by Laura Fannin , Cian Clinch December-18-2019 in Advertising and Marketing Law, Commercial & Business

On 4 December 2019, the Gaming and Lotteries (Amendment) Bill 2019 (the “Bill”) was passed by Dáil Éireann and when in force it will make significant changes to both the circumstances in which a lottery licence will be required and the requirements for obtaining a licence to run a lottery.  It is unclear at present when the Bill will be signed into law.

The amendments to the current rules, which are found in the Gaming and Lotteries Act 1956, are of particular importance to brands and marketing agencies who run prize draws as part of advertising campaigns.  Under the existing law, where the winner of a prize is determined in the main by chance, the promotion will usually fall within the definition of a lottery and require a licence.  As one of the criteria under the 1956 Act for obtaining a licence is that the lottery must be for a charitable or philanthropic purpose, a practice emerged in recent years for brands to partner with a charity who would obtain the licence. The licence would then be used by the brand for marketing purposes and a donation would be made to the charity for their involvement.  The new requirements in the Bill appear to impact on promotions being run in this manner.

Brands and marketing agencies who seek to run lotteries in conjunction with the promotion or sale of a product will fall into one of three scenarios under the new law:

 

1. The total value of prizes is not more than €2,500

Under the new Bill, a lottery licence is not required for lotteries that are conducted in conjunction with the selling or marketing of a particular product where the total value of the prizes is not more than €2,500, there is no charge for taking part in the lottery other than the purchase of the product and there is no additional charge for the redemption of a prize.

The wording of the Bill is unclear, however it appears that the €2,500 cap applies to each draw, as opposed to the total prize pool for the promotion.  If this interpretation is correct, this would negate the requirement for a lottery licence where a promotion, for example, has thirty different prizes, each with a value of up to €2,500, and there is a separate draw for each prize.

The requirement that there be no charge for taking part in a lottery other than the purchase of the product could potentially be problematic. For example, if a promotion requires the entrant to make a phonecall or send a text message this would involve an additional charge.  It is uncertain whether those charges would be found to be in contravention of the Bill.

 

2. The total value of the prizes is not more than €5,000

If the total value of the prizes in a lottery is not more than €5,000 or, where there is more than one lottery in any week the total value of the prizes for that week is not more than €5,000,  you can apply to the superintendent of the Garda Síochána for the district in which the applicant ordinarily resides for a permit authorising the promotion of the lottery.  

The application form for the permit is not yet available and is something to be prescribed by the Minister after considering certain factors, including “the charitable or philanthropic giving in society generally”. The application has to be submitted to the superintendent at least 60 days before the first day on which it is intended to promote the lottery and, in order for the application to be successful, certain criteria for the lottery will have to be complied with, including not accepting a stake from any person under 18 years old; not charging more than €10 per ticket; and not more than 5% of the total proceeds from the lottery being retained by the holder of the permit when the lottery is held for the benefit of a charitable organisation.  The Bill states that a lottery under a permit may be promoted for the benefit of the holder or for a charitable or philanthropic purpose.

 

3. The total value of the prizes is not more than €30,000 in any week and not more than €360,000 in any year

If the total value of the prizes in a lottery is more than €5,000, the only option available under the Bill to operate the lottery legally is to obtain a lottery licence. To obtain a licence, the applicant has to apply to the District Court in which the lottery is to be promoted at least 60 days before the first day on which it is intended to promote the lottery.  In considering the application, the Judge of the District Court shall have regard to the character of the applicant; the number of periodical lotteries already in operation in the locality; and the purpose of the lottery.  This gives the Judge much wider discretion than they had previously in deciding whether to grant a licence.

In addition to the requirements around the value of prizes, the Bill provides that the holder of the licence is not to derive any personal profit from the lottery; the value of each prize and the name of the intended beneficiary is to be stated on every ticket; not more than 25% of the total proceeds shall be retained by the holder of the licence and utilised for the expenses of the promotion; not more than 75% of the total proceeds shall be allocated to prizes; and not less than 25% of the total proceeds shall be allocated to a charitable or philanthropic purpose.

 

Prosecution

The running of a lottery in contravention of the Bill is an offence. If convicted summarily, a fine of up to €5,000 and/or imprisonment for a term not exceeding 6 years could be imposed.  If convicted on indictment, a fine of up to €50,000 and/or imprisonment for a term not exceeding 2 years could be imposed.  This is a significant increase on the current penalty.

We will provide further updates when the Bill has been commenced.  


For further information, please contact Laura Fannin lfannin@hayes-solicitors.ie or Cian Clinch cclinch@hayes-solicitors.ie.

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