From 1 December 2020, all lotteries promoted in Ireland will be governed by a new set of rules. This is the date that the long awaited Gaming and Lotteries (Amendment) Act 2019 commenced.
The new regime makes some significant changes to the legal requirements and processes involved in running marketing promotions. It will be important that any brands and agencies involved in running these promotions are aware of the changes and are ready to adapt their promotions to them.
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 2019 Act, 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.
While the wording is unclear, 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 Act.
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 Act 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 Act 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 s/he had previously in deciding whether to grant a licence.
In addition to the requirements around the value of prizes, the Act 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.
The running of a lottery in contravention of the Act 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.
The new rules governing the running of marketing promotions came into effect on 1 December 2020. Due to the significant changes that they make to the running of such promotions, brands and agencies should familiarise themselves with the rules.
If you have queries on how the new rules might affect your business or if you require guidance on implementing changes in line with the new legislation, please contact Laura Fannin email@example.com or Cian Clinch firstname.lastname@example.org at Hayes solicitors.
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About the Authors
Laura is a partner in the Commercial & Business team at Hayes solicitors. Laura advises clients on a diverse range of corporate and commercial matters and regulatory requirements. She is an experienced adviser on terms and conditions of sale and purchase, IT issues, data protection, product liability, advertising and promotions, intellectual property and a wide range of commercial agreements.
Cian is a partner in the Commercial & Business team at Hayes solicitors. He predominantly specialises in commercial litigation and dispute resolution and has acted for a variety of companies and financial institutions in contract, debt, insolvency, restructuring and recovery matters.