Gambling Fact Sheet #9 - Sales Promotions

Note: While reasonable measures have been taken to ensure the quality and accuracy of the information contained in this Fact Sheet, it does not change any legal requirements under the Gambling Act 2003 or the Racing Act 2003 or any other provisions under these Acts. This Fact Sheet is for general information only and is not a substitute for independent, professional legal or financial advice.

What is a sales promotion?

A sales promotion is a way that businesses may promote their goods or services. The business may be creating, distributing and/or selling the goods or services it wishes to promote.

A sales promotion
A chocolate manufacturer wishes to promote its brand of chocolate. It decides to run a promotion where the customer buys a chocolate bar at the normal price, then fills out a form to go into a draw, with the prize being a trip to London.

Sales promotions are governed under the Gambling Act to ensure that businesses do not make any commercial gain from the sales promotion, other than through the normal trading of goods and services.

Key requirements of a sales promotion

The key requirements for a sales promotion are:

  • The sales promotion must be run for the purpose of promoting the sale of the particular goods or services.
  • The goods and services being promoted under the sales promotion are usually sold by the retailer.
  • The party running the sales promotion must be the creator, distributor, or vendor of the goods or services being promoted.
  • It must not cost the person anything extra to enter the competition, other than the normal price of the goods and services. However the customer may need to pay the cost of sending their entry in.
  • The cost of sending the entry must be at the standard rate – for example the standard rate for posting a letter or for sending a text message via a mobile phone. If it is necessary to download an app to enter the promotion, the app must be free to download.
  • The winner of the competition will be determined either:
    • totally by chance, or
    • partly by chance and partly by skill or knowledge.
  • The winner may be decided in different ways. It may be a draw after all entrants have entered a “lottery”, or an instant win game, or a prize competition. (However, if the qualifying goods or services for a sales promotion are purchased online or over the phone, only a lottery is permitted.)
  • The prize must not be prohibited under the Act – such as firearms, explosives, restricted weapons, alcohol, taonga tūturu, or vouchers for these.
  • All other conditions including the period of the promotion must be made clear in promotional material before the event is run, and conditions cannot be changed once the competition has started.

If your sales promotion meets all the above criteria, it is likely to be lawful under the Gambling Act 2003 (the Act).

An example

Here is an example of a sales promotion which meets the legal requirements:

Promotion: If you attend any of the home rugby games in the
next season, you will have a chance to win a cash prize
of $5,000

How it meets the requirements for a sales promotion

Conditions are as follows:

You must hold a valid ticket or season pass for that seat.

You must be sitting in your seat at the time of the draw and announcement

There must be a minimum of 5,000 spectators attending the match according to the official entry report on the day.

 The prize will be NZ$5,000.

 

  • Customers will pay no more than the usual retail price of goods or services, in this case a ticket or season pass, to enter the sales promotion.
  • The promotional material states what and how much the customer has to purchase to enter the promotion.
  • All conditions are made clear in promotional material.
  • The prize is cash and as such, it is not illegal. The details of the prize are fully described.

 

How the prize will be drawn and announced

A random seat draw will be made in approximately the 70th minute of the match. If the seat drawn is not occupied by the valid ticket holder, the prize will be redrawn until an occupied seat is drawn, and the occupant meets the conditions.

  • The method of determining the winner is clearly described.

 

 

 

 

Timing of the promotion

The promotion will be held at selected matches between the 1st of April to the 30th of September of a particular year.

The organiser has publicised in advance which matches the prize is available.

 

  • The business has publicised in advance the matches where the promotion will be held. The time period of the sales promotion is clearly specified.
  • All conditions are made clear in promotional material.

 

Terms and conditions

Terms and conditions are noted on the ticket, with full terms and conditions set out on the website.

  • All terms and conditions are fully disclosed.

What about sales promotions where products or services are purchased in-store?

Where the goods are purchased in store, the winner of the sales promotion can be determined a number of ways, including via an instant win, or a lottery, or a prize competition

The customer can enter into the draw either by sending an entry in the post or by using a computer, phone or similar device.

What about sales promotions if products or services are purchased online?

A sales promotion scheme can also be run where the customer makes the purchase online or over the phone as long as:

  • the winner is determined by a lottery – which means that there must be a draw of entries after all tickets have been entered. This means online sales promotions cannot be instant-win type games, such as a scratchie.
  • The promotion must be mainly conducted in New Zealand (but see below for more on this).

The winner/s of the promotion can be contacted in any way convenient to the organiser.

What about sales promotions that are being run from Australia or other overseas countries?

We recognise that many businesses are run on a franchise model, with promotions run from the Australian or other office of a parent company. In general, the expectation is that sales promotions will be conducted in New Zealand, but they do not need to be exclusively conducted in New Zealand.

The main requirement is that any international sales promotion being offered in New Zealand should be run in such a way that New Zealand participants get the same opportunity to participate and win as overseas participants, with no extra costs or other barriers. 

The key requirements for running a sales promotion must be met, as set out above. In addition, the following conditions must be met:

  • the opportunities to enter and the chances of winning the competition are equal for all participants regardless of where the sales promotion originates
  • the qualifying product or service must be sold in New Zealand, and not just be a sales promotion scheme offered in New Zealand
  • the business must have an address in New Zealand for enquiries. This would demonstrate that they are conducting their business in New Zealand – and not just selling online to New Zealanders.
  • New Zealand winners do not face extra costs to collect their prize.

If the sales promotion scheme is being run in other countries as well as in New Zealand, the business is not allowed to advertise the overseas component of the gambling activity or promotion in New Zealand.  Promoters are only allowed to inform New Zealand participants how the sales promotion will be conducted in New Zealand.

Some commonly asked questions about sales promotions

Questions

Is this allowed under the Act?

Can the promotion include a knowledge question to be answered?

Yes. The competition can be based partly on skill/knowledge and partly on chance, or it can be totally based on chance.

Can the customer be required to pay more than the normal cost of a text or postage?

No. Charging an extra cost to enter, over and above the normal price of the goods or services, automatically makes the sales promotion illegal.

What if the promotion uses false or misleading advertising?

This would be illegal under the Fair Trading Act. All other New Zealand laws must be complied with when running sales promotions.

Must the method of determining the winner be disclosed?

Yes. The organiser must ensure the method of determining the winner is made clear to participants, as well as explaining how/when the winner will be notified.

 

Could a sales promotion offer a bar voucher as a prize where the voucher can be redeemed for food, alcoholic drinks and non-alcoholic drinks?

No. Alcohol is a prohibited prize and must not be used or included as part of a prize. However, there is no restriction on the products that can be promoted as part of a sales promotion – for example a business could promote a brand of alcohol under a sales promotion, providing the prize did not include any alcohol.

Please note that each sales promotion is unique and whether it is lawful or not will depend on the nature of each promotion. If you are still not sure that your sales promotion scheme is legal then we recommend that you email details of your proposed sales promotion to gambling.compliance@dia.govt.nz or contact your solicitor. The Department cannot provide legal advice.

Other New Zealand legislation such as the Fair Trading Act may also affect your sales promotion scheme.

What happens if a sales promotion is illegal?

Conducting illegal gambling is an offence and on conviction, can result in a fine of up to $20, 000 for an individual and $50,000 for a body corporate (section 19 of the Gambling Act).

Definitions

Instant win:

Where a winning ticket (or the money, or other prize awarded by the winning ticket) is determined before or at the same time as the competition is being run. For example, scratch and win games (scratchies), lucky dips, or mystery envelopes.
See here for more on instant wins.

Lottery:

A lottery is a draw that takes place only after all participants have entered the competition. For example, a raffle for a trolley full of groceries, or a sweepstake, is a lottery, as everyone who buys a ticket has an equal chance of winning.
Note: An instant win-type game is not a lottery, as the winning ticket is pre-determined before all participants have entered.
See here for more on lottery rules.

Prize competition:

A prize competition is gambling where the winner of the prize is determined partly by chance and partly by participants exercising some knowledge or skill. For example, tagged fishing competitions. See here for more on prize competitions.

Full list of prohibited prizes:

It is illegal to offer the following as prizes:

  • A firearm, explosive (including ammunition), restricted weapon, or airgun

  • Liquor

  • Tobacco products

  • A taonga tūturu (an object more than 50 years old that relates to Māori culture, history or society, and was manufactured, modified, used, or brought into New Zealand by Māori)

  • Vouchers or entitlements to commercial sexual services

  • Vouchers or entitlements to any of the other property listed above.

Taonga tūturu: 

An object more than 50 years old that relates to Māori culture, history or society, and was manufactured, modified, used or brought into New Zealand by Māori. 

Return to: Fact Sheets (Gambling Act 2003)