Competitions: Do I Need A Permit?

Competitions are a great way for many businesses to promote the goods and services they provide.

They can also help to get traction and lead to growth for your business.  

At first glance, it may seem simple to get one up and running.

However, there are strict rules and regulations when it comes to trade promotions and competitions. As such, it’s important to seek the right kind of legal advice 

For example, you may need a specific permit to legally operate a competition. If you’re unsure about whether you need a permit for the competition you want to run, don’t fret.

Here are the need-to-knows when it comes to running a competition in New Zealand.

What Are The Types Of Competitions?

There are two types of competitions a business can run:

• A game of chance
• A game of skill

What’s the difference?

A game of skill tends to require more effort from the entrants.

Most of the time, people who enter games of skill need to create an original piece of work as their entry.

You don’t need to provide the reasons as to why the entrants did or didn’t win but it’s a good idea to keep a record of your judging process.

The winner of the competition is chosen for their skill.

An example of a game of skill is a competition which asks its entrants to answer a question in “25 words or less” or submit a unique piece of work like a photo or video.

On the other hand, the winner of a game of chance is based on pure luck.

Entrants don’t need to demonstrate any skill in a game of chance.

Examples include entering your email address or tagging a friend in a facebook post, in exchange for an entry.

It’s important to be careful though- you don’t want to accidentally venture into remote gambling territory. Unless you’re running a lottery, collecting money online is considered illegal. Therefore, while you can promote your competition online and allow people to enter into it via text, make sure you’re aware of the relevant regulations. 

It’s fine to host a lottery event, although if certain criteria is met then you will need to get a permit- click here for more information. 

I Am Running A Game Of Chance – Do I Need A Permit?

No, whether you’re running a game of chance or skill, you don’t need to worry about getting a specific permit. However, you do need to be careful about following the regulations around hosting a trade promotion in order for it to be considered a legally compliant practice. 

For example, there are certain prizes that are prohibited such as firearms and explosives.

It’s also important that businesses don’t have any commercial gain from the promotion and ensure they: 

• Don’t promote items that wouldn’t regularly sell 
• Don’t charge people anything more than required to enter the competition 
• Clearly state the rules, prizes, entry requirements and anything else relevant for the public (no hidden clauses) 
• Transparently explain how the winners are selected  

Do I Need Anything Else For A Competition?

Once you’ve got the relevant permit, you have to consider the legal docs you might need before opening your competition to the public.

It’s important to know that, regardless of whether you’re running a game of chance or a game of skill, you will need well-drafted Competition Terms and Conditions and a Privacy Policy that complies with the  relevant New Zealand consumer protection laws and the Privacy Act 2020.

These terms & conditions will outline the essential provisions that need to be made clear between you and the entrants.

These provisions include the eligibility criteria of the participants, competition duration, how the prize can be claimed and what happens if the winner is unable to claim their prize.

It’s important that your terms and conditions have the relevant information included in them as it promotes fairness and verifies the genuineness of the competition.

What To Take Away…

Running a trade promotion or competition is a great way to boost the visibility of your business.

A competition permit may be necessary to ensure that your competition is fair and reasonable, along with competition terms and conditions.

If you would like a consultation on your options moving forward, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.

---