Can a prize promotion be run where there is an element of chance in the selection of the winner?
A prize draw may be conducted if the participants do not have to make direct or indirect payment to enter the competition. (An example of an indirect payment is where an additional payment is required on top of the price of a product/service that is required to be purchased as condition of entry into the competition or an inflated price is charged for the good or service).
Expenses incurred by participants in respect of postal services as well as normal telephone costs are allowed.
A consumer competition could also be considered a game of chance and, thus, fall under the provisions of the gambling legislation if:
- Material prizes, generally monetary, are awarded following a public offer of potential winnings by the organizer and acceptance of this offer by the participant;
- A direct or indirect payment of a participation fee is required other than the normal cost of purchasing a good or service; and
- Winnings are awarded on the basis of game rules through a random selection of the results of the events to which the game relates, regardless of how these results are achieved.
If this is the case, the organizer must obtain certain authorizations and licenses.