Running a Social Media Giveaway or Competition in Australia
A giveaway can be a cheap way to grow a following. Ask people to like a post, tag a friend and go into a draw. It feels casual, but in Australia it is usually a regulated activity.
Prize draws that promote a business are called trade promotion lotteries. Each state and territory sets its own rules, and they do not all match. Here is what to look at before you post.
What a trade promotion is
NSW describes a trade promotion as a free entry lottery used by businesses to promote their goods or services. South Australia uses similar wording. The key idea is chance. If the winner is picked by a draw, the rules for lotteries apply.
Entry generally has to be free. In NSW, trade promotions cannot carry an entry fee or any related fee. People can still be asked to buy your goods or services at their normal retail value to enter. South Australia has a similar rule and adds that the promoted goods must be your normal products.
Games of chance and games of skill
South Australia says that if winners are chosen by skill, the competition is not considered a lottery. A tipping competition is the example it gives. A minor test of skill does not get you around the rules if the winner is still drawn. Asking an easy question and then picking a name at random is still a draw.
Skill competitions bring their own work. You need clear terms that say how entries will be judged. Judging creative entries also takes time, which is worth weighing up for a small team.
Permit rules differ between states
The need for a permit depends on the state and the prize value. In NSW, an authority is needed if the total prize value for one promotion is more than $10,000. NSW also says there is no maximum prize limit for trade promotions. The NSW Government page on trade promotions covers the fees, timing and prize rules.
Online promotions are caught too. NSW says a promotion on a website or social media that is open to NSW residents needs a NSW authority if prizes exceed $10,000. That applies even if the business running it is based in another state. So a Perth business running a national giveaway still needs to look at the NSW rules.
South Australia sets its line at a different point. A draw with total prizes of $5,001 or more is a major trade promotion and needs a licence. Minor promotions of $5,000 or under do not need one, unless they use instant scratch or break open tickets. The South Australian Government guide to trade promotions for businesses sets out the full conditions.
Other states and territories have their own laws and thresholds. Check the rules in each place where your entrants live before you launch. If the promotion is national, that means checking with more than one regulator.
Prizes you cannot offer
Some prizes are off limits. NSW bans firearms, ammunition and other prohibited weapons as prizes. It also bans tobacco, smoking and vaping products, as well as certain cosmetic procedures. Alcohol is allowed only up to set limits.
South Australia also lists tobacco and firearms among the items that cannot be prizes. It requires cash prizes over $1,000 to be paid by bank deposit. Draws with more than $30,000 in total prizes need an independent scrutineer.
Write clear terms and conditions
Your entrants need to be able to find the rules. NSW says you must clearly advertise them or say where they can be found, such as on your website. Unusual or onerous entry conditions must be shown clearly, without people having to buy something to see them. A simple terms page on your site, linked from the post, covers this. A clear set of terms usually covers the points below.
- who can enter and any age limit
- the opening and closing dates
- how to enter
- how and when the winner is chosen
- the prizes and their value
- what happens to unclaimed prizes
Put the terms page somewhere easy to reach. If your site needs a tidy up first, start with our article on best practice for website design. A page that loads quickly and reads clearly on a phone suits people who arrive from a social post.
Who can enter and what happens after the draw
In NSW, anyone can enter except the people running the promotion and those involved in managing the business that benefits. That means owners and key staff should sit this one out. If your business is a company with several owners, a shareholders agreement is a good place to set out who makes marketing decisions like this.
Children can take part in NSW unless your rules set an age limit. NSW advertising must not show children taking part. South Australia says advertising must not target people under 18. A clear age limit in your terms avoids confusion across states.
Think about unclaimed prizes before you draw. NSW lets a prize be forfeited and redrawn after a set period, but you must make reasonable efforts to contact the winner. If your rules set no timeframe, the prize must be held for at least three months. For minor promotions, South Australia requires records to be kept for at least three months after the draw.
Making the giveaway worth it
A giveaway should bring in people who might buy from you. A prize linked to your own products is more likely to attract followers who care about what you sell. A generic prize can draw entrants with no interest in your business. A new business can use a launch giveaway to get its name out. It fits with the early steps in our guide to starting a carpet cleaning business.
Send entrants to a page on your site rather than keeping everything on social media. That gives you a chance to show your services, and our notes on building company website SEO explain how site pages get found in search. It also means the terms and the prize details sit in one place.
Frequently asked questions
Do I need a permit for an Instagram giveaway?
It depends on the prize value and where entrants live. In NSW, an authority is needed when total prizes exceed $10,000. In South Australia, a licence is needed for draws with prizes of $5,001 or more.
Can I charge people to enter?
No entry fee is allowed in NSW. People can be asked to buy your goods at their normal price as a condition of entry. South Australia has a similar free entry rule.
Is a competition based on skill a lottery?
South Australia says a competition where winners are chosen by skill is not a lottery. A minor skill test followed by a random draw is still a lottery. Check the rules in each state where people can enter.
Can my staff enter?
In NSW, people running the promotion and those involved in managing the business cannot take part. It makes sense to keep staff out of any public draw. Say so clearly in your terms.
This article is general information for Australia only and is not legal advice. Trade promotion laws differ between states and territories and they change over time. Speak with a qualified lawyer before running a large or national promotion.
