Types of Competition

Five popular trade promotion competitions you can use are:

  1. Game of skill
  2. Game of chance
  3. Trade incentive
  4. Offer
  5. Footy tipping

The one you choose for your business depends on your goals. Do you want to drive awareness of a new product? Or gather data about your target audience? Or use the promotion to increase the engagement of existing customers?

Don’t take this decision lightly – the trade promotion you choose determines the rules you need to follow. For example, you will need a trade promotion permit in some states in Australia to operate a promotion where the winner is determined by an element of chance.

Let’s look at some trade promotion examples in more detail.

Game of Skill vs Game of Chance

The most important question to ask yourself when running a trade promotion is how the winners are to be determined. This will determine which regulation and permit requirements apply to the competition.

In short, will it be a game of skill or a game of chance?

What is a Game of Skill?

A game of skill requires participants to submit an entry that meets criteria based on their physical or mental skill. The winner is determined entirely by merit either by judges or by vote.

Examples of games of skill trade promotions:

  • Tell us in 25 words or less…

  • Instagram photo competitions

  • Share a story or video

The reason this is such a popular format is simple: In Australia, game of skill trade promotions do not require a permit regardless of the scale of prize offered. This makes these competitions far quicker and easier to run.

However, in most states, there are still some rules you need to follow for game of skill trade promotions:

  • Your competition must have clear guidelines on the judging criteria.

  • All entries must be judged individually based on their merit.

  • The winner should be selected based on the skill and merit of their entry.

What is a Game of Chance?

A game of chance is a competition where the winner is selected at random. A trade promotion competition that involves a degree of chance in determining the winners is called a Trade Promotion Lottery in Australia. Also called a “game of luck”, no skill needs to be demonstrated and no judgement is passed for the winner to be determined.

If you want to run a game of chance trade promotion, you need to do your homework. Each state has limits and restrictions in place. Some states require you to apply for a permit first.

For example, South Australia only requires you to have a permit for a “major trade lottery” where the total prize pool value is greater than $5,000. Whereas in New South Wales, a permit is required if the lottery promotes a trade or business, regardless of prize value.

What is a Trade Incentive?

Trade incentives are promotions where a winner receives a prize based on a non-chance method. For example, a power tool supplier might offer a major prize to the hardware retailer that reaches a set sales target for a specific product line.

These forms of promotions are typically used in a B2B setting to boost loyalty and drive sales.

What is an Offer?

An offer is a trade promotion that provides a ‘gift’ to a customer for completing a certain requirement, such as purchasing a product. For example, purchase a soft drink and receive a free football in store.

There are a few rules around offers. For example, if the offer is limited to the first “X” purchases (there are only 1000 footballs available), you might need to get a trade promotion permit. It depends in which state the promotion is running, whether you are advertising the limited number of gifts and whether you ask people to send in a claim for the prize. Trade promotion permits are discussed further down in this article.

What is Footy Tipping?

As the AFL and NRL seasons kick off, so do footy tipping comps in workplaces around Australia. A footy tipping competition is when entrants must select the winning team in a football match. They are awarded a point if successful. This usually continues for the length of the season, with the final winner being the player with the most points.

Footy tipping is usually considered a game of skill, however this can vary across states and territories. Even in states where it is considered a game of skill, if the method of entry or selecting a winner involves an element of chance at any stage in the competition it could be considered a game of chance. For example, if there is more than one person with the same number of points, and a draw is used to determine the winner. In this case the trade promotion game of chance regulations apply and, depending on the prize value and the state or territory, you may need a trade promotion permit.

Guaranteed compliance for your next competition, sorted.

Plexus Promotion Wizard offers end-to-end legal support for competitions & promotions. Custom T&Cs and the right permits without any hassles, 90% faster and half the cost of traditional legal firms.


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