Laura Fannin, Partner at Hayes Solicitors, is a key adviser to both brands and advertising agencies on marketing and advertising issues. Laura advises clients in relation to all areas of marketing and advertising law, including data protection and e-privacy issues, consumer law, the drafting and negotiation of agency contracts, promotional terms and conditions, sponsorship agreements and licence agreements. She also advises on high value promotional campaigns prize draws and has particular experience in the area of lotteries. She shares her expertise on running a prize promotion in Ireland.
Any brand that has thought about carrying out a prize promotion in Ireland will have most likely come across the outdated Gaming and Lotteries Act 1956. Under this legislation any prize promotion, which involves an element of chance in selecting the winner, will most likely fall within the definition of a lottery under the 1956 Act. Under the act, lotteries are illegal unless they are run under a lottery licence.
While this aspect of the 1956 Act is not currently meaningfully enforced in Ireland in relation to marketing promotions, many brands do look to obtain a lottery licence for Irish promotions, to avoid any risk of prosecution. The process for obtaining a lottery licence requires a Court application and can add to the expense of running a promotion in Ireland.
One of the criteria under the 1956 Act for obtaining a lottery licence is that the promotion must be for a charitable or philanthropic purpose. Accordingly a practice emerged in recent years for brands to partner with a charity who would obtain the licence. The licence would then be used by the brand for marketing purposes and a donation would be made to the charity for their involvement.
The Irish Government, however, is currently updating this legislation as part of a reform of gaming practices in Ireland. In March this year the Gaming and Lotteries (Amendment) Bill 2019 was published, which provides for significant amendments to lotteries.
It is important to note that this Bill has not yet been passed in law, so the current 1956 Act still applies. The Bill was, however, very recently debated before the Irish houses of parliament and it is anticipated that the Bill will be finalised and become law later this year.
The Bill for the first time introduces provisions directly relating to marketing promotions. It provides that a licence or permit is not required where a lottery is held in conjunction with the selling or marketing of a particular product or service. There are, however, two potential issues for brands running marketing promotions where prizes are being distributed. Firstly, there is a requirement that there has to be no charge for taking part in a lottery other than the purchase of the product. This could potentially be problematic where, for example, promotions require the entrant to make a phone call or send a text message. It is unclear if the cost of the text or the call would be considered to be “an additional charge”. Secondly, the Bill requires the total value of the prizes for the promotions to be not more than €2,500. Given that this limit applies to the total value of the prizes, it is likely that the majority of marketing promotions would not be in a position to avail of this exception.
If the promotion cannot fulfil the requirements for the exemption for marketing promotions, then there is now a new option under the Bill for the promoter to apply for a permit. This permit can last for one year, and the total prizes in any one lottery cannot exceed €5,000 or if there is more than one lottery in any one week, the total value shall not be more than €5,000. There will be a fee for applying for the permit, the amount of which has not been set. Also permits will need to be applied for 60 days in advance of the promotion starting.
If the prize values are above the €5000 limit, described above, the only option open to a promoter is to apply for a lottery licence. The Bill allows a prize limit of €30,000 where a lottery licence is applied for. The new requirements set out in the Bill appear, however, to prevent the current practice of brands applying for lottery licences in conjunction with a charity.
The Bill provides that you cannot promote a lottery unless you hold the lottery licence or you are an employee or agent of the licence holder. In order to continue with the current practice of partnering with a charity, the brand would have to demonstrate that they are an agent of the charity. It appears unlikely that a Court would find that a brand is an agent of the charity in these circumstances.
If applying for a lottery licence is no longer an option for marketing promotions, which fall within the definition of a lottery, promoters will be confined (under the current draft of the bill) to giving away prizes of no more than €5000 in value.
The Bill will be debated by the Irish parliament prior to the enactment and amendments may be made that are favourable to brands and marketing agencies.
I have been involved in making submissions to the Irish Government on behalf of members of the Irish promotional marketing industry. These submissions urged the government to increase the prize pool limit; however there is no guarantee that they will do so.