Can I run a trade promotion in South Australia?

Competitions and Trade Promotions

What is a Trade Promotion? 

A trade promotion is a competition or giveaway run by a business which is designed to encourage the sale of goods or services. Trade promotions must be free to enter and winners must be chosen at random. In South Australia, these promotions are governed by the South Australian Government Consumer and Business Services (CBS). 

 

If you’re planning to run a trade promotion, understanding the licensing requirements and rules is essential. This article provides a breakdown of what you need to know to run a trade promotion in South Australia: 

 

Do you need a licence to run a trade promotion in South Australia? 

You’ll need a licence if your promotion: 

  • Has a total prize pool of over $5,000; or 
  • Involves instant scratch or break-open tickets. 

You won’t need a licence if  the total prize pool for your competition $5,000 or under. If it is $5,000.01, you will need a licence. 

 

 

How long does it take to get a licence for a trade promotion in South Australia? 

Standard applications take 14 business days to process once CBS receives them. 

 

 

Major Trade Promotions 

If the total prize value exceeds $5,000 (and doesn’t involve instant scratch or break-open tickets), it’s considered a major trade promotion. Here are some things to note when running a major trade promotion: 

 

  1. Free entry: Participants must not purchase an entry into a draw – entries must be free. However, participants may need to purchase goods and services from the business to receive a free entry into the draw. For example, a clothing retailer may require participants to purchase any item from their summer collection to receive a free entry into the giveaway to win a $200 gift.  
  2. Game of chance: Winners must win by chance – for example through a random barrel draw or online number generator. 
  3. Calls: If someone enters through calling, the calls can’t cost more than 50 cents (plus GST and mobile charges).
  4. Memberships: The goods and services sold as part of your trade promotion must be those that your business regularly sells. For example, if your business normally sells tech products, but your competition requires entrants to purchase a membership which gives the purchaser access to discounts with other brands to receive an entry into the draw, this will not be considered a valid trade promotion in South Australia. The reason this is invalid is because you do not typically sell memberships as your goods and services and therefore are not promoting your businesses’ goods or services through the promotion. This differs from trade promotion laws in other states. 

 

Instant Prize Trade Promotions 

If your promotion involves instant scratch or break-open tickets with hidden numbers, letters, or symbols, it’s classified as an instant prize trade promotion lottery. 

 

Regardless of the total prize value for instant prize trade promotions, you must apply for an instant prize trade promotion licence. 

 

Key takeaways  

  • You’ll need a licence in South Australia if your promotion has a total prize pool of over $5,000 or involves instant scratch or break-open tickets. 
  • The goods and services you are promoting as part of your trade promotion must be ones you regularly sell. If you do not regularly sell memberships as part of your business, you are not entitled to receive a licence for a trade promotion where customers must purchase a membership to enter your giveaway. 

 

Gladwin Legal are experts in Trade Promotion Law and have extensive experience in advising businesses. If you require assistance in understanding your legal obligations please contact us at info@gladwinlegal.com.au or 1300 033 934.