Reed Smith Client Alerts

Previously one of the thorniest jurisdictions in the world for conducting a sweepstakes, effective July 1, 2020, New South Wales (NSW) has modernized its promotional scheme in some very important ways. The key is that low-value prize promotions, including those that run online and on social media, may no longer require a lengthy and burdensome permitting process. A permit (or “authority” in NSW-speak) is only required where the total prize value of the sweepstakes exceeds A$10,000. That’s about US$7,700.

Authors: John P. Feldman

The process is modernized in the sense that you can get an authority for one, three, or five years at a shot. That is a huge benefit if you’re running a lot of promotions over the course of a year. If you apply for an authority online – and who wouldn’t? – you even get a 10 percent discount on your filing fee. So, we’re really talking about A$400 for one year and about A$800 for five years. You still have to submit your Official Rules for each sweepstakes to the NSW Fair Trading authorities for approval no fewer than 10 days before the start date. The flip side of this modernization is that there are now penalties that can be imposed for minor breaches of the new regulations, and the NSW Fair Trading authorities can initiate a court action if a breach is deemed to be major.

NSW used to make you wait three months to hear from a potential prize winner before moving on to an alternate. That quirk has been modified so that if a prize isn’t claimed within a set period of time, it can be forfeited and another draw can take place to determine a new prize winner. The sponsor must use “reasonable efforts” to contact the prize winner. But, as long as you have a period of time stated in the Official Rules (e.g., five days), you can move on promptly to an alternate winner. So it’s very important to state this time frame in your Official Rules because if no time is specified for an activity where an authority is required, the prize must be kept for at least three months after the draw before you can move on to alternates.

If you’re going to make any changes to your Official Rules, there’s a form you need to use to update them with the regulator. You also need to take “all reasonable steps” to notify the participants or make the information publicly available within a reasonable time before the change takes place.