Although Scotland did not get off to the best start at the European Football Championship 2024 ("Euros"), many Scottish (and other) businesses are enjoying the Euros as a way to promote their brand. Many brands will use prize draws as a tool to promote their brands, such as Coca Cola who has put QR codes on their product which enters consumers who scan it into a prize draw. Brands should consider, however, what steps are required to take in order to ensure such promotions are compliant with the relevant laws and regulations.

In the third blog of our three-part series on key considerations for organisations supporting both their nation and their brands, we consider the use of prize draws and competitions as promotional mechanisms and the regulatory hurdles that must be considered when running such promotions.

If you would like to read the other blogs in our Euros series, you can read part 1 on intellectual property considerations and part 2 on advertising issues.

Promotional prize draws and competitions

Running competitions, sweepstakes, or giveaways during the Euros can be an effective promotional strategy, however, such promotions are strictly regulated in the UK. Businesses must take care to ensure the mechanisms involved in their prize promotions do not make them illegal lotteries caught under the Gambling Act 2005 (the "Act"). The Act requires businesses to obtain a licence to administer lotteries, betting, and gaming.

In the UK there are two main types of promotion:

1.   Prize Draws: where a winner is chosen at random from all valid entries made by participants.

To ensure a prize draw does not fall under the scope of the Act, businesses must ensure that entry to the prize draw is free (or at least has both a paid and free entry route). Some limited costs can still be incurred by the participant in a free prize draw if the cost is considered charged "at the normal rate". This means the participant cannot be charged above what it normally costs to use a particular method of communication i.e., first- or second-class post. A participant may be required to pay the price of the good to enter the competition and it will still be considered free if the promotional product's price has not been inflated when compared to the non-promotional price charged for the goods.

2.   Competitions: where a winner is chosen based on the participant's skill, judgement, or knowledge.

This could be a magazine competition for example, which asks participants to correctly solve a crossword to win a prize. It is important that businesses ensure the skill element is sufficiently difficult enough to prevent a "significant proportion" of participants from receiving a prize. If the competition is not difficult, and entry is via a paid route, the competition risks being considered a "game of chance" and caught under the provisions of the Act.

Business should identify the type of promotional activity they are administering and ensure that (a) the prize draw is free, and every entrant is given a fair and equal chance to win; or (b) the skills aspect of the competition is sufficiently challenging enough.

Advertising of prize draws and competitions

In the UK, advertisements are regulated by the Advertising Standards Authority (the "ASA"). The UK Code of Non-Broadcast Advertising and Direct & Promotional Marketing ("CAP Code") applies to non-broadcast advertisements, sales promotions, and direct marketing communications. This includes advertisements in newspapers, magazines or other printed materials; advertisements online and on social media; and advertisements in public places, such as billboards or posters.

Regardless of whether businesses are promoting a prize draw or a competition, there are several general obligations under the CAP Code that must be met:

  • Transparency: Companies should clearly outline the terms and conditions of the promotional activity and ensure they are not omitting significant conditions. This includes information about eligibility criteria, entry methods, deadlines, prize details, and how winners will be selected and notified. Any information which consumers need to make an informed decision about whether to participate in a promotion or not will be considered significant. While it is acceptable to include a QR code or website link within the advert to direct a consumer to further information, key information and conditions should be displayed on the advert itself. The ASA has recently ruled against an alcohol seller for not clearly stating the conditions and nature of the competition within the advert. Companies should also ensure that any links to further information included in the advert are valid and working. Rule 8.17 of the CAP Code also contains a further list of information that companies must provide.
  • Fairness: Companies must ensure the competition or prize draw rules are fair and not misleading. Participants should have a clear understanding of what is required to enter and win the prize. Companies should avoid complex or ambiguous rules that could confuse participants.
  • Prize Descriptions: It is important to provide clear and accurate descriptions of the prizes available to be won. Details of what the prize will consist of, the number of prizes, their value, and any associated costs (i.e., taxes, and shipping) should all be included within the advert. Companies should be careful to include wording that prizes are subject to availability or subject to exchange (should this be a concern).
  • Winner Notification: Companies should outline the process for notifying winners and ensure that winners are contacted in a timely manner. It is generally advisable for the terms to contain drafting to explain what will happen if a winner does not claim their prize within a certain timeframe (for example, whether the company is able to award the prize to a runner-up). It is generally not acceptable to change the closing date of a promotion after it has been advertised unless doing so would cause no detriment to the participants. The ASA has previously upheld a complaint against an online retailer for not conducting its promotion with proper supervision and adequate resources when it informed individuals that they had won the promotional prize, when in fact the email had been sent in error.
  • Prize Distribution: All prizes should be awarded as described and within the specified timeframe. Companies must keep proper records of the promotion administration. For example, if administering a prize draw companies must be able to show how the prize was awarded in accordance with the laws of chance. If administering a competition, companies must be able to show what criteria was used by the judges to determine a winner, and that all the entries were reviewed.

Data Protection

Most competitions will require advertisers to collect personal information about their participants and may include the right to contact participants in the future with marketing materials. Organisations which intend to collect information such as a participant's name, telephone number, address or card details must ensure compliance with the General Data Protection Regulation ("GDPR"). All data should be collected, stored, and processed lawfully in accordance with the GDPR.

It is important to note the requirement under Rule 8.28.5 of the CAP Code which requires companies to either make available or publish information that indicates a valid award took place, ordinarily the surname and county of major prize winners (and if applicable, their winning entries).

It is important therefore that companies inform entrants in the terms, at or before the time of entry the companies' intention to use the entrant's information in this way. This provides the entrant the opportunity to object to their information being published or made available, or to reduce the amount of information published or made available. Even if a participant objects to their information being published publicly, companies must provide details to the ASA on request – and so the promotion T&Cs must make this clear to entrants.

Before releasing any information about a winner, companies must carefully weigh up their obligations under the Data Protection Act 2018 and UK GDPR to keep that information private. The privacy of winners must not be prejudiced by the publication of personal information and in limited circumstances promoters may need to comply with a legal requirement not to publish such information. The rules on release of personal data can be very complex, and companies should ensure they receive specialist advice before acting.

Running prize promotions during the Euros can be a highly effective marketing strategy, but it requires careful planning and adherence to the legal requirements. By complying with the CAP Code, drafting clear terms and conditions, and understanding whether your business is caught under the Act, businesses can administer successful and legally sound prize draws and competitions.

At Brodies, we have extensive experience of advising on a wide range of sports and advertising issues. Should you wish to discuss anything raised in this article, please contact Andy Nolan, Catriona Salton, and Clare O'Toole or your usual Brodies contact.

Contributors

Andy Nolan

Partner

Clare O'Toole

Solicitor

Catriona Salton

Solicitor

Ally Burr

Associate

Calum Lavery

Senior Solicitor