Trade Promotions in Australia: Making Sense of the Maze

Trade Promotions in Australia: Making Sense of the Maze

Launching a competition can enhance engagement for any Australian business—think quick social giveaways, major brand prize draws, or creative Instagram contests. But the legal framework adds plenty of speed bumps. These rules exist to keep promotions fair and transparent, not to catch businesses out—but mistakes are common, especially online. Here’s how each scenario comes up in real business life, and what every marketer should know to get it right.

What Does a Trade Promotion Look Like Day to Day?

A trade promotion is any free-to-enter competition or giveaway linked to promoting a brand, product, or store. Everyday examples include:

• In-store prize draw: “Buy any product this month and enter to win a holiday.”
• Instagram contest: “Tag a friend to win a gift pack.”
• Online game: “Spin the wheel for a chance at instant prizes.”
• Email signup offer: “Join our newsletter for a chance to win a $500 voucher.”

Why does the law matter here? Because winners are either chosen by chance (luck) or skill (judging), and that distinction directly affects the rules and whether a permit is needed.

Game of Skill vs Game of Chance—Real Life Differences

Game of Skill (No Permit Usually Needed):

• Example: “Write in 25 words why you love our coffee—the best answer wins a trip.”
• Scenario: The winner is picked based on creativity or merit, never through a random draw, even for tie-breakers.
• Practical Tip: If a business decides to select between identical top entries by random draw, it’s now a game of chance—and may need a permit.

Game of Chance (Permit Often Needed):

• Example: “Buy any product to go in the draw—winner drawn at random.”
• Scenario: Most big prize draws, lucky dips, instant-win scratch cards.
• Practical Tip: If the contest is run nationally or in states like NSW, ACT or SA, permits may be compulsory, especially if prize value exceeds a certain value.

Why get it right?

Failing to apply for the right permit puts the business at risk of serious penalties, public scrutiny, and even having to cancel the contest after launch.

One of the biggest traps for businesses is assuming that the same set of rules applies everywhere in Australia. In reality, each state and territory has its own legislation and regulators, and the differences can catch even experienced marketers off guard.

Here’s how the variations typically play out:

• Permit thresholds and requirements vary: Some jurisdictions require permits when prize pools hit certain values, while others don’t impose permit obligations at all. A business running the same competition nationally may need approvals in some regions but not in others.
• Restrictions on prize types: In certain jurisdictions, there are blanket bans on offering specific prizes (for example, medical or surgical procedures). That means a prize that seems creative or on-trend in one place may not even be legal in another.
• Different definitions of “chance” vs “skill”: Some regulators take a stricter view of what counts as a game of chance, while others are more flexible. A promotion you think is skill-based may be reclassified as chance-based elsewhere—triggering extra compliance obligations.
• Application and disclosure rules: Timeframes for getting approvals can differ, as can the need to display permit numbers on your advertising. Forgetting to include a permit number (or not applying early enough) can derail an otherwise well-planned campaign.
• Instant win or “scratchie” style promotions: In some states, even small-value instant win mechanics can trigger licensing requirements, regardless of the overall prize pool.

Why This Creates Problems for National Campaigns

Imagine this scenario:

A retailer in Victoria wants to run a social media giveaway for “all Australians.” The campaign is designed around chance (a random draw), with a prize pool worth $6,000. On the surface it looks simple—but as soon as you open the promotion to residents outside Victoria, the rules of other jurisdictions kick in. Some may require permits, others may impose extra restrictions, and the brand could find itself non-compliant without even realising it.

Or consider a brand in Sydney planning a collectible card activity. If regulators in one jurisdiction treat it as a collectible activity, it may run without a permit and even extend beyond 12 months. But if another jurisdiction decides it is really just a game of chance, then full trade promotion rules apply—including permits, disclosure obligations, and record-keeping.

So we can see that planning a nationwide competition means mapping out every jurisdiction’s requirements, not just your home state. Skipping this step risks fines, reputational harm, or even having to pull the promotion mid-campaign.

One missed detail can mean fines, reputational damage, or unhappy entrants—especially if the contest has to be cancelled mid-promotion.

Social Media Promotions—New Channel, Same Rules

Australian businesses routinely use Facebook, Instagram, and TikTok for promotions:

Example: “Share this post with your friends to win!”

Scenario: Facebook bans using personal timelines for contest entries, and all platforms expect clear terms and winner selection policies.

Key pitfall: Not stating privacy terms or winner notification details means breaking both platform rules and privacy laws for collecting data from entrants.

Why get it right? Failing to follow these rules can get a business’s page flagged, lose access to its audiences, or trigger regulatory investigations under the Privacy Act.

Collectible Activities

Some promotions focus not on random chance, but on collecting items (e.g., trading cards, stickers, tokens):

Example: “Buy every drink in our range, collect all 5 tokens, and redeem for a limited-edition prize.”

Scenario: If the giveaway is structured as ‘collect and redeem’ (not ‘random draw’), it may not need a trade promotion permit—but only if the activity is approved by licensing authorities.

Practical trap: If an authority decides the campaign is really an ordinary lottery, all the standard permit rules apply anyway.

Why get it right? Only regulatory approval brings certainty. Going ahead without it can mean non-compliance, forced cancellation, or having to retrospectively secure complex permits.

Getting Privacy Right—Don’t Skip This Step

Whenever a business collects personal data (names, emails, addresses), they must:

• Have a compliant privacy policy, clearly available to entrants.
• Use opt-in consent for electronic marketing (Spam Act rules apply).
• Allow easy, cost-free opt-out at any time.

Why get it right? Breaching privacy or spam laws in a trade promotion can mean fines up to AUD$2.2 million per day (ACMA enforcement), lawsuits, and immense brand trust damage.

Why Businesses Need to Nail Compliance—And How to Do It

Every business wants to run a successful promo, but getting it wrong exposes them to fines, lost time, damaged brand reputation, and legal headaches. To avoid these traps:

• Plan early: Research permits and rules before launch. Use official state resources.
• Be clear on promotion type: Only true skill-based contests avoid permits; random draws almost always require them somewhere.
• Map every market: For national/online contests, comply with all states and territories involved.
• Get privacy right: Always disclose use of data and allow opt-outs.
• Get legal help: Qualified advice is the best way to design safe, fun, and effective promotions.

The reality is that trade promotions in Australia are not “plug and play.” They need careful planning, clear terms, and awareness of the different rules that apply depending on where and how you run them.

That’s where legal advice comes in. We regularly help businesses structure their promotions, making sure they’re compliant without losing the fun and creativity that make competitions so effective. This includes:

• Advising on whether your promotion is a game of skill, game of chance, or a collectible activity.
• Mapping the regulatory requirements across all relevant jurisdictions.
• Drafting clear, legally sound terms and conditions that protect both the business and its entrants.
• Ensuring your privacy and data collection practices meet Australian standards.
• Guiding you through permit applications where needed.

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Please note the above article is general in nature and does not constitute legal advice.

Please email us info@iplegal.com.au if you need legal advice about your brand or another legal matter in this area generally.