NZ Raffle and Prize Draw Laws for Businesses

Running a raffle or prize draw can be a great way to build buzz, grow your email list, move stock, or support a cause your customers care about.

But in New Zealand, raffles and prize draws sit in a tricky space where marketing meets regulation. If you get the structure wrong, you could accidentally run an unlawful gambling activity, breach consumer law through unclear promo terms, or mishandle customer data.

Don’t stress though - once you understand the key rules, you can design a promotion that’s fun for your customers and legally solid from day one.

This guide explains the practical essentials of raffle and prize draw laws in New Zealand that small businesses should know, including when you might need a licence, how “promotional prize draws” work, and what to include in your T&Cs.

What’s The Difference Between A Raffle, Prize Draw, Giveaway And Competition?

Before you promote anything, it’s worth getting clear on what you’re actually running. Different structures can trigger different legal requirements.

Raffles (Usually Fundraising Lotteries)

A raffle is typically a form of “lottery” (a prize is allocated by chance, often by drawn ticket numbers). In New Zealand, raffles are regulated under the Gambling Act 2003.

In practice, raffles are most commonly run by:

• clubs and community groups
• schools and sports teams
• charities and incorporated societies

If you’re a business running a raffle to raise money for yourself (rather than for genuine fundraising purposes), you’ll want to be especially careful - it may not fit the usual “society fundraising” model that the law is designed around.

Promotional Prize Draws (Chance-Based Promotions For Customers)

A “prize draw” is often used as shorthand for a marketing promotion where customers go into a random draw to win something.

Some prize draws can fall under the Gambling Act too, but there’s an important carve-out for sales promotion schemes (more on this below). If your promotion fits within that definition, it’s generally permitted without needing a gambling licence.

Skill-Based Competitions

If winners are determined by skill (not chance), you may be running a “prize competition” rather than a lottery. Think: “best caption wins”, judged creative entries, or quiz questions that genuinely require skill.

Be careful here - if it’s really just a token skill question and the outcome is still effectively random, regulators may treat it as chance-based.

Giveaways (Free Entry Promotions)

Many businesses run giveaways where entry is free (for example, “comment to enter” or “sign up to our newsletter”). These aren’t necessarily “sales promotion schemes” because there’s no purchase requirement - but you still need to consider:

• consumer law (truthful advertising and not misleading people)
• privacy and marketing consent (especially if you’re collecting personal information)
• platform rules (for example, social media platform promotion policies)

The key point: even if your giveaway doesn’t feel like “gambling”, you still need proper rules and clear processes.

Do You Need A Licence To Run A Raffle Or Prize Draw In New Zealand?

This is usually the first question business owners ask, and for good reason. The short answer is: sometimes. It depends on how the promotion is structured and who is running it.

Raffles And The Gambling Act 2003

Under the Gambling Act 2003, most raffles are treated as a type of lottery. In many cases, running a lottery requires the organiser to be an eligible “society” and, depending on the size and structure of the raffle, to operate within the relevant class of gambling (and/or obtain the right approvals).

Day-to-day administration and guidance for these rules commonly sits with the Department of Internal Affairs (DIA), and local authorities may also be involved depending on the activity.

If you’re a business thinking, “We’ll just sell tickets and draw a winner,” that’s the point where you should pause and get advice - because ticket sales are a classic trigger for regulated gambling activity.

Sales Promotion Schemes (Common For Businesses)

If you’re running a promotion like “Buy a coffee, go in the draw to win a month of free coffees,” you may be able to structure it as a sales promotion scheme.

Generally, a sales promotion scheme is a promotion where:

• the prize is awarded by chance; and
• the customer gets entry because they buy goods/services at the normal price; and
• there’s no additional amount paid to enter (beyond the normal purchase).

If your promotion fits within this framework, it’s typically permitted without needing a gambling licence.

What can trip businesses up is accidentally charging an “entry fee”, inflating the price during the promo (so the “normal price” requirement isn’t met), making entry conditional on an extra payment (for example, “$5 extra to enter the draw”), or selling entry “chances” separately from the genuine purchase. These issues can push the promotion out of the sales-promotion safe zone.

When To Get Advice Early

It’s smart to get advice before you publish marketing materials if any of these apply:

• you want to sell tickets, entries, or “numbers”
• you’re partnering with a charity and you’re not sure who the legal “promoter” is
• you’re running the promo across multiple channels (online + in-store + through influencers)
• you’re offering high-value prizes (which increases scrutiny and dispute risk)

If you want a clear “yes/no” answer for your exact concept, this is one of those areas where tailored advice can save you a lot of headaches later.

What Rules Apply To Promotional Prize Draws And Giveaways?

Even if you don’t need a gambling licence, you still need to run your promotion fairly and transparently.

Have Clear Terms And Conditions (And Make Them Easy To Find)

Your promotion should have written rules that cover the practical “what ifs” (because customers will ask). This is where Competition Terms and Conditions become essential.

Strong T&Cs help you reduce disputes by setting expectations about things like:

• who can enter (age, NZ residents only, employees excluded, etc.)
• start and end dates/times (including time zone)
• how to enter (purchase, online form, in-store entry, etc.)
• draw date, how the winner is selected, and how they’re contacted
• redraw rules if the winner can’t be reached
• prize details and any exclusions (for example, travel dates, blackout periods, non-transferable)
• how you’ll handle any issues outside your control (for example, courier delays)

It’s also common to align your promo rules with the way your business already sells and communicates (for example, refunds, delivery timelines, and customer support processes).

Don’t Mislead People In Your Marketing

Your ads, landing page, social posts, EDMs and in-store posters all need to be consistent with your promo rules. Under the Fair Trading Act 1986, you must not mislead or deceive consumers (or be likely to mislead or deceive them).

Common risk areas include:

• advertising a prize image that doesn’t match what’s actually being supplied
• not clearly disclosing key limitations (for example, “winner must collect in Auckland”)
• implying “everyone wins” or “guaranteed” outcomes where it’s chance-based
• changing the rules mid-promo without having a clear right to do so (and without communicating properly)

If you’re adding fine print, it needs to genuinely clarify - not contradict the headline promise.

Plan Your Winner Announcement Process

Most customer complaints happen after the promotion ends, not during it.

Make sure you can prove you ran the draw fairly, including:

• keeping a record of valid entries
• documenting the draw method (manual draw, randomiser tool, etc.)
• keeping a record of contact attempts

If you’re promising “live draw” transparency, make sure you can actually deliver that in a way that doesn’t accidentally disclose personal information.

What About Privacy, Email Marketing, And Using Entrants’ Data?

Most prize draws are designed to collect leads - which means you’re likely collecting personal information such as names, emails, phone numbers, addresses, or social media handles.

That triggers privacy obligations under the Privacy Act 2020.

Tell People What You’re Collecting And Why

If you’re collecting personal information, you should be upfront about:

• what information you’re collecting
• why you’re collecting it (administering the promotion, contacting winners, marketing, etc.)
• who you may share it with (for example, a courier company or prize supplier)
• how long you’ll keep it

For many businesses, having a website Privacy Policy that aligns with the promotion is an important part of getting this right.

Be Careful With “Enter = Subscribe”

A classic small business strategy is “enter your email to go in the draw”. That’s fine - but if you also want to send ongoing marketing emails or texts, make sure you handle consent properly.

Best practice is to:

• separate “enter the draw” from “subscribe to marketing” (for example, a tick box)
• clearly explain what kind of marketing you’ll send
• include an unsubscribe option in marketing messages

In New Zealand, direct marketing by email and SMS is also regulated under the Unsolicited Electronic Messages Act 2007, which (among other things) requires consent in many cases and functional unsubscribe facilities in commercial electronic messages.

If you’re planning to market by email or SMS, it’s worth understanding the rules around direct marketing compliance, including the email marketing laws your business needs to follow.

Only Use The Data In The Way You Promised

If you say “We’ll only use your details to administer this giveaway,” then using the list later for a big promo campaign can create compliance risk and customer backlash.

Privacy compliance isn’t just legal box-ticking - it’s brand trust. Customers are much more likely to enter (and stay engaged) when they feel their data will be handled responsibly.

Common Mistakes Small Businesses Make (And How To Avoid Them)

Most raffle/prize draw issues we see aren’t intentional - they happen because the promotion moved fast and the legal details were an afterthought.

Here are the big ones to watch out for.

1. Accidentally Running An Unlicensed Raffle

If you’re selling entries (tickets, numbers, paid “chances”), you may be moving into regulated gambling territory.

Fix: structure it as a compliant sales promotion scheme (where entry is tied to purchase at normal price with no additional payment), or get advice on whether a licensed/approved raffle model is needed.

2. Missing Or Incomplete Promotion Terms

If you don’t clearly set out the rules, you’re more likely to face disputes like:

• “I entered but you never contacted me”
• “I thought it was open to Australia too”
• “You changed the prize”

Fix: publish clear rules and make them accessible wherever you promote the giveaway. If you need to limit liability in a sensible way (without overreaching), a properly drafted set of terms is far safer than trying to patch things with a quick social caption.

3. Overpromising In Ads

Marketing teams naturally want a strong hook - but the Fair Trading Act still applies to hype.

Fix: make sure the “headline” claim and the detailed terms match. If there are key restrictions, disclose them early and clearly.

4. Not Thinking Through Logistics

If you’re a product-based business, shipping and timing issues can become legal and reputational problems fast.

Fix: build timeframes into your terms (for example, “Prize will be dispatched within 14 days of winner confirmation”), and confirm you can actually supply what you’re offering.

5. Using Entrants’ Content Without Permission

If your giveaway involves user-generated content (photos, videos, testimonials), you may want to repost it later.

Fix: make sure your terms include appropriate permissions to use entries for marketing. If you don’t, you could end up with an IP or privacy complaint.

6. Relying On A Generic Template

Not all promotions are the same. A “one-size-fits-all” template often misses the details that matter - like redraw rules, privacy disclosures, or eligibility restrictions.

Fix: tailor your terms to your actual promotion. This is also where having a broader set of business Business Terms can help keep your overall customer-facing rules consistent.

Key Takeaways

• Raffles and prize draws can be regulated in New Zealand under the Gambling Act 2003, so it’s important to structure your promotion correctly before you launch.
• Selling entries or tickets is a major red flag for gambling compliance - many business-friendly promos are instead structured as sales promotion schemes tied to purchase at the normal price (with no extra payment to enter).
• Your advertising must be clear and not misleading, and the Fair Trading Act 1986 applies to your social posts, landing pages, EDMs, and in-store signage.
• Always use written promotion rules that clearly cover eligibility, entry method, draw dates, winner contact, redraws, and prize limitations.
• Privacy still matters even for “fun” giveaways - if you collect personal information, be transparent about how it will be used and stored under the Privacy Act 2020.
• Be careful with marketing consent if you plan to email or SMS entrants after the promotion ends - you’ll also need to comply with the Unsolicited Electronic Messages Act 2007 (including consent and unsubscribe requirements).

If you’d like help setting up legally compliant raffle or promotion terms, or you want advice on how New Zealand’s raffle and prize draw laws apply to your exact campaign, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.