New Trade Promotions Regulation in NSW

New South Wales has introduced a new regulation governing trade promotions. Here’s how it will affect you.

The new Regulation

As noted in our recent update, the Community Gaming Regulation 2020 (NSW) took effect on 1 July 2020. While the NSW government had consulted with stakeholders on a draft of the Regulation, significant changes were made in the final version and stakeholders were given very little time to digest the final version before it took effect.

The Regulation implements a number of important changes to how game of chance trade promotions must be run in NSW.

Permits are replaced by authorities

The concept of a “permit” for a game of chance trade promotion is replaced by an “authority”.

Each promoter only needs to obtain one authority, under which they can run as many promotions as they wish.

No authority is required unless the value of the prize pool for a promotion exceeds $10,000.

You can get an authority that lasts one, three or five years. Since the price difference is small, most promoters will want to get a five year authority.

The NSW government fees for us to get an authority for you are:

Consent of a person authorised by the promoter

For all game of chance trade promotions, whether or not an authority is required, the promoter must obtain the written consent to the conduct of the promotion from a person who is authorised by the business benefiting from the promotion. This will usually be the promoter but in some cases may also include a third party that benefits from the promotion, for example if a product manufacturer runs a promotion through retail stores operated by the third party.

As part of our service, we will prompt our clients to put these consents in place.

Obligation to submit terms and conditions

Once a promoter has a NSW authority they must submit their promotion terms and conditions to NSW Fair Trading for each promotion over the value of $10,000. This must be done at least 10 business days before the start date of the promotion.

Terms and conditions

Under the Regulation all game of chance trade promotions – whether or not they require an authority – must have terms and conditions that cover various prescribed points.

A new point that must be covered in the terms and conditions is the way disputes about the conduct of the promotion or the claiming of a prize are to be resolved. We are now including wording in terms and conditions we draft, to cover this.

The terms and conditions must state that where there is no prize winner or the prize winner cannot be found, that fact will be published. This is also a new requirement.

A further requirement is that the terms and conditions must prohibit a person involved in the management of any benefiting organisation from participating in the promotion. This arguably has the (probably unintentional) effect of disallowing many trade incentive promotions that involve an element of chance. For example, if a manufacturer runs a promotion to encourage the managers of third party retail stores to sell more products, the retail stores may be “benefitting organisations” meaning that the managers of the stores must not participate.

No more amendment applications but…

There will no longer be a requirement to submit an amendment application if you wish to change the rules of your promotion, since there will be no permit to amend.

However for a promotion run under an authority, you must submit any significant amendments to your terms and conditions to NSW Fair Trading accompanied by a notification of changes form. You must also take reasonable steps to notify entrants of the changes.

If you already have a permit for a promotion that has not yet started, and you need to amend it and the prize pool value is over $10,000 then you will have to obtain an authority and your permit will be cancelled.

Scrutineers for prize draws

Any determination of a prize winner for a trade promotion conducted under an authority must be carried out under the supervision of an independent scrutineer, unless the regulator grants an exemption.

Record keeping

You are no longer required under NSW law to keep records for your game of chance promotions, however you must still meet the record keeping requirements of other states/territories. Depending on where your promotion is running in Australia, you may need to keep records for up to five years.

Of course, regardless of the legal requirement in NSW there are good reasons to keep records that demonstrate the proper conduct of your promotions. For example, if you have a dispute with an entrant these records will be helpful.

Promotions open to children

You must not publish any advertising promoting a game of chance trade promotion that depicts children participating in a trade promotion – even a promotion that is directed to children. Marketers of products to children will need to take great care not to breach this requirement.

Enforcement

One purpose of the Regulation is to strengthen consumer protection and “hold operators to account” for breaches of their trade promotion terms and conditions.

NSW Fair Trading is now able to issue a penalty notice in relation to a minor breach of the Regulation. The promoter can pay the penalty without admission of liability, in order to resolve the matter – or can choose to go to court, and potentially face a higher penalty.

For more serious breaches, NSW Fair Trading might be inclined to commence court proceedings immediately rather than issuing a penalty notice.

Questions?

As always, our trade promotions team is here to help! Get in touch if you have any queries.

Authored by:

David Smith, Partner

Jessica Bell, Paralegal
+61 3 9252 7701 | jessica.bell@gadens.com

Cassandra Cox, Paralegal
+61 3 9612 8201 | cassandra.cox@gadens.com

Jade Lamb, Paralegal
+61 3 9612 8215 | jade.lamb@gadens.com