Legal Practices for sweepstakes and contests

Legal Practices for sweepstakes and contests

In each country it is necessary to operate in compliance with the different regulations that vary from country to country, both for prize events and for other more general areas such as those on consumer protection and unfair practices, on privacy, on safeguarding public confidence and respect for equal opportunities, as well as the regulations in force in the field of taxation.

It is therefore necessary to follow every aspect with care:

  • Consulting on the mechanics
  • Drafting of the Regulations
  • Managing the authorisation request
  • Support for obtaining guarantees on the prizes
  • Advice on the choice of the prize pool and management of the winners
  • Indications for the tax aspects
  • Privacy consulting

Thanks to the expertise and experience gained in the organisation of Prize-Promotions and Gift with Purchase promotions in over 70 countries around the world, Promosfera is the right partner for the management of all the administrative and bureaucratic activities related to your Prize-Promotion.

Drafting of the Regulations

The regulations of a Prize-Promotion is the key document that contains all the essential information for carrying out each promotion.

The drafting of this document is mandatory in all countries of the world.

The information it must contain includes who the promoter is, how long the promotional initiative will last, what are the prizes up for grabs, when they will be delivered to the winners and all the other information required by each country as is the case, for example, in Italy and Brazil, where it is also necessary to indicate the non-profit organisation or the State body to which the unassigned prizes will be donated.

Some countries provide specific models as is the case in Portugal, Brazil and El Salvador, others, instead, leave freedom of drafting, however indicating the must-haves to be respected.

Managing the authorisation request

In some countries, the organisation of a Prize-Promotion is subject to obtaining authorisation from the competent authority; in others it is simply necessary to issue a communication to that effect.

In some cases, even in the same country, depending on the mechanics of the contest, the type of obligations required changes.

For example, in Bulgaria and in the Philippines it is necessary to obtain a specific authorisation from the competent authorities for any type of competition, while in Mexico it is mandatory to request authorisation for Chance-Based Promotions and it is recommended to issue a communication for Skill-Based Promotions. And so on, every country has its own rules.

Promosfera deals with the drafting of regulations in accordance with the regulatory indications and the request for authorisation for your Prize-Promotion in the times and in the ways provided for by the law of each country.

Management of guarantees on the prizes: deposits and sureties

To protect consumers, in some countries the State requires the promoters of a contest to provide guarantees on the promised prizes.

These guarantees can be requested in different forms.

In Italy, for example, a surety is required which can be both banking and insurance, while in Portugal it is compulsorily that it be a banking surety.

In other countries, such as the United States, the prize bond is mandatory only if the prize at stake exceeds the value of $5,000.

In Turkey, in order to organise a Chance-Based Promotion, companies must submit a letter of guarantee from their bank to the authorities.

Management of the tax aspects

In many countries of the world, contests take on fiscal significance. In some countries the prizes resulting from a contest are considered to be taxable income for the winners, in others, the total prize pool is seen as an amount to be subject to a fixed rate and sometimes registration fees are provided.

The tax burden can fall on the promoter, as happens in Italy, Holland, Spain and Portugal, or on the winner, as happens in Japan, Turkey and the United States, for example.

The rate to be paid varies from one country to another, for example in Portugal it is 45%, in Italy it is 25%, in Spain it is 21%.

Promosfera offers you the correct support for the documentation necessary for the purpose of obtaining the appropriate guarantee according to the country and the fulfilment of tax obligations.

Privacy consulting

With regard to privacy, in Europe with the introduction of the GDPR, the rules have been standardised, but when the contest also involves non-European countries or persons, it is necessary to carefully check the applicable regulations and any rules to be followed.

A further aspect to be evaluated and managed carefully is the transfer of data, in particular, when it takes place to non-EU countries.

Promosfera, also using specialised privacy consultants, is able to offer support for the correct management of data processing aspects.