Legality of promotional games: the (red) devil is in the details
Ellen, newly appointed Marketing Manager for the startup of the year, set herself an objective to increase the company’s revenue by 30% this year. An ambitious goal but with the World Championship of Football coming up there is hope. Anyway, clients expect no less from a dynamic startup! After a productive brainstorm she has come up with a fancy concept and she is ready to roll this out. But then her manager reminds her that it would best if she ran her campaign by their legal counsel. You never know if a campaign like this needs to be legally checked. Should she really…?
Nowadays, promotional games are becoming increasingly popular, in particular due to the development of electronic communications and social networks. It's not uncommon to come across an Instagram or Facebook post that allows its users to win prizes (from concert tickets to the latest blender) simply by liking and sharing it. Actually, these promotional techniques are not new. We all remember the fact that we could win tickets to see the French football team (at the time, our favorite Red Devils did not qualify for the world cup) by simply buying a cereal box in which a code, winning or not, was mentioned.
The success of these promotional techniques rouse the commercial companies’ interest wishing to use them in promotional actions. The difficulty is all the greater as the difference between lotteries, games of chance and contests is rather unclear but nevertheless decisive.
In Belgium, promotional games are strictly regulated. For example, offering to a consumer the chance to win a one-year subscription to a football magazine by sending the code "football" by text message is simply illegal. In such a case, the winner is chosen exclusively by chance. This type of promotional action is a lottery which is prohibited as are the games of chance, but not the contests.
How do we ensure that a promotional game does not fall under the definition of lottery or game of chance?
The difference between contests (permitted) and games of chance (prohibited) is thin. Indeed, games of chance are any game (i) by which a stake is involved (ii) where there is a probability of loss of that stake or profit and (iii) in which chance has an impact on the course of the game and the determination of the winner or the prize. When a promotional game is not free, in order not to fall under the definition of game of chance, it is important that only the players’ skills are likely to designate the winners, excluding chance. The following example can be qualified as a contest even though the registration is not free: a football tournament, organised by a beer brand, with registration fees, at the end of which the winning team wins tickets for the World Cup final. Indeed, such contest does not leave room for chance in determining the winning team, it is therefore not a prohibited game of chance.
In order not to fall within the scope of the games of chance, no registration fees may be requested if chance plays even a small role in determining the winner. Knowing that a bet is at stake, the following examples will be qualified as games of chance; (i) a "World Cup pool" organised by a company or (ii) a competition during which players bet a certain amount on their favorite team of the World Cup, the players who bet on the winning team receive a trip to Russia. An exception to the ban with regard to games of chance is however provided for establishments authorised by the Gaming Commission (i.e. casinos, gaming houses and drinking establishments duly authorized for this purpose).
As far as lotteries are concerned, lotteries (free or not) are characterised by the exclusive intervention of chance. The chances of winning a prize are not influenced at all by the (physical or intellectual) skills of the participants. The above example (sending the "football" code by SMS) can be qualified as a lottery. In order not to fall within the scope of this prohibition, it is important that the participants’ (intellectual or physical) skills play a role in determining the winner, for example by asking a qualifying question. The Belgian legislator has provided an exception for lotteries organised by the National Lottery or tombola organised by duly authorised philanthropic associations.
While it is true that contests are not regulated by any specific law, it must be borne in mind that the presentation and offer of such contest, as commercial practices, are subject to the Code of Economic Law, such as consumer law. A regulation clearly setting out the rules of the contest is therefore essential.
To conclude, bet that the Red Devils will win the World Cup 2018? Yes, but lawfully!