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Can I charge an entry fee for my competition?
If I charged an entry fee for every time I was asked this question, I would be rich. But unfortunately for me, I don’t and unfortunately for you, you can’t charge for entry, no.
The answer is no, you cannot charge people to enter your competition in Australia. Photo of a man paying by card by rupixen.com on Unsplash.
We understand why you would want to charge for entry into your competition – they can be expensive to run and prizes and promotion don’t come for free. Being able to charge people to enter your competition would help cover the costs of running it, but unfortunately, charging for entry is unlawful here in Australia and indeed many countries around the world.
This post will explain why you’re not permitted to charge an entry fee, but it’s not all doom and gloom, we’ll also share how your competition can still help pay for itself without charging for entry (or breaking any rules)…
Why can’t I charge an entry fee for my competition?
If you’ve read our recent post on competition raffle websites, you’ll know that if you’re not a charity, club, not for profit or other eligible organisation, you are not permitted to profit from running a raffle or lottery… so selling tickets for your competition is out.
If you’re a business and not a charity or club, your competition is classed as a ‘trade promotion lottery’ here in Australia. That means you’re running a competition (or lottery) to promote your trade (or business).
Each state or territory sets out its laws and rules for running competitions, or trade promotions and each state or territory specifically states that trade promotion lotteries, or competitions, must be free to enter.
NSW
A trade promotion gaming activity is a free-entry lottery conducted to promote goods or services supplied by a business.
(Source: NSW Fair Trading)
ACT
A feature that distinguishes a Trade Promotion Lottery from other lotteries is that a trade promotion lottery is free to enter…
(Source: ACT Gambling and Racing Commission)
SA
Entry must be free for all trade promotions…
(Source: SA Business and Trade)
NT
… entry must be free…
(Source: NT Business and Industry)
QLD
[Trade promotions] are free entry draws conducted to promote goods or services…
(Source: Business Queensland)
WA
There must be no cost to enter the lottery.
(Source: WA Department of Local Government, Sport and Cultural Industries)
TAS
… a trade promotion cannot have a cost of entry…
(Source: TAS Department of Treasury and Finance Trade Promotion Fact Sheet)
VIC
The *only* exception to this rule (because there’s always one) is Victoria, who updated their rules on 28 July 2020 to state:
The expense per entry must not exceed the gazetted amount (currently $1)
(Source: Victorian Commission for Gambling and Liquor Regulation)
Victorians can be asked to pay up to a dollar for entry. Dollar coin image by Alexander Lesnitsky on Pixabay.
So technically, you can charge up to $1 for an entry to a competition open to Victorian residents only.
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You can’t charge for entry, but you can charge for your products or services…
Each state and territory may prohibit charging for entry (or charging more than $1 for entry if you’re open to VIC residents only); but they also stipulate that you can require your entrants to purchase your products or services in order to gain an entry into your competition.
Here’s what each state has to say on the matter:
NSW
No entry or related fees are permitted. Entry by purchasing goods or services at their normal retail value is allowed.
(Source: NSW Fair Trading)
ACT
The ACT website don’t specifically say you are permitted to offer entry in exchange for purchasing products, however they do specifically mention product purchases in their definition of a trade promotion lottery (or competition):
A Trade Promotion Lottery is a promotional activity used as an incentive to encourage people to do something, such as purchase a product or participate in an event.
(Source: ACT Gambling and Racing Commission)
SA
… participants may have to buy goods or services, which are the subject of the promotion…
(Source: SA Business and Trade)
NT
… entry must be free but can be conditional on buying goods or services…
(Source: NT Business and Industry)
QLD
Like the ACT, the QLD website doesn’t directly say you can require entrants to purchase a product in order to gain entry to the competition, however they do address it in the following paragraph:
In the instance that the player is required to buy goods or services to be eligible to enter the promotional game the costs of the goods or services must be no more than its market value.
(Source: Business Queensland)
WA
A trade promotion lottery is a lottery conducted to promote the sale of goods or the use of services, in which every participant takes part:
- without cost to him; or
- by reason of the purchase of goods or the use of services, the cost of which is no more than the cost would be without the opportunity to take part in the lottery.
(Source: WA Department of Local Government, Sport and Cultural Industries)
That’s a long-winded way of saying, if they have to purchase goods or services, you must charge your normal rate and not up your prices for the competition.
TAS
Unlike a lottery or raffle, a trade promotion cannot have a cost of entry (except for the ordinary cost of purchasing the goods or services, which should be the normal retail price).
(Source: TAS Department of Treasury and Finance Trade Promotion Fact Sheet)
VIC
Other than stating that you cannot charge more than the gazetted amount of $1, the VCGLR do not address purchasing products or services in exchange for entry.
The expense per entry must not exceed the gazetted amount (currently $1)
(Source: Victorian Commission for Gambling and Liquor Regulation)
… What you can’t do is up your prices.
You may have noted in the quotes from the state and territory websites above that many explicitly state that you cannot hike your prices up to help cover the cost of your competition.
Not only would that be unethical, but it may also be unlawful.
The solution: design your competition to encourage sales.
Whilst asking entrants to purchase a product or service in order to be awarded an entry is a great way to generate revenue up front from your competition; it isn’t the only way of making money through competitions.
One of our most successful, tried and testing methods for turning entrants into paying customers is to simply ask them to purchase something.
Sounds so simple, right? But it works.
When your competition is over, no matter how you asked them to enter your competition, use the same channel to thank them for entering, announce your winner and tell them what to do next (hint: it’s buy your product or service).
TIP: avoid using discounts as an incentive to purchase, or you’ll encourage customers to only purchase if there’s a discount on offer. Photo by Artem Beliaikin on Unsplash.
To sweeten the deal and encourage even more sales as a result of your competition, consider offering a discount or value add. We would always encourage the clients we work with to offer a value add rather than a discount (constant discounts can hurt your brand and prevent customers ever paying full price).
As you can see, charging for entry is outright prohibited in all states besides Victoria, which will allow you to charge up to $1 to its residents in exchange for an entry. What isn’t prohibited is asking your entrants to purchase a product or service in order to enter your competition. Whilst it’s not charging for entry per se, this method still allows your business to make money through running a competition.
If you need help designing a competition that generates 12x return on investment or $60,000 worth of sales in a week, you’re in the right place. Book in a free strategy session with our team, or get in touch with us to discuss how we can help you make your next competition pay for itself.
