act

Violations of the Swedish Marketing Act may lead to the following sanctions:

  • Orders or prohibitions under penalty of fines. It is not uncommon that such sanctions amount to SEK 1,000,000 (approx. US$104,000) but there are no maximum fines.

  • Marketing Disturbance Fee of SEK 5,000 – SEK 5,000,000 (approx. US$520 – US$520,000), but no more than ten percent of the annual turnover. It should be noted that this sanction is rarely invoked; and

  • Damages to affected parties.
Thailand

Thailand

For non-compliance with the TGA, i.e. arranging a prize promotion event without the License, the arranger could be liable to imprisonment for up to 1 year or a fine of ฿50 (approx.US$1.50) – ฿2,000 (approx. US$63) (if the arranger is a corporate entity, the imprisonment will not be imposed).

For non-compliance with the CPA, i.e. advertising the prize promotion event in breach of the CPA, the violator will be liable to imprisonment for up to 3 months or a fine of up to ฿30,000 (approx. US$950), or both.

Turkey

Turkey

According to the Decree on National Lottery w. no 320, if a prize promotion is not in compliance with the relevant rules, an imprisonment between 2 months to 2 years and a monetary fine from TRY 100,000 to TRY 10,000,000 (approx. US$16,500 - 1,655,000) is legally possible. Additionally, such non-compliant activity may be evaluated in the scope of Consumer Protection Law, and may be deemed to be a misleading activity and/or unfair commercial activity. In this case, the relevant authority may apply an administrative fine up to TRY 341,921 (approx. US$56,600).

Furthermore, the GDNL may prohibit the organizer from arranging a prize promotion for two years.

Ukraine

Ukraine

The following penalties can be outlined with respect to conducting prize-promotions:

  • For non-compliance by advertisers relating to the content of advertisements or regarding the dissemination of such advertisements – fines amount to five times the cost of the distributed advertisement

  • For breach of requirements of the Law of Ukraine on 'Protection from Unfair Competition' – fines in amount of up to 5% of business profits (group) for the last year (if profits of the business entity for the last year is not declared – an amount of US$6,164)

  • For breach of data protection rules within prize promotions – fines of approximately US$61 – US$307

Separately, please see the penalties for conducting gambling which is prohibited in Ukraine – fines in amount of around US$1,205,721 with confiscation of gambling facilities and all the realized profit is to be paid to the State budget of Ukraine. Also Ukrainian legislation provides for criminal responsibility for conducting gambling in the form of fines of approx. US$6,164 – US$24,566, depending on the circumstances of the commission of the crime.

Finally, the following penalty is established for conducting lottery without license – fines of approx. US$2,412,139, together with the confiscation of gaming facilities.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

There are a variety of fines which may be awarded by the DED for non-compliance, such as a fine for not having the DED representative present at the draw (AED10,000) (approx. US$2,700), a fine for using or exploiting a Dubai Shopping Festival without permission (AED20,000) (approx. US$5,400) and a fine for submitting false information to the DED (AED20,000) (approx. US$5,400). Further, the campaign can be cancelled by the DED.

Gambling is forbidden under the Penal Code and the Civil Code. People who operate gambling establishments and participants can be fined and receive custodial sentences of up to ten years. As such it is important to consider the elements of each campaign to ensure it does not fall foul of this legislation.

Announcing fictitious prizes or discounts and promoting adulterated, corrupt or counterfeit products amount to commercial fraud under the Anti-Commercial Fraud Law. Businesses that commit commercial fraud risk a penalty of up to two years of prison and up to AED1,000,000 (approx. US$272,000) in fines depending on the type of goods to which the violations relate.

Other penalties may apply such as closure of premises and withdrawal of licences and the penalties may be doubled in case of repeat violations.

United Kingdom

United Kingdom

The ASA has limited sanctions, the main one being publicizing adjudications that a company breached the CAP/ BCAP code (which can lead to negative press coverage).

The majority of offences arising under the CPR's are punishable by a fine, which used to be set at a maximum of £5,000 (approx. US$6,440). However, this statutory maximum has now been disapplied so there is flexibility to impose a higher fine. For more serious cases, an (unlimited) fine or a prison term of up to 2 years or both can be imposed. For example, a fine was levied on a retailer of £300,000 (approx. US$386,400) for misleading advertising in breach of the CPRs. Sanctions are proportionate to the breach and routinely commence with requests to amend or stop non-compliant promotions. Immediate compliance often prevents more severe sanctions. In addition, the amendments made to the CPRs in 2014 provided consumers with a direct right to redress (in addition to actions that can be brought by the regulators), and this includes possible remedies such as damages.

Sanctions under GDPR for breaching data protection law can be very high indeed (fines could reach the higher of €20 million (approx. US$22.4m) or 4% the global turnover of the infringing company / its group, in the most serious cases).  Criminal prosecution under and class action consumer damages claims are also possible under GDPR.

United States

United States

Overall Summary

Penalties vary by state and under Federal law. An improperly structured sweepstakes or skill competition arguably could constitute an illegal lottery or gambling, which are criminal offenses under state and Federal law. However, it is more common for regulators and consumers to seek civil remedies, such as injunctions, restitution, and civil penalties.

Federal Law

The FTC can bring enforcement actions for unfair and deceptive trade practices under Section 5 of the FTC Act. Remedies can include injunctions, civil penalties, and audits.

Under the DMA, the US Postal Inspection Service can obtain temporary restraining orders and injunctions, as well as assess civil penalties up to US$2 million dollars.

The FCC can assess fines starting at US$4,000 for each violation of its contest rules.

Selected States

Arizona – Violation would be considered gambling and likely a class 1 misdemeanor. R.S. §§ 13-3303, 13-3304.

Arkansas – Consumers can file a lawsuit for violations of the prize promotion laws or consumer protection laws. AR Code § 4-102-103.

California – Violations of Cal. Bus. & Prof. Code § 17539.1 constitute unfair business practices and are likely enforceable in a civil action under Cal. Bus. & Prof. Code § 17200. That law also provides for injunctions and civil penalties not to exceed US$2,500 per violation. The penalties for engaging in illegal gambling, such as the operation of an illegal lottery, are a fine between US$100 and US$1000 and imprisonment in county jail not exceeding 6 months, or both. Cal. Pen. Code § 330.

Colorado – Can be up to US$10,000 per violation if the violation committed against an elderly person. Colorado Consumer Protection Act § 6-1-112(c).

Florida – Any person, firm, corporation, association, agent, or employee who violates any provision of this section or any of the rules and regulations made pursuant to this section shall be liable for a civil penalty of not more than US$1,000 for each such violation, which shall accrue to the state and may be recovered in a civil action brought by the Department of Agriculture and Consumer Services or the Department of Legal Affairs. Fl. Stat. §849.094(9)(b).

Georgia – Consumers can file a lawsuit for violations of the prize promotion laws or consumer protection laws. See e.g. O.C.G.A. §§ 10-1-390 et seq.

Illinois – Violations are generally considered an unfair practice under the Consumer Fraud and Deceptive Business Practices Act, which may subject the promoter to penalties and injunctions. Consumer can also bring class actions for intentional violations of the law and recover the greater of US$500 or twice the amount of pecuniary loss. 815 ILCS 525/40.

Massachusetts – An illegal lottery can result in fines of not more than US$2,000 or imprisonment up to 1 year. General Laws of Massachusetts 271, § 15.

New York – Every person, firm or corporation who coerces a retail dealer to participate in any promotion or advertising scheme or plan of the type set forth in subdivision one of this section shall be guilty of a Class B Misdemeanor. N.Y. Gen. Laws § 396-e(7).

Rhode Island – Violations can constitute a misdemeanor. R.I. Gen. Laws § 11-50-6.

Texas – Violations of sweepstakes law can give rise to a civil penalty of not less than US$5,000 or more than US$50,000 for each violation found. Actions can only be brought by the state Attorney General. Violations of gift offer law is a Class B misdemeanor for first offense, a Class A misdemeanor for a second offense committed within 5 years of the first conviction and a third degree felony for a third offense committed within five years of the first two convictions. They are also subject to deceptive trade practice action. Tex. Bus. & Com. Code §§ 621.251, 621.252.

Utah – The state Attorney General can seek a permanent restraining order or bring criminal charges for violations of the lottery laws. Utah Code Ann. § 13-28-8; Ga. Code Ann. §§ 16-12-21, 10-1-393(b)(16)(N).