Modern business concept

Skill and chance based competitions

By Connor James

The differences

A competition that is based on skill does not involve an element of chance in determining the winners. A competition based on skill does not require competition permits.

In any skill based competition judges should be qualified. An example of a skill based competition is one which asks a question for entrants to answer in 25 words or less. A competition that asks entrants to complete the wo_d is not a skill based competition as more than one person will get the correct answer. You can run a skill based competition where winners are determined on the number of votes i.e. in a search for Australia’s next top househusband. If you do run a vote based competition you would need to have a mechanism to determine the winner if two or more people get the same number of votes- i.e. the Promoter will determine the winner based on some element of the entry if there is a tie.

Chance based competitions are usually more difficult to set up but do attract more entries (as they are easier to enter). Competitions where winners are determined instantly, such as with a scratchie game card, or draw are chance based competitions. Chance based competitions require competition permits.

The essentials

There are many requirements to consider when establishing a competition. If you are drafting your own terms and conditions, be careful to fully set out how and when people can enter, what the prizes are, their value, how the winners will be determined and how you will notify winners. It is important to be clear to avoid confusion and complaints. You then need to ensure that everything you do is consistent with your terms and conditions i.e. your advertising material and the way you accept entries.

You should be careful to consider how many times you want people to enter your competition. If you only want entrants to enter once, be sure to set this out in your terms and conditions. If you fail to limit the number of entries you may end up with some people entering hundreds or thousands of times. This could, or could not, be what you want. You should consider noting that use of ‘scripting software to enter is prohibited’ and, if your competition is online, use CAPTCHA. 

One of your main responsibilities is to be fair and abide by your terms and conditions. If you are going to be running a number of competitions over time, you should consider implementing policies and procedures to ensure that your company complies with the applicable regulations.

Chance based competition requirements

For national competitions, where the winners are determined by an element of chance, there are a number of essential requirements. These include, but are not limited to:

  1. You need terms and conditions clearly setting out how and when people enter, the prizes including their value, the number of winners, and how you will notify the winners;
  2. Trade promotion permits ( competition permits ) will be required from NSW and ACT (unless an exception applies) if your prize total is $5k or less;
  3. Trade promotion permits will be required from NSW, ACT (unless an exception applies), SA and VIC if your prize total is over $5k.
  4. You cannot begin advertising your competition unless you have received all of the relevant permits;
  5. You will need to display minimum (condensed) terms along with permit numbers in all advertising of your competition; and
  6. You must collect entries, draw the winners and award the prizes you say you will in your terms and advertising. Records, including entries and winners, must be kept.

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Conclusion

When conducted properly, competitions can be an exciting and cost effective way of increasing sales and further promoting your company’s goods and services. Permitz Group can help set up your competition and apply for competition permits on your behalf. We work with both skill and chance based competitions.