At least once or twice a month we receive an enquiry asking us to help set up a raffle competition website, whereby an entrant purchases a ticket for a chance to win prizes such as jet-skis, cars, houses, cash or other expensive items. The premise is simple: out of the ticket sales you purchase the prize and pocket the rest as profit.

We’ve put together this post to to explain the three main reasons we can’t help you with your raffle competition idea:

  1. Because a raffle is not like a regular trade promotion competition.
  2. Because it’s extremely difficult to (legally) charge an entry fee for a competition.
  3. Because there are no licences or permits that cover you to run these types of raffle sites.

Whilst the premise of a raffle site may be simple, the legals, permits, execution and even ethics by contrast are not. Essentially, running any type of raffle for profit is – understandably – extremely well legislated and monitored here in Australia. Unless you’re a charity, club, not for profit or other eligible organisation, you will find it next to impossible to profit from such a raffle website.

1. A raffle is not like a regular trade promotion competition.

On a day to day basis, we deal primarily with trade promotion lotteries and their accompanying permits and licences.

If a business wants to promote their products or services, they engage our services to run a competition. As part of our services, we ensure the competition is legal and apply for a licence, the client gets a bucket tonne of leads and sales, the competition closes, the winner is awarded their prize and everybody’s happy.

A trade promotion is designed specifically to promote a trade or business and its products or services, this definition from the NSW Fair Trading website sums it up nicely:

A trade promotion gaming activity is a free-entry lottery conducted to promote goods or services supplied by a business.

A trade promotion must genuinely promote goods or services apart from offering participation in the trade promotion gaming activity.

A raffle website does not usually promote a product or service.

A raffle competition website usually makes its money as a business purely from ticket sales – not from products or services.

You would choose a prize such as a car, promote the competition to win a car, charge people to purchase a ticket to win a car, purchase the car as a prize from those ticket sales and the rest would be your profit margin.

The fact that your raffle site competition isn’t being run to promote your business but is being used primarily to generate revenue, is where the difference between a raffle and a competition or trade promotion lies.

2. It is extremely difficult to (legally) charge an entry fee for a competition.

With a standard competition or trade promotion run by a business to promote a product or service, there is either no charge for entry or an entry is given when a product or service is purchased. In exchange for handing over their money, your customer receives their goods and the entry into the competition is a bonus.

In other words, they are not paying for an entry to the competition, they are primarily paying for a product or service.

In a raffle, the entrant hands over their money in exchange for the entry ticket only, receiving no goods or services in return.

As you can imagine, taking a person’s hard-earned money in return for a chance to potentially win a prize is an area that must be highly regulated to protect consumers like you and me from being ripped off.

In my opinion, it’s also highly regulated because it’s very close to gambling. After all, an entrant is giving money to another person for profit, with no guarantee of a favourable outcome (i.e. winning). Gambling, as we know is a very highly protected and regulated industry.

It’s in the fact that you’re charging for entry purely to make a personal profit, that’s the reason it’s difficult and, mostly illegal, to charge an entry fee.

3. There are no licences or permits that cover you to run these types of raffle sites.

Even if you somehow navigate around the previous reasons not to run a raffle site, there’s still the issue of licences and permits.

Remember: you will need to abide by and apply for any applicable licence or permit for each and every state and/or territory your competition is open to, NOT just for the state in which your company is registered or based.

The different states and territories of Australia are extremely clear on what is and isn’t permitted when it comes to gaming, competitions and raffles – and unfortunately, unless you’re a club, charity or not for profit, it’s not good news.

Let’s look at the breakdown state by state.

NEW SOUTH WALES RAFFLE COMPETITION LAWS

The New South Wales Fair Trading website has a huge amount of information on community gaming and games of chance. We’ve trawled the site and condensed only the most relevant information for your raffle website idea.

There are 6 different types of Community Gaming permitted in NSW:

  • Art unions
  • Housie and bingo
  • Lotteries
  • Sweeps and calcuttas
  • Trade promotions
  • Promotional raffles

Housie and bingo aren’t relevant for a raffle site unless you plan to run an online bingo site, in which case, read up on them here.

Sweeps and calcuttas are only permitted to be run by charities and non-profit organisations, political parties, trade unions, registered clubs and specific racing clubs. If that’s you, you can find out more here.

Trade promotions have been covered at length in our post What is a trade promotion lottery?

So that leaves us with Lotteries, Promotional raffles and Art unions.

Lotteries refers to the traditional lottery set up – as an entrant you have a numbered ticket and a number is drawn at random by the organiser. The entrant with the matching number, or numbers, wins.

Image by Alejandro Garay from Pixabay.

The only types of lotteries permitted by organisations that are not charities or non-profits are progressive lotteries such as tipping competitions, where a number of draws are made over a set period of time and free lotteries, where no fee can be charged for entry.

So would your raffle site idea be permitted under a progressive lottery if you met the definition of ‘progressive’? No.

The NSW Fair Trading site states that:

No payment may be made as a salary, wage, fee, commission, percentage or other benefit to anyone who conducts a progressive or mini-numbers lottery.

Promotional raffles, despite their name, are not much help either, as “A promotional raffle can only be conducted at a venue that holds a club licence under the Liquor Act 2007. It must only be held for the purpose of attracting or entertaining patrons.” even if you do hold a club licence, under the rules:

Minimal or no profit is received from ticket sale of tickets, as at least 90% of the gross proceeds must be used to cover the cost of the prizes.

Finally we have Art unions. Don’t get too excited, art unions are only permitted to be conducted by the following organisations only:

  • charities
  • sporting clubs
  • social clubs
  • registered clubs
  • political parties
  • trade unions
  • incorporated associations.

So under NSW Community Gaming laws, your raffle site idea is not permitted. Under no circumstances would you be able to run a raffle site, sell tickets and keep the proceeds as profit once the prize has been purchased from the proceeds.

ACT RAFFLE COMPETITION LAWS

ACT list 6 types of lotteries permitted in their state.

  • Trade promotions
  • Raffles
  • Housie
  • Calcutta
  • Card Jackpot Raffles
  • Lucky Envelopes

I’m only going to cover raffles here as they are the most relevant category of competition for a raffle website.

As per the ACT Government’s Gambling  & Racing Commission website:

A raffle usually involves the sale of tickets followed by a draw to determine the winners of certain pre-determined prizes. A prize includes anything of value or benefit.

Which I imagine describes your raffle website to a tee.

Under ACT laws, you will not require a licence to run a raffle-style competition that’s open to ACT residents if your prize value does not exceed $2,500 AUD and you meet the criteria for Exempt Lotteries.

If your prize or prize pool (the combined value of all prizes for your competition) is valued at over $2,500 AUD, you will need to meet the raffle conditions set out in the  ACT’s Raffle Information and Conditions document and apply for a permit in ACT.

So essentially, your raffle website idea is permitted in ACT subject to their conditions and approval… however, unless you’re based in ACT and only opening and advertising your competition to residents of ACT, it’s unlikely to be profitable for you due to the small population.

SOUTH AUSTRALIA RAFFLE COMPETITION LAWS

South Australia keep it simple and only have Trade Promotions listed as permissible types of competitions/games in their state.

In terms of charging people for entry, in case you’re curious, here’s what they have to say:

Entry must be free for all trade promotions, but… participants may have to buy goods or services, which are the subject of the promotion.

So if you’re selling products or services and using a competition to promote them (i.e. running a trade promotion) you can make money through asking people to purchase to enter, but as a raffle site would be charging purely for an entry, it would not be permitted in South Australia.

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NORTHERN TERRITORY RAFFLE COMPETITION LAWS

The Northern Territory (NT) specify that you must be an ‘approved association’ to run a raffle open to its residents. Since approved associations must be community organisations with at least 10 members, it’s unlikely your raffle competition site would be approved.

In any case, even for approved associations, the NT Government website clearly states that

… no payment, fee, commission, remuneration or any other benefit whatsoever can be provided to any individual or organisation, whether or not it is connected with the approved association, in relation to the organisation or conduct of a lottery, raffle or game.

Since you can’t make a profit from a raffle in NT, it’s a hard no from this territory.

QUEENSLAND RAFFLE COMPETITION LAWS

The Queensland Government define four categories of games that are permitted to be advertised and run in their state.

  • Category 1 games – gross proceeds are not more than $2,000
  • Category 2 games – gross proceeds are more than $2,000 but not more than $50,000
  • Category 3 games – gross proceeds are more than $50,000
  • Category 4 games are trade promotions, or “free entry draws conducted to promote goods or services”.

The categories of games are divided by total gross proceeds (from ticket sales for example) as well as who is eligible to run them.

In most cases, the game must be conducted by “an eligible non-profit association” or “eligible incorporated non-profit association” for Category 3 games. Category 1 games are permitted to be run by an individual in some circumstances; however given that the gross proceeds can not exceed $2,000, even if you did obtain approval, you’re unlikely to make a profit.

TASMANIA RAFFLE COMPETITION LAWS

The Tasmanian government website classes competitions such as bingo, raffles, sweepstakes and tipping competitions as ‘Minor Gaming’.

Minor gaming, according to the Liquor and Gaming website is:

… gaming where the proceeds are used for a not-for-profit organisation or for charitable reasons (such as education, welfare, sport and recreation), and not for the private gain or benefit of any person, except by way of charity.

As a raffle website aims to provide private gain, you will not be permitted to run a raffle open to residents of Tasmania unless you’re a not-for-profit or charitable organisation.

WESTERN AUSTRALIA RAFFLE COMPETITION LAWS

Western Australia (WA)’s Department of Local Government, Sport and Cultural Industries’ website refers to raffles standard lotteries and again, it’s bad news I’m afraid…

A standard lottery permit can be granted where the principal object of the lottery is the raising of funds for the active promotion, support or conduct of any sporting, social, political, literary, artistic, scientific, benevolent, charitable or other like activity. The lottery cannot be conducted for private gain or any commercial undertaking.

I don’t think WA’s position on raffles (or standard lotteries) can be any clearer, if they cannot be conducted for private gain, you’re unable to run a lottery open to WA residents.

VICTORIA RAFFLE COMPETITION LAWS

Victoria’s Commission for Gambling and Liquor Regulation only list two types of permissible lotteries in their state – public lotteries (run by Tattersalls and include Oz Lotto and Powerball for example) and Trade Promotions.

So again, a raffle website would not legally be permitted in Victoria.

TASMANIA RAFFLE COMPETITION LAWS

The Tasmanian government website classes competitions such as bingo, raffles, sweepstakes and tipping competitions as ‘Minor Gaming’.

Minor gaming, according to the Liquor and Gaming website is:

… gaming where the proceeds are used for a not-for-profit organisation or for charitable reasons (such as education, welfare, sport and recreation), and not for the private gain or benefit of any person, except by way of charity.

As a raffle website aims to provide private gain, you will not be permitted to run a raffle open to residents of Tasmania unless you’re a not-for-profit or charitable organisation.

A note on raffles and games of skill.

Games of skill do not require a licence in any state in Australia.

However, due to the nature of games of skill competitions, they are unlikely to suit your raffle website model for a number of reasons that may restrict your earning potential.

Skill may mean first person to correctly guess the answer to a question for example. If this is the case, your competition could end before you’ve raised enough money to cover the cost of the prize.

Games of skill, statistically speaking, also see fewer entries than games of chance because of the nature of the entry method. More effort means more people are put off entering and again you may not raise enough money from ticket sales to cover the cost of the prize and running the competition.

Whilst the idea of running a raffle website seems straight-forward enough, the execution and legal compliance of said raffle competition website on the other hand is not. Even if you manage to navigate your way around the fact a raffle website does not genuinely promote a product or service, or the fact that it’s incredibly difficult to charge people to enter a competition beyond a simple purchase to win competition; starting and running a raffle competition website in Australia would be against the law unless you’re a legitimate, registered, bona fide charity or other eligible organisation. Being associated with, or donating a portion of the proceeds to a charity is not enough. The fact remains that making a profit or personal gain from a raffle is against the law in many states and territories of Australia.

If this article still hasn’t put you off the idea of starting a competition raffle website, then consider yourself warned – the penalty for not having the correct licences and permits in place is hefty fines and even prison.

If you’ve decided against running a raffle site, but are still interested in running a trade promotion style competition (to promote your products or services) then we’d love to help. Get in touch with us via our contact page.

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