FAQ – Questions about prize contests around the world

In Austria, prize competitions are regulated by various laws, including the Gambling Act, the Unfair Competition Law, and tax regulations.
In general, both prize draws and competitions are allowed, whether they are free to enter or require the purchase of promoted products/services.

In Austria, chain letters and pyramid schemes are strictly prohibited. Any promotion with these characteristics are subject to penalties.

Yes, for certain types of prize competitions, promoters are required to pay a 5% tax. This obligation is not tied to an individual promotion but to the total value of prizes awarded by the same company throughout the year. The tax applies when a company awards more than €10,000 in prizes within a single year.

In Belgium, it is only permitted to organize competitions where the winner is determined solely by skill or merit. The presence of chance elements classifies the promotion as a “lottery,” which is prohibited.

In addition to avoiding elements of pure chance, it is essential to carefully evaluate the type of activity proposed and ensure compliance with local regulations. Legal support is crucial to guarantee that the competition meets all Belgian legal requirements.

Contests in Belgium must include an element of ability that determines the winner. For example, participants may be required to create a work, solve a complex problem, or answer intellectually challenging questions.

In France, both prize draws and competitions can be organized. Companies without a physical presence in France can also manage these initiatives, provided they comply with local regulations.

Contests in France must comply with the regulations in the Consumer Code (“Code de la Consommation”). Key obligations include drafting a set of official rules that adhere to legal standards and ensuring compliance with communication regulations. Additionally, it is highly recommended to deposit the rules with the competent authorities.

The organization of prize promotions in the Netherlands must comply with various laws, including the Code of Conduct for Games of Chance, the Civil Code, and the Consumer Protection Act, in addition to regulations governing advertising, communication, and privacy.
For some types of promotions, tax regulations also apply.

Both prize draws and competitions are permitted in the Netherlands. However, different requirements and limitations apply to prize draws depending on the value of individual prizes and the total prize pool. For example, prize draws with a total prize pool exceeding €100,000 are prohibited.

Except for exempt amounts, prizes are considered taxable income for winners. Depending on the prize value and competition mechanics, the tax burden may fall on the promoter. In such cases, the promoter must be a Dutch-registered company. The tax rate varies and is determined annually by the tax authorities.

Portuguese regulations impose different requirements depending on whether the promotion is a prize draw or a competition. For prize draws, a license from the relevant authorities is required, involving the submission of corporate documents, obtaining a guarantee for the prize pool, payment of a government tax, etc. Specific requirements also apply to the draw, prize delivery, and closure of the promotion.

For competitions, it is crucial to ensure that the promotional mechanism does not include any element of chance. Otherwise, the competition will be classified as a prize draw and must comply with strict regulations, including obtaining government authorizations. Competitions are still subject to consumer protection, communication, advertising, and privacy laws.

In Russia, prize promotions and promotional lotteries are regulated by multiple laws, including the Civil Code, the Federal Law on Advertising, the Consumer Protection Law, the Lottery Law, and the Data Protection Law. These regulations require a thorough analysis of promotional mechanics to ensure compliance.

Yes, prize draws are permitted in Russia as long as they comply with existing regulations. In the past, these competitions were classified as lotteries and thus required a license.

Russian regulations are considered complex and bureaucratic, with few official guidelines and limited case law. For this reason, it is crucial to have experts review the promotion mechanics to ensure compliance and reduce the risk of penalties.

In Serbia, competitions, prize promotions, and loyalty campaigns can be organized. Prize draws are also allowed, both with free entry and linked to a purchase, but they require specific authorizations and compliance with regulatory requirements.

Prize draws are subject to strict regulations and a complex organizational process. They can only be organized by companies registered in Serbia, and a license must be obtained from the Ministry of Finance. There are also specific restrictions on aspects such as competition duration, the number of prize promotions allowed per year, and even the terminology used in promotional communications.

The amount of taxes and payment methods depend on various factors, particularly the prize value and the mechanics of the initiative. The tax rate ranges from a minimum of 20% to a maximum of 45% of the total prize value, depending on whether it is a competition or a prize draw.

In Spain, prize promotions are regulated by multiple laws, including Ley 13/2011 de Regulación del Juego, consumer protection laws, advertising and commercial regulations, and tax laws.

In Spain, it is possible to organize competitions, prize draws, and prize promotions with purchase. Each type is subject to specific timelines and regulatory requirements, with stricter obligations for prize draws.

Spanish law establishes various tax obligations depending on several factors, particularly the mechanics of awarding prizes and the value of individual prizes. As a general indication, the tax rate can range from 20% to 30% of the total prize pool.

In the UK, prize promotions are regulated by three main laws: the Gambling Act 2005, the Consumer Protection from Unfair Trading Regulations 2008, and the CAP Code of the Committee of Advertising Practice, in effect since 2011. These regulations define the rules for properly managing promotional activities.

To organize a prize promotion in the UK, it is first necessary to ensure that the proposed promotional mechanics are allowed under current regulations and the authorities’ guidelines. In addition to drafting complete official rules, companies must pay particular attention to the development of communication materials, which must include detailed Terms and Conditions.

Although there are no specific prohibitions, the organization of instant win promotions is subject to very particular technical constraints. Similarly, the organization of “open and win” mechanics follows different rules than those used in Italy.

South Korean privacy regulations are highly detailed. The privacy notice must include information such as the name of the person responsible for data management, the intention to transfer data to third parties, and the retention period. Additionally, if data is transferred abroad, specific consent is required.

No, South Korean law allows a foreign company to organize prize promotions for South Korean citizens without involving a local promoter. However, it is essential to ensure that the official rules and participation forms are adapted to comply with local regulations.

In Japan, it is possible to organize both prize draws and competitions. Free-entry prize promotions and purchase-linked prize promotions, known as “closed prize promotions,” are also allowed, but they must comply with specific limits on prize value and total prize pool.

Violating Japanese prize promotion laws can result in severe penalties, including up to two years of imprisonment or a fine exceeding €21,000. Local authorities constantly monitor compliance with these laws, even after the promotion has ended.

To organize a prize promotion in Japan, it is essential to comply with the rules regarding the maximum value of prizes and the total prize pool, especially for purchase-linked promotions. Every element of the promotion must be carefully analyzed to ensure compliance with local regulations.

In Kazakhstan, if the value of an individual prize exceeds $21, a tax equal to 10% of the prize’s value must be paid. This tax must be considered when planning the prize pool.

Promotional materials for prize promotions in Kazakhstan must be written in both Kazakh and Russian, in accordance with the Language and Advertising Law. It is important to comply with the specific proportionality and placement rules established by the regulation.

In Brazil, contests are regulated by Law No. 5.768 of December 20, 1971. All promotional mechanics, whether prize draws or competitions, require authorization from the Ministry of Finance through CAIXA Econômica Federal. Each promotion must follow a structured and complex process.

To obtain authorization, it is necessary to submit detailed documentation to the Ministry of Finance through CAIXA Econômica Federal. The authorization identification number must be included in all prize promotion materials, including regulations, websites, and advertising materials.

In Brazil, prizes cannot consist of money nor be converted into money. The total prize pool value is limited and must be proportional to the revenue recorded by the company during a period equivalent to the promotion’s duration.

In Mexico, prize promotions are subject to different regulations depending primarily on the method of awarding prizes. The main laws include Ley Federal de Juegos y Sorteos, Ley Federal de Protección al Consumidor, and regulations on the handling of participants’ personal data.

Prize draws can only be organized by Mexican companies and are subject to obtaining a permit from the Secretaría de Gobernación through the Dirección General de Juegos y Sorteos. The process for obtaining the permit is complex and involves submitting corporate documentation, securing a financial guarantee for the prizes offered, and paying taxes and fees.

In the United States, prize promotions are divided into two main categories: sweepstakes, which must allow free participation, and contests, in which winners are selected based on merit or skill.

The applicable regulations depend on various factors, including the location of the sponsoring company, the mechanics of participation, the geographical scope of the promotion, the total prize pool value, and the communication methods used. These elements determine whether the promotion is subject to federal, state, or local laws.

For promotions with a total prize pool exceeding $5,000, some states require a specific registration and the acquisition of a surety bond covering the prize value. These requirements take approximately 3-4 business days and must be completed at least 7 to 30 days before the promotion begins.