How to organise a prize-draw or -competition abroad 20 May 2022 Legal aspects to consider when planning an international promotion When you decide to organise a prize-draw or -competition abroad, the first fundamental decision you need to make is about the mechanism you want to adopt: is it legal in the country where you want to organise your promotion? Not all countries have the same rules. Let’s see some examples of limits and prohibitions in certain countries of the world. #1 Draws or competitions decided by chance If you want to organise a draw or competition decided by chance, you have to be careful because: in some countries they are prohibited, for example in Belgium; in others they are subject to significant restrictions; in the Netherlands, for example, there are constraints on the total prize pool that a company can place on the line; in Luxembourg they are allowed only if participation is free; in the USA they are allowed only if the participation mechanism does not depend on either a purchase or excessive effort on the part of the participants. in others still, they are subject to complex obligations, as happens in Portugal, Poland, Serbia, Croatia and many countries in South America, such as Mexico. In addition, you should recognise that the time required to implement these draws or competitions varies from country to country and – depending on the procedures required by local national regulations – it may also be necessary to have an in-country location for the payment of taxes. #2 Draws or competitions decided by merit Each country has its own interpretations, and therefore mechanisms, that some national regulations consider as merit, others as chance. For example rush and win is enabled in Belgium and Portugal while it is viewed as decided by chance in Italy Voting, in most nations, occurs as a sort of people’s jury, with some exceptions, such as: Spain, where a draw or contest becomes decided by chance the United States where a combination of voting and decision by jury is always recommended. In many countries, the organisation of competitions decided on merit is subject to different national regulations and obligations with respect to competitions decided by chance. But there are also countries that make no distinction: this is the case in Brazil and Italy where the requirements of the authorities remain the same regardless of the mechanism. #3 Draws or competitions tied to a purchase One of the key objectives of a prize-draw or -competition is to boost sales. This is a very intuitive and widespread logic but there are countries where it is forbidden to organise draws or competitions with this mechanism, such as the USA and Canada. In other countries, however, they are subject to restrictions: this is the case, for example, in Switzerland, where these draws and competitions were banned until a few years ago and are now legal only if they are of short duration. Finally, in other countries, the presence of an obligation to purchase complicates local requirements, such as in the Czech Republic. When a company organises a draw or competition with a purchase necessary that is located in several countries including those where it is prohibited, it is necessary to create a parallel mechanism that also allows free participation to those who do not want to buy. How to organise the same draw or competition in countries with different national regulations When you host a prize-draw or -competition abroad that involves several countries at the same time, you won’t always be able to do it using the same mechanism. But don’t worry, just study alternative ways of participation according to the rules in force and you can still take your promotional activity wherever you want! Look at the examples of activities created by Alessi in Austria, Germany, the Netherlands and Belgium, and by BKT in 8 European countries at the same time. National regulations and prize-draws and -competitions abroad The regulations affect all aspects of a promotion: from the information to be included in the regulations to the need to pay a deposit or issue a surety to guarantee the prize pool, up to taxation and the choice of the prizes to be won. Do you want to create a prize-draw or -competition abroad? Contact us and we can work out the ideal initiative for you together!
