Blog: New Rules For Promotional Lotteries – What Does This Mean For Higher Value Prizes?

0

Peter Bolger and
Robert haniver

Peter Bolger and Robert haniver of LK Shields write about the new rules that will update the gambling legislation and the control of gambling.

The Gaming and Lotteries (Amendment) Act 2019 (2019 Act) was enacted on December 21, 2019 and will enter into force on December 1, 2020. It is an interim reform measure to amend and update the 1956 Law on Gaming and Lotteries (1956). Act), pending future comprehensive reform of gambling licensing and regulation in Ireland.

Brand owners and marketing agencies will welcome a new exemption from the legal ban on unlicensed lotteries, where the promotion of a lottery is associated with the sale or marketing of a product. However, this exemption is not available for promotional programs whose total prize value exceeds € 2,500. Additionally, locality and other restrictions associated with lottery permits and licenses mean that many business promoters are likely to continue the practice of structuring their promotions in a way that is intended to be outside the regulatory regime.

Below is a brief analysis of the New Product Promotion Exemption and some of the barriers faced by promoters of higher value lotteries.

What is a lottery?

The narrow definition of a “lottery” under the 1956 Act has been clarified by case law over the years, which identifies three components to a lottery: (i) there is a distribution of a prize; (ii) which happens by chance; and (iii) there is a contribution or payment to participate in the lottery. In practice, this definition generally covers raffles, raffles, raffles and bingo. The 2019 law did not change the legal definition of a lottery and this three-member test therefore remains valid.

Product promotion exemption

The 1956 law has long been viewed as outdated and an obstacle to modern promotional marketing practices. This has led promoters to go to the district court through various charities to obtain lottery licenses subject to the 1956 law or to structure promotional programs in a way intended not to meet the definition of ‘a “lottery”.

Promoters who attempt to take their program out of the regulatory framework have typically done so by providing a means of getting into promotion that does not require the purchase of a promotional product or the introduction of an element of ‘skill. In the promotion mechanism (for example, requiring the correct answer to a relatively simple question as a gateway to the chance to win a prize). However, these practices were not without risk of review and prosecution. For this reason, the new product promotion exemption is good news for lower priced lotteries.

This exemption allows for the legal promotion of lotteries, without having to obtain a lottery permit or license, when the lottery is conducted in conjunction with the sale or marketing of a particular product and when:

  1. the total value of the prizes does not exceed € 2,500; and
  2. there is no charge for participating in the lottery other than purchasing the relevant product (if required) and there is no additional charge for redeeming a prize.

Some products

For the purposes of this exemption, the 2019 law defines “market” and “sell”. However, the term “product” is not defined and therefore it is not clear whether the exemption is intended to be limited to the sale or marketing of physical goods, to the exclusion of services, or whether the The term “product” is to be interpreted in the same way as under the Irish Consumer Laws, which define a “product” as covering goods or services.

Price limit

The limit of € 2,500 for all available lottery prizes will prevent many larger promotional programs from relying on this exemption. It may be possible to structure a promotion to have multiple raffles, each of which falls within the prize value limit of € 2,500. However, this approach may involve risks given the uncertain wording of the exemption.

No cost to participate

Irish case law has long established that the distribution of prizes by chance will be a lottery if a “significant number” of participants pay to participate and the purchase of a promotional product constitutes a contribution or payment for a chance to win. a price. Therefore, if a significant number of people buy a product from a promoter for a chance to win a prize, the overall promotion will generally be considered a lottery even if there is a way to enter without payment or some other form of payment. contribution. The exemption for the promotion of new products deals with this aspect.

However, the requirement that there be no additional charge for the redemption of a prize is uncertain. Unlike the UK Gambling Act 2005, the 2019 Act does not set out certain costs allowed for participants (for example, sending a letter by post, standard rate phone calls or texting ).

Lottery permits and licenses

The 2019 law clarifies the licensing and authorization regime for lotteries and sets the minimum age for participation at 18.

The condition that the holder of a lottery license cannot personally profit from the lottery has been removed. Therefore, non-charitable organizations can apply to a Garda superintendent in their local district for a lottery permit for which the total value of prizes is limited to € 5,000. A lottery license only covers a specific locality and is therefore not suitable for nationwide promotional programs.

Periodic lottery licenses may be obtained for lotteries with a prize value limited to: (i) € 360,000 if only one lottery is held for one year; and (ii) € 30,000 if more than one lottery is organized during a week. The license holder is prohibited from taking advantage of the lottery, so it remains that only a charity or philanthropic company can apply for a license. However, the 2019 law introduces a number of new measures that appear to be intended to put an end to non-charities using charities in front of a license application. For example, the district court judge, when considering an application for a license, is now obliged to investigate the purpose of the lottery. This new jurisdiction conferred on the district court will likely result in the denial of applications when it is obvious to the judge that the charity is not the primary beneficiary of a license application.

Offenses

A person convicted of an offense under the general prohibition of promoting lotteries (section 26) or the conditions of permits (section 27B) and licenses (section 28), is liable on summary conviction , with a maximum fine of € 5,000 and / or up to 6 months ‘imprisonment, or on conviction on indictment to a maximum fine of € 50,000 and / or up to 2 years’ imprisonment. The officers of an offending legal person can also be prosecuted in certain circumstances. A court can suspend or revoke a permit or license upon conviction for an offense.

What’s next for higher value lotteries?

While the New Product Promotion Exemption is a useful update to the law, it does not support promotions offering the chance to win one or more prizes with a value greater than € 2,500. The locality restrictions for permits and licenses, as well as the new rights conferred on the district court with regard to license applications, will likely cause some promoters of higher-value lotteries to structure their projects so that they fall outside the scope of the law. not from the regulatory regime.

The highly anticipated Gambling Control Bill has yet to be released. This will replace the General Gaming Control Bill of 2013, which, along with the opposition-led Gaming Control Bill of 2018, ignores the current nature of the gaming industry. However, the gambling control bill is unlikely to make life easier for higher-value lotteries.

A report released by the government-appointed inter-ministerial task force on future licensing and regulation of gambling recommended that relevant reforms under the 2019 law be reflected in the future gambling control bill. In addition, the report recommends that applicants for gambling permits and licenses be fully investigated by the proposed gambling regulatory authority to ensure their suitability and suitability. before a license is granted. These recommendations do not suggest that flexibilities will be introduced for higher value promotions.

A public consultation period is expected once the new law on gambling control is published, which will allow stakeholders to have their say. Any new legislation will be the subject of significant pre-legislative review and debate. However, given the already significant delays in the reform, the 2019 law risks being a longer palliative than one would have liked.

Blog: New Rules For Promotional Lotteries - What Does This Mean For Higher Value Prizes?
  • Peter Bolger is a partner and head of the technology, intellectual property and privacy team at LK Shields and Robert Haniver is a partner lawyer.


Source link

Leave A Reply

Your email address will not be published.