Can a prize promotion be run that is based on skill?
Yes, but the winner must be determined only on the basis of skill and not chance, particularly if the entrant pays to enter (including buying a product in order to be eligible to enter).
If a prize promotion requires no purchase or consideration to enter, i.e. simply a skill question, the Fair Trading Act would apply. The main prohibitions under the Fair Trading Act are the prohibitions on misleading and deceptive conduct and false, misleading or unsubstantiated representations.
If the outcome is partly based on skill and partly based on chance (for example a skill question, with the correct answers going into a draw) a prize promotion might be considered as an authorized gambling activity under the Gambling Act if it meets the requirements of a 'sales promotion scheme'. The requirements are listed below:
- Participation in the prize promotion requires purchase of the goods or services being promoted for a price not exceeding the usual retail price.
- The entrant is not required to pay direct or indirect consideration to enter the promotion (other than purchasing the relevant goods or services).
- The date or period over which the outcome of the promotion will be determined is clear to the entrant at the time and place of sale.
- The promotion is run by the creator, distributor or vendor of goods or services to promote those goods or services.
- The promotion does not involve a gaming machine nor a restricted or prohibited prize.