South Australia shakes up ‘game of chance’ trade promotion regulations

The South Australian Government has now completed an extensive review of its Lottery and Gaming Regulations 2008 (SA). It has issued a draft of the proposed Lotteries Regulations 2021 (SA) for comment. These would replace the existing regulations in December this year.

The upshot: incremental improvements

While the Lotteries Regulations would introduce some small improvements, these represent more of an evolution than a revolution. Notably, it seems that the status quo will continue in relation to licences: trade promotions (other than ‘minor’ ones) will continue to require a licence in South Australia.

Categories of ‘game of chance’ trade promotion

The proposed regulations would maintain South Australia’s current categories of ‘game of chance’ trade promotion, namely:

• A minor trade promotion lottery, which has a prize value of $5,000 or below. These can be run without a licence. This type of trade promotion must not include any instant prizes.
• A major trade promotion lottery. This is a trade promotion (other than a trade promotion (instant prize) lottery) where the total prize value exceeds $5,000, or the prizes include both instant prizes and drawn prizes. Disappointingly, these will still require a licence.
• A trade promotion (instant prize) lottery means a trade promotion in which all the prizes are instant prizes. These promotions will also still require a licence. Instant prizes would include, for example, a unique code printed on product packaging that can be used to claim a prize online, or a prize that is revealed when the user clicks a button in an app.

Summary of key changes

We summarise below some of the key changes that the Lotteries Regulations 2021 would implement, and some of the deficiencies we see in the drafting of the Regulations.

Some of the shortcomings seem to flow from the fact that the Regulations (and the Lotteries Act 2019 (SA) under which the Regulations will sit) cover various types of low-value gambling, such as bingo and numerous forms of fundraising gambling, as well as trade promotions. Rules that suit other types of gambling do not always sit well when applied to trade promotions, which are free to enter and provide a consumer benefit.

1. Prohibition on management entering a trade promotion

Under the proposed Regulations, a member of the management committee of an organisation must not enter a trade promotion conducted by the organisation. For a company, this would presumably include board members and perhaps, members of any executive management committee. Further under the Regulations, a person who is involved in the conduct or promotion of a trade promotion must not enter it.

Any company that conducts internal trade promotions, or trade promotions that aim to boost the company’s sales to ‘friends and family’, will need to take care with these restrictions and will likely need to exclude certain board members and staff from participating.

2. Advertising must not be directed at minors

The Regulations will require that any advertising or promotion for a trade promotion must not be such as to appear to a reasonable observer to be directed at minors or to portray minors participating in gambling activities (which would seem to include participating in a trade promotion). This will make it difficult to run any trade promotion that seeks to encourage participation by children.

3. Advertising must not suggest that the promotion is a means of improving your financial position

Any advertising or promotion for a trade promotion must not be such as to appear to a reasonable observer to imply that the trade promotion is a means of improving a person’s financial position.

On the face of it, a trade promotion with the tagline, ‘Become a millionaire!’ which offered a $1 million cash prize to be won by random draw, may contravene this requirement.

4. No requirement for electronic draw system to be approved by SA regulator

Currently if you wish to draw winners in a trade promotion using an electronic system, the system must be approved by the relevant South Australian regulator.

Under the new Regulations, that requirement will disappear but the system used must be a random number generator that draws a winner at random. The SA regulator can still request information about the system.

There remains a requirement in Queensland to get an electronic draw system approved by the relevant regulator there before you can use it to draw winners in a trade promotion.

5. Major trade promotion lottery must not be drawn electronically, except to draw winners at random

The proposed Regulations state that a major trade promotion lottery must not be drawn electronically except by way of a random number generator that draws a winner at random.

This might pose a problem for ‘winning moment’ type promotions, where winners are not drawn at random – instead, winning time periods or times are drawn at random and the first person to enter during a winning time period (or in some cases, after a winning time) wins a prize.

The Regulation would not impose a similar requirement for trade promotion (instant prize) lotteries, so ‘winning moment’ type promotions would appear to be permissible under that category of trade promotion.

6. Scrutineer requirement

Under the Regulations, an independent scrutineer would be needed to scrutinise any draw in a major trade promotion lottery where the total prize value in that draw is $30,000 or more. The threshold value is currently $20,000.

The draft Regulations state that the draw must be conducted ‘in the presence’ of the scrutineer, which raises doubt about whether the scrutineer could scrutinise the draw remotely via videoconference. This may be an important point given the ongoing restrictions relating to COVID-19.

7. Notification of winners

The current time period within which a winner must be notified that they have won a prize is 14 days. The Regulations will reduce this timeframe to seven days which seems reasonable given the modern communication methods available.

Currently, the name and address of each winner of an instant win prize valued over $250 or any drawn prize, regardless of the value, must be forwarded to the relevant SA regulator within 14 days of the draw. This requirement will no longer apply under the Regulations.

Feedback on the proposals

The SA government has called for interested parties to provide feedback on the draft Regulations. Submissions are due by 27 August 2021.

Gadens will be making submissions setting out our thoughts on the proposed changes. If you’d like us to consider any particular points when preparing our submissions, please let us know.

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Authored by:

David Smith, Partner

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

Sonja Muzoska, Paralegal
+61 3 9252 2529 | sonja.muzoska@gadens.com

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