Are you trying to answer the question:
- do I need a license to run a prize draw?
We’ve got the answer for you and it may surprise you!
First, the good news: generally speaking, you do not need a license to run a prize draw with very few exceptions.
However, there are plenty of laws, rules and stipulations to running a prize competition or free drawing to ensure that they remain legal. If certain factors are not carefully maintained, your giveaway could constitute an illegal lottery.
The difference between prize competitions and lotteries is that lotteries are usually run by governments while prize competitions can be hosted for private benefit and profit. However, prize competitions or prize competition events typically do not require a purchase but are instead run based on skill or knowledge from the participant!
In a prize competition, the element of skill or knowledge must not prevent a large number of people from taking part (which would be discriminatory) or prevent a large number of people who take part from receiving a prize.
If your competition relies solely on chance, you must be clear on the gambling and lottery laws of the state and country you are operating in, in order to eliminate the chance that you are running an illegal lottery.
How can you be sure you aren’t running an illegal lottery with your prize draw? Ensure that people can take part without paying, if there is a paid route, the prize of the promoted product cannot be increased during the promotional period, the choice is publicized clearly and finally, if there is both a paid and free route, the system for advocating prizes cannot distinguish between one route or the other.
There you have the answer to the question ‘do I need a license to run a prize draw?’. Stick to these rules and you’ll be hosting a successful prize draw in no time!