Running free competitions in Australia can be a fantastic way to grow your brand, build an email list, drive traffic to your website, and reward your customers.
But “free” doesn’t mean “no rules”. In Australia, competitions are regulated through a mix of state and territory gaming laws, plus national consumer, spam and privacy rules. If you’re not careful, you can accidentally run an unlawful lottery, make claims that breach the Australian Consumer Law (ACL), or collect customer data in a way that creates privacy risk.
The good news is that most small businesses can run promotions safely and confidently once you understand the key compliance areas and put the right documents in place.
Below is a practical legal checklist you can use to set up your next free competition the right way.
What Counts As A “Free Competition” In Australia?
When people look for free competitions in Australia, they’re usually talking about a promotion where customers can enter without paying (for example, “enter your email to win”). From a legal perspective, what matters is whether the promotion has:
- Prize (something of value is being won)
- Chance (winners are chosen randomly, or luck plays a role)
- Consideration (someone gives something up to enter, usually money, but it can be broader in some contexts)
Different rules can apply depending on how your competition is structured. The two most common categories are:
1) Game Of Skill (Usually Lower Risk)
This is where winners are chosen based on skill, merit, or judgement (for example, “tell us in 25 words or less why you love our product”, judged against clear criteria).
Games of skill are often easier to run because they typically aren’t treated as regulated “gaming” activities in the same way as chance-based draws.
2) Game Of Chance / Prize Draw (Where Approvals May Apply)
This is where winners are chosen randomly (for example, random draw from entries), which can trigger “trade promotion” rules and, in some states/territories, approval or permit requirements.
Even if entry is free, a random prize draw may still be regulated.
Be Careful With “Purchase To Enter”
If you require people to buy something to enter, you’re no longer in “free competition” territory (even if the product is fairly priced). Depending on the details, you may be dealing with a trade promotion that’s more regulated, and you’ll need to be particularly careful about advertising, terms, and any permit/approval requirements.
Do You Need A Permit To Run Free Competitions In Australia?
This is one of the most common questions we hear from small businesses. The short answer is: it depends on where you run it, who can enter, and how the winners are chosen.
Permit/approval requirements depend on things like:
- Whether your promotion is a game of chance or a game of skill
- Which state/territory the promotion is run in (and where entrants are located)
- The total prize value
- How the winner is chosen and how the promotion is advertised
As a general rule, most Australian states and territories do not require a permit for a standard “trade promotion lottery” (that is, a business-run promotional prize draw where entry is free). However, some jurisdictions do have additional requirements - and the rules can change over time.
For example, the ACT can require an approval/permit for certain chance-based trade promotions (commonly depending on the total prize value). If you’re running an online promotion open to ACT entrants, that may bring the ACT rules into play even if you’re based elsewhere.
If your promotion looks like a lottery (prize + chance + payment), you can run into serious issues if you don’t structure it correctly.
Even where permits are not required, you still need solid terms and compliance with the ACL.
If you run your promotion online and allow entrants from across Australia, you may need to consider requirements in multiple jurisdictions. This is where businesses often slip up, because they assume “it’s only online” or “it’s free so it’s fine”.
If your promotion is closer to a raffle format (even if it’s for marketing), it’s worth understanding the rules that apply to raffles and trade promotions. Many business owners start with a quick check of raffle laws to spot the red flags early.
Sometimes small businesses run competitions linked to fundraisers, social clubs, community events, or charity partnerships. The legal requirements can change depending on whether it’s a commercial promotion or a fundraising activity (and who is running it).
If you’re operating in a particular state, you may also need to check state-based requirements. For example, if you’re in Queensland, the rules can differ to other regions, so it can help to review raffle laws in Queensland as part of your planning.
A Legal Checklist For Running Free Competitions (Step-By-Step)
Here’s a practical checklist you can use before you hit “post” on your giveaway.
1) Define The Competition Type (Skill vs Chance)
Start by writing down:
- How people enter
- Whether entry is truly free (including whether a purchase is required)
- How you select winners (judging vs random draw)
- Whether there is any element of luck
If you want to keep things simpler from a gaming law perspective, consider a genuine game of skill with clear judging criteria. But keep in mind: if it’s a “skill” competition in name only (and you still do a random draw), regulators may treat it as chance-based.
2) Confirm Your Eligibility Rules
Eligibility rules are not just admin detail. They’re part of setting expectations and reducing disputes.
Common eligibility settings include:
- Age limits (for example, 18+ if the prize involves alcohol, gambling-adjacent items, or other restricted products)
- Australian residents only (or specific states only)
- Employees/contractors of your business excluded
- One entry per person (or per email address)
If you restrict entry by location (for example, NSW only), be consistent across your ads, entry page, and terms.
3) Make Sure Your Advertising Is Clear And Accurate
Many competition problems come from marketing copy that’s exciting but vague. Under the ACL, your promotion must not be misleading or deceptive.
This matters for things like:
- How you describe the prize (including any conditions, limits, expiry dates, or included/excluded items)
- How you describe the odds or how the winner will be chosen
- Whether you suggest “everyone wins” or “instant win” when that’s not true
It’s worth building your promotion around the principles in misleading or deceptive conduct so your campaign doesn’t accidentally overpromise.
4) Check Your Prize Value, Supply, And Delivery Plan
Before launching, be confident you can actually deliver the prize exactly as advertised. Think about:
- Stock availability (especially if the prize is your own product)
- Shipping costs (who pays, and where you will ship)
- Timing (when you’ll announce the winner and when the prize will be delivered)
- Substitution rights (whether you’ll reserve the right to swap the prize if unavailable)
If you intend to reserve the right to substitute prizes, make sure that’s clearly stated in the terms and done fairly.
5) Decide Whether You’ll Use “Bonus Entries” (And Be Careful)
Bonus entries can be effective (for example, “get an extra entry if you refer a friend” or “extra entry if you follow us on social media”). But they can create compliance issues if the promotion stops being genuinely “free” or if the mechanics aren’t clear.
If you’re offering multiple entry pathways, spell them out so entrants understand what actions are required and how many entries they receive.
6) Put A Clear Paper Trail In Place
You should be able to show:
- When the competition opened and closed
- The entry list (exportable, time-stamped if possible)
- The draw or judging process
- How you contacted the winner
- How the prize was delivered
This helps if a customer complains, if the winner disputes the result, or if a platform requests evidence of the outcome.
What Terms, Policies, And Legal Documents Do You Need?
If you want to run free competitions professionally, the biggest risk reducer is having clear, fit-for-purpose legal terms. This is where many small businesses try to copy-paste terms from a template they found online, only to discover it doesn’t match what they’re actually doing.
Competition Terms And Conditions
Your competition terms should cover the essentials, including:
- Promoter details (who is running the competition)
- Entry period (start/end dates and times, including time zone)
- Eligibility and entry limits
- How to enter (and what counts as a valid entry)
- Prize details and total prize value
- How winners are chosen (judging criteria or random draw method)
- Winner notification and redraw rules (for unclaimed prizes)
- Any liability limitations (carefully drafted)
- Privacy collection details (what info you collect and why)
For many businesses, it’s sensible to have dedicated Competition Terms & Conditions that match the specific mechanics of your promotion (rather than relying on generic website terms).
Privacy Compliance (Especially If You’re Collecting Emails)
Most free competitions are designed to collect personal information (like name, email address, phone number, mailing address, or social media handle).
Privacy obligations can apply in different ways depending on your business. For example, some small businesses may be covered by the small business exemption under the Privacy Act 1988 (Cth) (often where annual turnover is $3 million or less). However, there are important exceptions (including where a business trades in personal information), and even if you are exempt, privacy compliance is still a major practical risk area (including complaints, platform requirements, and customer trust).
If you’re collecting and using personal information, you should be clear about:
- What you collect
- Why you collect it (for example, to administer the competition, contact the winner, and send marketing if the entrant opts in)
- Who you share it with (for example, fulfilment partners)
- How people can access or correct their information
In practice, this usually means providing a clear privacy statement at the point of collection (often called an “APP collection notice”) and linking to a proper Privacy Policy, particularly if you’re running promotions through a website landing page.
Email And SMS Marketing Rules
If your competition entry includes signing up to marketing (or you plan to follow up with entrants), you’ll also want to consider your obligations under Australian spam rules.
As a general rule, you’ll want clear consent and an easy unsubscribe process. The rules around consent and marketing content are commonly addressed in email marketing laws.
Tip: a safer approach is to separate “enter the competition” from “subscribe to marketing”, so people can enter without being forced into ongoing marketing (and those who opt in are genuinely interested).
If the competition runs through your website, your website terms can support the overall framework (for example, acceptable use rules and limits on access). However, your competition terms should still be the main document governing entry and winner selection.
Common Legal Pitfalls With Free Competitions (And How To Avoid Them)
Even well-meaning promotions can go wrong. Here are some of the issues we often see, and how you can reduce the risk.
Accidentally Running An Illegal Lottery
If your promotion involves a prize, is based on chance, and requires payment (including “purchase to enter”), you may be operating in regulated territory.
If you want a chance-based draw but also want to keep entry accessible, consider including a genuinely free entry method, and make sure your terms and advertising are consistent with how the promotion actually works.
Unclear Prize Conditions
If the prize has limitations (expiry dates, blackout periods, limited sizes/colours, or additional costs), disclose them upfront. Surprising the winner later is a common trigger for complaints and reputational damage.
Misleading “Free” Claims
If you describe something as “free”, it should not hide unavoidable costs. For example, if the winner must pay shipping, that should be disclosed clearly.
Similarly, if you run a promotion that includes discounted pricing, bundles, or value claims, make sure your pricing statements are accurate and easy to understand. This is closely connected to advertised price laws.
Not Awarding The Prize As Promised
Changing the rules mid-way, refusing to award the prize, or selecting winners differently from what you advertised can create legal risk and customer backlash.
If you need flexibility (for example, if a prize becomes unavailable), build that into your terms upfront in a fair and transparent way.
Using Entrant Content Without Permission
If your competition asks people to submit photos, videos, testimonials, or creative entries, don’t assume you automatically have the right to use that content in your marketing.
Your terms should clearly address what rights you receive (for example, a permission for you to repost entries), and whether you’ll credit entrants.
Key Takeaways
- Running free competitions in Australia can be a powerful marketing tool, but “free” doesn’t remove your legal obligations.
- Start by identifying whether your promotion is a game of skill or a game of chance, because this can affect whether permits/approvals and gaming rules apply (especially if the promotion is open to entrants in multiple states and territories).
- Make your advertising clear and accurate, and avoid any claims that could be misleading under the ACL.
- Put tailored Competition Terms & Conditions in place so entrants understand eligibility, entry mechanics, winner selection, and prize conditions.
- If you collect emails or other personal information, align the competition with your Privacy Policy, provide a clear collection notice, and make sure your marketing consent process complies with spam rules.
- Keeping records of the draw/judging process and winner notification helps protect your business if complaints arise.
If you’d like a consultation on running free competitions for your small business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
