Legal Requirements For Running Lotteries And Competitions In New Zealand

Running a giveaway, prize draw, or “enter to win” campaign can be a great way to build your email list, boost sales, and reward loyal customers.

But if you’re running lotteries and competitions in New Zealand, the legal requirements can feel a bit confusing at first - especially because the rules change depending on whether your promo is a true “lottery” (chance-based), a skill-based competition, or a sales promotion tied to purchases.

In this guide, we’ll walk you through the key legal requirements for promoters and businesses in New Zealand, what to watch out for, and how to set your campaign up so you’re protected from day one.

What Counts As A Lottery Or Competition In New Zealand?

A good starting point is understanding what you’re actually running, because the legal obligations often depend on whether your promotion is:

• A lottery (chance-based) - winners are selected by chance (for example, random draw).
• A prize competition (skill-based) - winners are determined by skill or judgement (for example, “best caption wins”, judged recipe contest).
• A sales promotion scheme - a promotion connected to buying goods/services, where entry is linked to purchase (for example, “buy to go in the draw”).

In New Zealand, the main law you’ll keep coming back to is the Gambling Act 2003. It regulates “gambling”, which can include certain prize draws and lotteries where people pay (directly or indirectly) for a chance to win a prize.

From a practical business perspective, the legal question is usually:

Is your promotion (1) chance-based, and (2) does it involve paying to enter (including by requiring a purchase)?

If the answer is “yes” to both, you’re much more likely to be in regulated territory.

A Quick Example (Because This Is Where People Get Caught Out)

Imagine you run an online store and want to do a promo:

• Promo A: “Sign up to our newsletter for a chance to win a $500 gift card.” (No purchase required.)
• Promo B: “Spend $50 and go in the draw to win a $500 gift card.” (Entry linked to purchase.)
• Promo C: “Tell us your best tip for [topic] - best answer wins a $500 gift card.” (Winner chosen by judged skill/merit.)

These can have very different legal requirements depending on how they’re structured and advertised. That’s why it’s worth planning the legal side early - it’s much easier than trying to “fix” a campaign once customers have already entered.

Do I Need A Permit Or Licence To Run A Lottery Or Competition?

This is one of the most common questions we get from business owners.

The short answer is: sometimes - and it depends on the type of promotion, who is running it, and how it’s structured.

Under the Gambling Act 2003, some gambling activities require authorisation, and “lotteries” can fall into categories (often referred to as “classes”) depending on factors like prize value, how the lottery is run, and whether it’s for authorised purposes (for example, community fundraising) rather than private commercial gain.

It’s also important to treat “sales promotion schemes” carefully. If entry is only available to customers who buy (or otherwise pay), a chance-based promotion may be treated as regulated gambling unless it fits within a permitted category or an exemption. In other words, simply calling something a “promotion” doesn’t take it outside gambling regulation.

Because the consequences of getting this wrong can be serious (including having to cancel the promotion, refund entry fees, or facing enforcement action), it’s worth checking early whether you need approval. If you want a deeper breakdown of the permit question, a helpful starting point is Sprintlaw’s guide on permit requirements and how they apply in practice.

Practical Steps To Reduce Permit Risk

If you’re trying to keep things simple (and compliant), common approaches include:

• Avoid charging an entry fee (including “hidden” entry fees).
• If entry is linked to purchase, get advice before relying on a “free entry option” - it may help in some structures, but it won’t automatically take a chance-based promotion outside the Gambling Act (the details and how it’s promoted matter).
• Make it skill-based (if appropriate for your brand) with clear judging criteria.
• Be careful with “donation” language - if a “donation” is really required to enter, it may still be treated as payment.

That said, the details matter. The way you draft your terms, the way you promote the campaign, and whether entry truly is free can change the legal assessment.

How Do I Structure Competition Terms So I Don’t Mislead Customers?

Even if your promo doesn’t need a permit, you still need to run it fairly and transparently.

Most businesses will need a solid set of promotion terms covering things like eligibility, entry rules, prize details, and how winners are chosen. This matters for two big reasons:

• Customer trust: clear rules reduce complaints and “but your post said…” disputes.
• Legal risk management: good terms help you show you ran the promotion as advertised.

As a promoter, you’ll also want to keep the Fair Trading Act 1986 front of mind. This law broadly requires that your advertising and promotional representations are not misleading or deceptive (and that you don’t make false or unsubstantiated claims).

So, if you say “winner announced Friday” - you should be ready to announce Friday (or have terms that allow a change, and communicate it properly). If you say “everyone who enters has the same chance” - you need a system that genuinely delivers that.

Having competition terms and conditions that are tailored to your exact promotion (not a generic template) is one of the easiest ways to avoid messy arguments later.

What Should Your Competition Terms Usually Cover?

While every campaign is different, most well-drafted terms will deal with:

• Promoter details (your business name and contact info).
• Eligibility rules (age limits, location limits, employee exclusions).
• Entry period (start/end dates and times, including time zone).
• How to enter (including whether purchase is required, and if there’s a free entry route).
• Prize details (what it is, the value, what’s included/excluded, any conditions).
• How the winner is chosen (random draw details or skill judging criteria).
• Winner notification (how and when you’ll contact them, and what happens if they don’t respond).
• Redraw rules (if a winner is ineligible or unreachable).
• Publicity (whether you can publish winner names/photos, and how consent works).
• Liability limits (to the extent permitted by law).
• Fraud and disqualification (for fake accounts, bots, or manipulation).
• Changes/cancellation (when you can change the promotion, and what you’ll do if you cancel).

It’s also smart to align your promotion terms with your broader online legal setup - for example, your Website Terms and Conditions if entries happen through your site or you’re using your online store to run the campaign.

What Privacy, Spam, And Data Rules Apply When You Collect Entries?

Many promotions collect personal information, such as:

• names
• email addresses
• phone numbers
• postal addresses (for prize delivery)
• photos, videos, or other user-generated content

Once you’re collecting personal information, you need to think about compliance with the Privacy Act 2020.

In plain language, that means you should be able to answer:

• What information are you collecting?
• Why are you collecting it?
• How will you store it and keep it secure?
• Who will you share it with? (for example, courier companies, software platforms, marketing tools)
• How long will you keep it?
• Will you use it for marketing later?

This is where having a clear Privacy Policy is helpful - especially if you’re collecting entries online.

Be Careful With “Enter To Win” Email Marketing

A lot of businesses run competitions specifically to grow an email list.

That can be completely legitimate, but you need to be transparent about what people are signing up for, and you need to send marketing emails lawfully. If you’re planning to add entrants to a mailing list, you’ll want to align your entry process with email marketing laws (including making sure people can unsubscribe and that your messages aren’t misleading).

A good rule of thumb is: don’t bundle consent in a sneaky way. If entry means they’ll receive marketing emails, say so clearly at the point of entry (and reflect it in your terms and privacy wording).

What Other Laws Can Affect Lotteries And Competitions For Businesses?

The Gambling Act and privacy obligations are big ones - but they’re not the only legal risks.

Depending on your promotion, you may also need to think about:

Fair Trading Act 1986 (Advertising And Claims)

This affects how you describe:

• your prize value (“worth $2,000!”)
• your odds (“everyone has an equal chance”)
• your winner selection process
• your timeframes (“winner announced in 24 hours”)

If your advertising creates a strong impression, but your fine print says something different, that can still cause problems. Your headline marketing and your terms should match.

Consumer Guarantees Act 1993 (If The Prize Is A Product Or Service)

If your prize is something you supply in the ordinary course of business (for example, your own product, a membership, or a service package), you should think about how consumer guarantees apply.

For instance, if the prize is a service, you still want clear boundaries around what’s included, booking requirements, expiry dates (if any), and what happens if the winner can’t redeem it in time.

Contract And Liability Risk (Running The Promotion Properly)

Even when you’re giving something away, you’re still creating expectations - and disputes often happen when:

• the prize is out of stock
• the business changes the rules mid-campaign
• the winner claims they weren’t contacted properly
• multiple staff members run the promo inconsistently

This is where well-written terms and internal processes matter. Many businesses also include a carefully drafted disclaimer (where appropriate) to clarify limits and avoid misunderstandings - but it needs to be consistent with consumer law and can’t “contract out” of obligations that legally can’t be excluded.

Platform Rules (Social Media And Online Platforms)

If you’re running a promotion on social media, marketplaces, or another platform, you also need to follow that platform’s promotional rules.

This isn’t “law” in the traditional sense, but it’s still a compliance risk - because your campaign can be removed, your account can be restricted, or you can lose access to your audience overnight.

In your terms, it’s common to clarify that the promotion is run by you as promoter, and to include any platform-required wording (where required) - without accidentally implying a platform is endorsing your campaign.

What Are The Most Common Mistakes Businesses Make (And How Can You Avoid Them)?

Most legal issues we see with promotions aren’t caused by businesses trying to do the wrong thing. They usually come from rushing a campaign live without checking the legal structure first.

Here are some common pitfalls to watch out for:

1. Accidentally Creating A Paid Lottery

If entry is linked to purchase, or there’s any “payment to enter” element, you could be stepping into regulated gambling territory. Consider whether you need a different structure (for example, a genuinely skill-based competition) or whether your promotion needs to fit within a permitted category under the Gambling Act.

2. Unclear Or Incomplete Terms

If your terms don’t cover redraws, timeframes, eligibility, and what happens if something goes wrong, you can get stuck making decisions on the fly - and that’s when complaints escalate.

3. Collecting More Data Than You Need

If you only need an email address to run a random draw, don’t ask for a phone number, date of birth, home address, and a photo “just because”. Collecting unnecessary personal information increases your privacy risk and your compliance workload.

4. Using Entries For Marketing Without Clear Consent

Be upfront about what people are signing up to, and make sure your follow-up marketing complies with spam and privacy requirements.

5. Changing The Deal After People Enter

Sometimes you genuinely need to extend dates or adjust the prize (for example, a supplier issue). The key is to:

• have terms that explain when changes can happen
• act fairly and transparently
• communicate clearly to entrants

In many cases, getting legal advice before making changes can save you from a bigger problem later.

Key Takeaways

• Legal requirements for lotteries and competitions in New Zealand depend heavily on whether your promotion is chance-based or skill-based, and whether people pay (directly or indirectly, including through purchase) to enter.
• The Gambling Act 2003 is a key law for businesses running chance-based promotions, particularly where entry involves payment or purchase. “Sales promotion schemes” can still be regulated depending on how they’re structured.
• Clear competition terms and conditions help you run a promotion fairly, reduce disputes, and align your advertising with the Fair Trading Act 1986.
• If you collect entry details, you should consider your obligations under the Privacy Act 2020 and have a clear Privacy Policy explaining what you collect and why.
• If you plan to add entrants to your marketing list, your entry flow should align with email marketing laws and include transparent consent and unsubscribe options.
• Generic templates can miss key details - tailored legal drafting is often the simplest way to protect your business from day one.

If you’d like help setting up legally compliant promotion terms or checking the structure of your campaign, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.

This article is general information only and does not constitute legal advice. For advice about your specific promotion, get legal advice tailored to your circumstances.