Skill and Chance: a guide to international prize contest regulations

Understanding the regulatory complexity of skill-based versus chance-based prize promotions across international markets

When planning international prize contests, the classification of your contest as skill-based or chance-based isn’t just a technical detail—it’s a decision that fundamentally shapes your legal obligations, budget, and timeline. While these two categories may appear straightforward, their interpretation varies dramatically across jurisdictions, creating a regulatory landscape that demands careful navigation.

The stakes are high: misclassifying your contest mechanic can trigger unexpected authorization requirements, taxation burdens, and compliance costs that derail even well-planned campaigns.

This analysis of skill-based versus chance-based contest regulations has been developed by Rossella Adriatico, International Senior Account Manager at Promosfera.

Drawing on her extensive experience navigating international prize contests compliance, Rossella provides practical guidance on how classification decisions impact the feasibility and legality of your campaigns across different markets.

Throughout this article, you’ll find her expert recommendations and answers to the most pressing questions brands face when planning international promotions.

Defining skill-based and chance-based contests

Skill-based promotions

These contests evaluate participants based on demonstrable abilities, creativity, or knowledge. Common formats include:

Knowledge-based quizzes and trivia competitions
Photography and visual arts submissions
Creative writing or video challenges
Gamified competitions featuring leaderboards and achievement systems

Chance-based promotions

Winner selection in these promotions depends primarily on random factors rather than merit:

Prize draws and sweepstakes
Instant-win mechanisms
“Scratch and reveal” promotions
Random selection

What seems like a clear-cut distinction often becomes murky in practice. A contest that qualifies as skill-based in one market may be legally classified as chance-based in another—and this single difference can transform your entire compliance strategy. Our role is to provide clarity before you commit resources, ensuring your promotion is legally sound from conception through execution.

Country-specific regulatory frameworks

The regulatory treatment of international prize contests types varies significantly worldwide. Here’s what you need to know:

Belgium’s restrictive approach

Belgian law prohibits pure chance-based promotions under gaming legislation. Companies seeking to run such campaigns must implement workarounds:

Incorporate elements of skill alongside chance
Partnerships with registered Belgian charitable organizations
Guaranteed prize structures that eliminate randomness

Germany, Austria and Italy

Germany, Austria, and Italy adopt a more permissive regulatory stance, allowing both contest types—even when participation requires product purchase.

Hong Kong’s licensing requirements

Any promotion incorporating chance elements falls under gaming and betting oversight in Hong Kong. Authorization from regulatory authorities and proper licensing are mandatory prerequisites.

Albania’s Controlled Framework

Since 2009, Albania has maintained strict oversight of chance-based promotions. Key requirements include:

Domestic company registration
Official authorization process
Documentary submissions and fee payments
Government supervision during winner selection

Skill-based contests avoid these formal requirements—but only if they’re genuinely free from random elements. Even minor chance components trigger the full regulatory framework.

Portugal’s dual-track system

Portuguese law establishes distinct pathways:

Chance-based: Mandatory authorization, financial guarantees, prize taxation, and reallocation of unawarded prizes

Skill-based: No formal authorization needed (though filing contest rules is advisable), with no taxation requirements

Spanish compliance requirements

Spain mandates formal notification to the AEAT (tax authority) for “Sorteos” (chance promotions), along with the “Tasa de combinación aleatoria”—a 10% levy on total prize value.

“Concursos” (skill competitions) follow simplified procedures, though both types require “Ingreso a cuenta” withholding on individual prizes exceeding €300.

UK and Argentine oversight models

Both nations emphasize independent administration—but with different approaches.

The UK’s Gambling Act 2005 and CAP Code require that judging panels (for skill contests) and random selections (for chance promotions) be conducted by parties independent from the promoter or its delegate.

Argentina requires official oversight: chance-based draws mandate the presence of an “escribano público” (public notary), who must also witness high-value prize distributions.

Netherlands’ tiered structure

Dutch regulations categorize chance promotions as “regular” or “small” based on prize pool size, with corresponding limits on draw frequency, campaign duration, and total value.

Skill-based contests face only standard consumer protection requirements, with no special taxation on prizes.

United States’ purchase restriction

The American legal framework draws a sharp line between “Sweepstakes” (chance) and “Contests” (skill):

Sweepstakes must never condition entry on purchase (“No Purchase Necessary” rule)
Contests may require purchase—except in Colorado, Maryland, and North Dakota, where they’re prohibited

Question: Given how dramatically the skill/chance definition varies internationally and its significant consequences, what’s the most frequent mistake brands make when classifying contest mechanics across markets?

Answer: The critical error is applying domestic definitions or intuitive interpretations without investigating each target country’s legal standards. Consider rush-and-win mechanics: clearly chance-based under Italian law, yet classified as skill-based in Belgium and Portugal. This misclassification means overlooking crucial authorization procedures, tax obligations, and compliance requirements. The result? Project plans that dramatically underestimate timeframes and budgets, often omitting mandatory steps entirely.

Why specialized expertise matters

Successfully managing the regulatory complexities between skill and chance across international markets requires current, jurisdiction-specific knowledge. These aren’t merely procedural differences—they fundamentally affect campaign structure, financial planning, and implementation schedules.

The skill versus chance determination, though conceptually simple, becomes a strategic cornerstone for compliant and effective international promotions.

Consider these real-world implications drawn from our analysis:

Authorization extremes: Albania permits skill contests without formal approval—but detecting any chance element activates comprehensive requirements: authorizations, documentation, taxation, and government oversight.

Parallel legal pathways: Portugal maintains separate regulatory tracks. Chance promotions navigate mandatory authorization, financial guarantees, and taxation; skill promotions bypass formal authorization (though filing remains recommended).

Direct tax impact: Spanish “Sorteos” (chance) trigger AEAT notification and 10% prize pool taxation. “Concursos” (skill) streamline procedures, yet both incur withholding on valuable prizes.

Oversight requirements: Argentine chance draws require notary presence. UK regulations mandate independent oversight for both categories—judging panels for skill contests, draw administration for chance promotions—but specifically prohibit promoter involvement.

Purchase restrictions: in the US, Sweepstakes (chance) must never require a purchase (“No Purchase Necessary”). Contests (skill) may condition entry on purchase—except in specific state jurisdictions.

Understanding each market’s approach to skill versus chance forms the foundation of international promotional planning. These examples demonstrate why accurate classification is your campaign’s critical first step.

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