Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
Running a raffle, sweepstake or “win a prize” promotion can be a great way to build your email list, boost sales, or launch a new product.
But in New Zealand, promotions can cross into regulated “gambling” faster than many business owners expect. The good news is that with the right structure (and the right paperwork), you can run a compliant campaign that’s still fun for customers.
This guide breaks down the key raffles, sweepstakes and prize promotions legal requirements in New Zealand from a small business perspective, including when you might need a licence, what your terms should cover, and the other laws you still need to follow even if it’s “just a giveaway”.
What Counts As A Raffle, Sweepstake Or Prize Promotion?
Before you can work out the legal requirements, you need to correctly label what you’re doing. In practice, three elements are often used to assess whether something is “gambling”:
- Prize (there’s something of value to win)
- Chance (the winner is determined by luck, like a random draw)
- Consideration (someone has to pay money, or provide something of value, to enter)
If your promotion has all three, you may be running a form of gambling (which can trigger licence/permit requirements and strict rules).
Raffles (Commonly Regulated As Gambling)
A typical raffle involves selling tickets, then drawing a winner at random. That “ticket purchase” is usually the consideration element, which means raffles are commonly treated as regulated gambling in NZ.
This is why raffles are often run by clubs, schools and charities under specific rules and licences. If you’re a business planning to run a raffle, you’ll want to be careful about how it’s structured and whether you’re legally allowed to run it at all.
Sweepstakes And Giveaways (Often Safer If Entry Is Free)
“Sweepstake” isn’t a single legal category that automatically makes things compliant. What matters is how entry works.
If entry is genuinely free (and your winner is chosen by chance), your promotion may avoid being treated as gambling because the “consideration” element is missing.
However, “free” needs to be real, not just on paper. For example, if someone has to buy a product to enter and there’s no genuine free-entry alternative, it may still be considered “pay to play”.
Trade Promotions (Purchase-Linked Promotions)
Many businesses run “buy a product and go in the draw” campaigns. In NZ, these are often described as sales promotion schemes. Depending on how they’re run, they can raise gambling-law issues if entry is effectively paid (for example, if you must purchase and there’s no genuine free entry method).
Sometimes businesses try to make entry “free” by saying “keep your receipt and email us to enter”, but if you still have to buy the product, you haven’t removed consideration.
The right structure depends on your campaign goals, your industry, and how you’re promoting it. This is one of those areas where a quick legal check before launch can save you a lot of headaches later.
Do You Need A Permit Or Licence To Run A Promotion?
This is usually the first question small business owners ask, and it’s the right one.
In New Zealand, gambling is regulated under the Gambling Act 2003. Whether you need a licence (and what kind) depends on what you’re running, who is running it, and how money is being collected and used.
As a starting point, traditional raffles (especially those involving ticket sales) are commonly regulated as gambling and may only be lawful if run in specific ways (often by authorised groups) and/or under an appropriate class of licence. Businesses should be especially cautious where the promotion looks like a standard ticketed raffle.
By contrast, some purchase-linked campaigns fall into the “sales promotion scheme” category under the Gambling Act. These can be lawful in many cases, but they still have rules around how the promotion is structured and promoted (and they don’t automatically avoid gambling-law oversight just because they’re called a “trade promotion”).
If you’re unsure, it’s worth reviewing the common situations covered in permit requirements before you spend money on ads or print marketing.
Key Factors That Affect Permit/Licensing Requirements
When we assess whether a promotion is likely to trigger gambling rules, we generally look at:
- Is entry paid? (ticket sales, entry fees, purchase requirements)
- Is the winner decided by chance? (random draw vs a judged competition)
- Who is running it? (a business vs a charity or community organisation)
- Where does the money go? (private profit vs authorised purposes)
- What is the total value of prizes and ticket sales? (thresholds can matter)
- How is it advertised? (the way you describe it can create legal risk)
A Practical (And Often Safer) Alternative: Skill-Based Competitions
If you want a purchase-linked promotion without gambling-style risk, a genuine skill competition can be a better fit (for example, a judged “best photo” contest or a creative submission where skill determines the winner).
Be careful though: if the “skill” element is tokenistic and the winner is effectively random, it may still be treated as chance-based.
Also, even if you avoid gambling law issues, you still need to comply with advertising and consumer laws (we cover this below).
What Should Your Promotion Terms And Conditions Include?
Even when a promotion doesn’t require a permit or licence, your next major risk is a customer dispute.
Clear Terms and Conditions do two important jobs:
- They tell customers exactly how the promotion works (reducing complaints and negative reviews).
- They help you prove you ran the promotion fairly and consistently (especially if someone challenges the outcome).
For most businesses, this is where a properly drafted Competition Terms and Conditions document becomes essential.
Core Clauses To Include
While every promotion is different, most compliant T&Cs should address:
- Promoter details (your legal business name and contact details).
- Eligibility (age limits, residency requirements, employee exclusions, one entry per person, etc.).
- Entry mechanics (how to enter, opening/closing dates, and what counts as a valid entry).
- Free entry pathway (if relevant) (exact instructions, no hidden barriers).
- Prize details (what the prize is, any exclusions, expiry dates, and whether it’s transferable).
- Draw/judging details (date, time, location, method of random draw or judging criteria).
- Winner notification (how and when you’ll contact them, and what happens if they don’t respond).
- Redraw rules (clear process if the winner is ineligible or can’t be contacted).
- Publicity and content rights (if you want to post winners or reuse entries, be upfront).
- Liability wording (reasonable limits, and clarity on what you are/aren’t responsible for).
Make Sure Your Advertising Matches Your Terms
A common mistake is writing solid terms, then posting an ad that contradicts them (for example, advertising “anyone can enter” when your terms exclude certain regions or ages).
In NZ, misleading promotions can create issues under the Fair Trading Act 1986. It’s not just about what you intended; it’s about the overall impression your marketing creates.
In other words: your terms need to be accurate, and your ads need to be consistent with your terms.
Advertising, Consumer Law And “No Purchase Necessary” Rules
Even if gambling law doesn’t apply, most prize promotions still sit inside the “everyday” legal framework that applies to selling and marketing in New Zealand.
Fair Trading Act 1986: Don’t Mislead People
Under the Fair Trading Act, you generally need to avoid misleading or deceptive conduct. In a prize promotion context, this can include things like:
- Not clearly disclosing key conditions (like short redemption periods or limited stock for prize fulfilment).
- Implying a higher chance of winning than is realistic.
- Changing rules mid-promotion without a clear right to do so (and without handling it fairly).
- Advertising a prize that you can’t actually supply.
Pricing and promotion claims also matter. If you’re running a “buy now to enter” campaign that includes discounts or special pricing, make sure you understand how advertised pricing rules work under consumer law, including issues around advertised price statements.
Consumer Guarantees Act 1993: Still Applies If You’re Selling Products
If your promotion is tied to selling goods or services to consumers, your normal consumer guarantee obligations don’t disappear just because there’s a prize involved.
For example, if someone buys your product and it’s faulty, they may still have rights under the Consumer Guarantees Act (depending on the circumstances), even if your terms say “no refunds”.
Can You Use Disclaimers?
Disclaimers can be helpful to clarify the scope of your promotion (for example, clarifying that a third-party social platform doesn’t sponsor the promotion, or that images are illustrative).
But disclaimers don’t give you a free pass to mislead people or to contract out of non-excludable consumer rights.
If you’re using disclaimers in marketing or on your website, it’s worth getting the wording right in a way that aligns with NZ law and your overall messaging, including a properly drafted Disclaimer where appropriate.
Privacy, Email Marketing And Running The Promotion Fairly
Many businesses use promotions to collect leads (names, emails, phone numbers, birthdays, shipping addresses). That’s fine, but it triggers privacy and marketing compliance obligations.
Privacy Act 2020: Be Clear About What You’re Collecting And Why
Under the Privacy Act 2020, you should take reasonable steps to ensure people know:
- what information you’re collecting
- why you’re collecting it (for example, to administer the promotion and contact winners)
- who will receive it (for example, a fulfilment provider or courier)
- how it will be stored and protected
If you’re collecting personal information through a landing page, website form, or checkout, it’s usually a good idea to have a fit-for-purpose Privacy Policy in place and to make sure it matches what you’re actually doing in the campaign.
Spam And Consent: Don’t Add Entrants To Your Mailing List Without Permission
A big compliance trap is using a giveaway as a way to quietly build a mailing list.
If you want to send marketing emails to entrants, you should make sure you’re complying with NZ’s anti-spam rules under the Unsolicited Electronic Messages Act 2007 (including consent and unsubscribe requirements). Your entry form wording matters here.
If email marketing is part of your plan, it’s worth checking your process against the basics in Email Marketing Laws so you don’t accidentally turn a fun campaign into a complaint.
Operational Fairness: Document Your Process
From a risk-management perspective, run your promotion like you might need to prove it later (because sometimes you do).
That means:
- keeping a record of entries
- recording the draw/judging process
- keeping evidence of how the winner was selected
- keeping a record of winner contact attempts
This also helps if you get chargebacks, customer complaints, or platform disputes.
Common Mistakes Businesses Make (And How To Avoid Them)
Most promotion problems aren’t caused by bad intentions. They happen because businesses move fast, reuse templates, or rely on “what everyone else does”.
Here are some common issues we see.
1. Requiring A Purchase Without A Genuine Free Entry Option
If your promotion is chance-based and requires a purchase, you may be moving into gambling territory.
If you want a purchase-linked campaign, consider:
- a skill-based competition (where skill genuinely determines the winner), or
- a chance-based promotion with a clear and genuine free-entry pathway.
2. Changing The Prize Or Extending Dates Without Authority
Sometimes stock runs out, a supplier pulls out, or a launch is delayed. If you want flexibility, your Terms and Conditions should clearly reserve a right to make certain changes (and you should still exercise that right fairly).
Changing core elements without a contractual right can create Fair Trading Act risk and reputational damage.
3. Vague Winner Selection Criteria
If it’s a judged competition, you need to explain the judging criteria and who is judging. If it’s a random draw, you should specify that it’s random and describe the draw process at a high level.
Ambiguity is where disputes grow.
4. Over-Collecting Personal Information
Only collect what you actually need to run the promotion. If you don’t need someone’s date of birth, don’t collect it “just because”.
Less data usually means less risk.
5. Forgetting The “Boring” Stuff: Fulfilment, Shipping And Tax
If you’re shipping a prize, make sure you’ve covered:
- where you’ll ship (NZ only vs worldwide)
- who pays shipping
- delivery timeframes (and realistic expectations)
- what happens if a prize is lost in transit
Also, depending on how the promotion is structured and who wins, there may be accounting and tax considerations for your business. Your accountant can help you confirm how to treat promotion costs and prizes (this article is general information only and isn’t tax advice).
Key Takeaways
- To understand the legal requirements for raffles, sweepstakes and prize promotions in New Zealand, start by checking whether your promotion involves a prize, chance, and consideration (payment/value to enter).
- Raffles that involve selling tickets or requiring payment to enter may be regulated under the Gambling Act 2003, and you may need to consider permit or licensing requirements before launch.
- Even if gambling law doesn’t apply, you still need to comply with general business laws like the Fair Trading Act 1986 (misleading conduct) and consumer law obligations tied to your sales and advertising.
- Clear, tailored Terms and Conditions are one of the best ways to reduce disputes and show you ran the promotion fairly and consistently.
- If you collect customer data through the promotion, make sure you’re meeting Privacy Act 2020 obligations and not signing people up to marketing without appropriate consent.
- Document your promotion process (entries, draw/judging, winner notification) so you can respond confidently if someone challenges the result.
If you’d like help setting up a compliant raffle, sweepstake or prize promotion (including Terms and Conditions and advice on structuring the promotion), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
