Can a prize promotion be run where there is an element of chance in the selection of the winner?
Yes. However, if the conditions of gambling mentioned above are met, it might be considered as a gambling activity, which is unlawful. Under the Gambling Act, 'prize draws' shall be reported to the GSA in advance (but no license is required). Pursuant to the Gambling Act, a prize promotion will qualify as a 'prize draw' only if the following requirements are met:
- it is related to the purchase of goods or services;
- free of charge (there is no payment in addition to the usual market price of the product or service);
- the determination of the winner is conducted through the 'public drawing' of a ticket.
If these requirements are not met (e.g. participation is skill-based and not based on purchase of goods), the organizer has no obligation to notify the GSA and the provisions of the Gambling Act will not apply, unless the activity is considered as gambling activity, e.g. because participation is not free of charge. Cash prize is not possible in the case of prize draws.