The rules for running promotions in Ireland are changing.
With effect from 1 December 2020, all lotteries operating in Ireland became subject to a new set of rules, governed by the Gaming and Lotteries (Amendment) Act 2019. The 2019 Act brought in some significant changes to the legal requirements and processes involved in running marketing promotions. Petra Green, lawyer at PromoVeritas explains the updates.
It goes without saying that that these rules in Ireland apply to purchase associated promotions, and not free to enter ones. It’s the payment element which makes these promotions fall within what is called a ‘lottery’. The elements of a lottery are:
- You have to pay to enter the game.
- There is always at least one prize.
- Prizes are awarded purely on chance
1. Total value of the prizes is less than €2,500
Where the total value of the prizes is less than €2,500, such promotions will NOT require a licence or permit, provided there is no charge for taking part, other than the purchase of a product at its standard rate, or redeeming the prize.
There are different schools of thought here, but it appears that the €2,500 cap applies to each draw, as opposed to the total prize pool for the promotion. If this is correct, it would not be necessary to obtain a lottery licence where a promotion has 10 different prize draws, each offering a prize (or prize pool) with a value of up to a maximum of €2,500.
2. The total value of the prizes is not more than €5,000 – Lottery Permit
Where the total value of the prizes in a lottery is not more than €5,000 or, where there is more than one lottery in any week the total value of the prizes for that week is not more than €5,000, an application must be made to the superintendent of the Garda Síochána for the district in which the applicant ordinarily resides for a permit [AP1] authorising the promotion of the lottery. This application must be submitted at least 60 days before the start date, there is also the possibility that an application will need to be made in each district.
3. The total value of the prizes is not more than €30,000 in any week and not more than €360,000 in any year – Lottery Licence
Where the total value of prizes is not more than €30,000 in any week or not more than €360,000 in one year. An application must be made to the District Court in the area where the promotion will be run at least 60 days before the start date of the promotion. The following will be taken into consideration when granting the licence:
- the character of the applicant;
- the number of periodical lotteries already operating in the locality; and
- the purpose of the lottery.
The weekly prize cap of €30,000 will continue to apply with the inclusion of an additional cap of €360,000 for once-off annual prizes.
The Act states that the holder of the licence is not to derive any personal profit from the lottery. A number of new thresholds were also introduced under the Act which includes:
- not more than 25% of the total proceeds shall be retained by the holder of the licence and utilised for the expenses of the promotion;
- not more than 75% of the total proceeds shall be allocated to prizes; and
- not less than 25% of the total proceeds shall be allocated to a charitable or philanthropic purpose.
It is also a requirement to display the value of each prize and the name of the intended beneficiary.
What does this mean?
The impact of this on our clients is potentially huge – although there is no definition of “proceeds” in the Amendment Act, it is likely to be interpreted to mean the price of the product being purchased. So for a promotion that sells millions of units (chocolate bars or packets of crisps, for example) 25% of all sales should be donated to charity, likely rendering the promotion cost prohibitive.
Northern Irish Law
Moving on to Northern Ireland, the most important aspect of NI law for promoters is that purchase associated promotions are viewed as gambling. An NPN entry route is required for prize draws that do involve a purchase. This directly conflicts with the UK CAP Code and Consumer Protection Regulation (CPR) and the Gambling Act 2005 which stipulates that promoters do not need to offer an NPN route for purchase linked promotions. However, Northern Ireland still has its own gambling laws, so technically a mechanism whereby the public can enter a promotion without paying, or by paying no more than the cost of a stamp or standard rate text message, is required.
Promoters running UK-wide or international prize draws have several options. The first is to exclude Northern Irish residents from entering, the second is to set up an NPN route for Northern Ireland only and the third is to dismiss NI law and simply follow the EU’s rules.
Having an NPN rule does not form part of the CPR and therefore choosing the 3rd route – not having an NPN route for entrants – would mean that the promotion is legally in line with UK laws and regulations. Given that the Northern Ireland Assembly have repeatedly advised that they are intending to change their laws to fall in line with the rest of the UK, there is little to no appetite for prosecuting brands who do not offer an NPN route and, in our experience, these promotions appear to go unchecked.
So providing your brand has a risk profile that allows for a very small amount of risk, they may well feel comfortable with proceeding with the third option and treating Northern Ireland in the same manner as the rest of the UK.