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05 Mar 2020

Trade promotion lotteries: proposed regulation to lift administrative burden in NSW

By Sharon Segal, Sophie McLeod

Draft regulation indicates that permits will only be required to conduct trade promotion lotteries in NSW when the total prize value exceeds $10,000.

Over the last few years, the NSW Government has been working towards renewing the legislative framework that regulates the conduct of community gaming activities in New South Wales. A key focus of those reforms has been to make community gaming laws less complex, less confusing and less prescriptive.

Following the introduction of the new Community Gambling Act 2018 (NSW) (which is yet to commence but will replace the Lotteries and Art Unions Act 1901 (NSW)), the NSW Government recently released a draft Community Gaming Regulation 2020 (NSW), setting out proposed new requirements for conducing gaming activities in New South Wales for charitable, not-for-profit and social purposes, and for trade promotions in the commercial sector. Many existing requirements for the conduct of community gaming activities have been retained, but the laws have been modernised and provide a more streamlined approach.

Trade promotion lotteries: a refresher

Trade promotions are games or competitions conducted for the promotion of a trade or business and often involve an element of chance rather than being solely a game of skill. Trade promotions which involve an element of chance, such as when a winner is selected from a random draw, are known as "trade promotion lotteries".

Each State and Territory in Australia has its own laws regulating the conduct of trade promotion lotteries in their jurisdiction.

Australian Capital Territory

If total prize value is over $3,000.

However, a permit is not required for online promotions which meet certain conditions.

New South Wales

Always, regardless of prize value.

If the Community Gaming Regulation is introduced in the proposed form, only if total prize value is over $10,000.

Northern Territory

If total prize value is over $5,000, unless a permit is granted in another State or Territory and the result is to be determined in that State or Territory.

Queensland

If total prize value is over $5,000, unless a permit is granted in another State or Territory and the result is to be determined in that State or Territory.

South Australia (these are currently under review)

If total prize value is over $5,000.

Always for "instant prize" promotions (regardless of prize value).

Tasmania

No permit required.

Victoria

No permit required.

Western Australia

No permit required (provided prescribed conditions are met).

New permit threshold for trade promotion lotteries

In the case of trade promotion lotteries, the most significant change is removing the current requirement of a permit for all trade promotion lotteries, and replacing it with a permit requirement only when a trade promotion lottery has a total prize value which is greater than $10,000.

The Impact Statement accompanying the Draft Regulation indicates that the reduction in administrative burden resulting from this change will generate industry and government cost-savings of over $1 million per year. It is also likely to bring an increase in the number of trade promotion lotteries conducted in New South Wales, with many businesses no longer opting for a game of skill promotion (eg. "25 words or less" competitions) in order to avoid the requirement for a permit in New South Wales.

New civil penalties for non-compliance

Although permits will no longer be required to conduct a trade promotion lottery which does not exceed $10,000 in prize value, promoters will still be required to conduct their trade promotion lottery in accordance with certain requirements as set out in the Draft Regulation.

A new civil penalty regime for non-compliance is intended to promote integrity in the system given the reduced role that the regulator will have in overseeing the conduct of trade promotion lotteries. For example, the Draft Regulation proposes to introduce a general requirement that all community gaming activities be conducted fairly and transparently, as well as more comprehensive requirements regarding the records that must be kept by promoters. If these requirements are not met, a maximum penalty of 50 penalty units will apply (currently equivalent to $5,500).

Next steps: further consideration and then implementation

The NSW Government is currently analysing public feedback on the Draft Regulation. Once any required changes are made, the new Community Gaming Regulation will take effect upon the commencement of the Community Gambling Act 2018 (NSW). Timing for the commencement of the new laws is not currently known.

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Disclaimer

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.