Can a prize promotion be run that is based on skill?
Yes, although the law is unclear and skill competitions could be risky in a B2B context.
For B2B skill competitions, ensure:
- The winner is picked on the basis of skill alone (e.g. quality, accuracy, originality) not in any way by chance; and
- Criteria for awarding prizes are clear, objective and precisely defined.
Articles L. 322-1 et seq. of the Internal Security Code et seq. prohibit any and all operations (including skill competitions) offered to the public under any name whatsoever, that create an expectation of gain and the outcome of which is determined, even in part, by chance and for which a financial contribution from the participants is required by the organizer.
Article L. 322-2-1 adds that the prohibition includes games the functioning of which relies on the player’s know-how. This could be interpreted as prohibiting skill competitions. However, there might be an argument that it means that the prohibition of chance-based games also applies when know-how is a factor in the determination of the outcome of the contest.
That being said, Article L. 322-2-2 provides that this prohibition does not apply to promotional lotteries mentioned in article L. 121-20 of the Consumer Code, which is why the risk that the skill competition be considered as unlawful is lower in a B2C context.
For B2B, if the competition is totally skill-based and based on clear and objective factors that show that chance is not a factor, the competition would be lawful. If there is doubt as to whether chance is a factor, it would fall within the general prohibition of lotteries, except if participation is totally free. If reimbursement of the financial contribution is offered in the terms and conditions, this is not sufficient to make it lawful.