Running prize draws legally

Prize promotions attract entries cheaply and sit at the intersection of four separate regulatory regimes.

The gambling question

Broadly, a promotion where entry requires payment and the outcome depends on chance may constitute a lottery requiring a licence.

The usual routes to avoid that: make entry free, or make the outcome depend on skill rather than chance. The definitions vary considerably by jurisdiction and the detail matters.

A free entry route must be genuinely free and genuinely equivalent, not hidden or disadvantaged.

The terms

Complete terms must be available before entry and must cover:

Incomplete terms are the most common problem and the easiest to fix.

Data protection

Entry data may be processed to run the promotion. Using it for marketing afterwards requires separate consent.

Making marketing consent a condition of entry is unlikely to produce valid consent, because consent conditioned on a benefit is generally not freely given.

The workable structure: entry requires the data needed to run the draw; an unticked, clearly separate box offers marketing consent; and entry is possible without it.

State the retention period for entry data and delete it afterwards.

Platform rules

Social platforms impose their own conditions, frequently stricter than the law. Common requirements: acknowledging that the platform is not involved, releasing the platform from liability, and prohibitions on requiring people to share content or tag others.

Breaching platform rules can result in the promotion being removed and, for repeated breaches, the account.

The winner

Notify within the stated period, using the stated method. Publish the winner where the terms said you would, with their consent to publication.

Keep records of the selection process. Disputes about fairness are answered with documentation and not with assertion.

Tax and value

The prize value may have tax consequences for the winner in some jurisdictions and for the promoter in others. State the value accurately in the terms; overstating it is a misleading claim.

The quality caveat

Prize draws generate large numbers of entries and very poor data. Entrants want the prize, not the relationship. A list built from a prize draw typically shows low engagement and high complaint rates, which damages deliverability for the rest of your list.