If you’re a small business owner, running a promotion can be one of the fastest ways to build brand awareness, grow your customer list, and increase sales. You might be thinking about a “buy-to-enter” giveaway, a social media competition, or a simple in-store prize draw.
These types of campaigns are commonly called trade promotions in Australia. They can be fantastic for growth - but they’re also an area where small mistakes (like unclear rules, the wrong marketing claims, or missing approvals) can create legal and reputational risk.
This guide is general information only and is not legal advice. Trade promotion requirements can change, and the rules can differ depending on where your entrants are located and how your promotion is structured - so it’s important to check the current position for each relevant state and territory before you launch.
In this guide, we’ll walk you through what trade promotions are, how they work, and the key legal essentials you should keep in mind before you launch.
A trade promotion is a promotional activity run by a business to promote its goods or services, usually by offering prizes or other benefits to customers who enter.
If you’ve been wondering what a trade promotion is, a good way to think about it is: it’s marketing that involves an incentive (often a prize) and an entry mechanic (like purchasing, subscribing, or submitting details).
Trade promotions come in many forms. Here are a few common examples we see small businesses use:
- Purchase-to-enter prize draws: “Spend $50 and go in the draw to win a hamper.”
- Social media giveaways: “Like, follow, and tag a friend to enter.”
- Email subscriber promotions: “Join our mailing list for a chance to win.”
- In-store competitions: “Drop your entry form at the counter.”
- Online competitions: A website form, quiz, or entry page used to collect entries.
This is where things can get confusing. Businesses often use the words “raffle”, “giveaway”, “competition”, and “trade promotion” interchangeably - but legally, they don’t always mean the same thing.
In broad terms:
- Trade promotions are usually run to promote a business and are often regulated under state and territory trade promotion lottery rules (particularly when chance is involved).
- Raffles are often associated with fundraising (for example, charities or community groups), and can fall under separate raffle or gaming rules.
If you’re not sure whether your promotion is more like a raffle or a trade promotion lottery, it’s worth checking your obligations early - the compliance steps can be different. As a starting point, having a read of raffle laws in Australia can help you spot when you may be moving into a more regulated category.
Yes, trade promotions are legal in Australia - but they’re regulated.
The main reason is simple: once you’re offering prizes and collecting entries, you’re in an area that can affect consumers’ purchasing decisions. Regulators want to make sure promotions are fair, transparent, and not misleading.
Game Of Chance vs Game Of Skill
One of the biggest “first questions” is whether your promotion is a game of chance or a game of skill:
- Game of chance: winners are selected randomly (for example, a prize draw). These are often regulated as “trade promotion lotteries”.
- Game of skill: winners are chosen based on merit (for example, “best photo wins” or a judged written answer). These are often treated differently because the outcome isn’t random.
Why does this matter? Because permits and other mandatory requirements are most commonly triggered by promotions that involve chance (especially “purchase-to-enter” prize draws).
State And Territory Rules Matter
Trade promotions in Australia are not regulated under one single national “trade promotions law”. Instead, the rules can differ depending on the state or territory connected to the promotion - and in many cases, that’s where your entrants are located.
That means an online promotion that can be entered Australia-wide may need to comply with multiple sets of rules at once.
It’s also worth remembering that different regulators may be involved depending on the issue. For example, consumer-facing advertising and promotion claims are overseen nationally by the ACCC under the Australian Consumer Law, while trade promotion lottery conditions (including any permit requirements) are typically handled at the state/territory level by the relevant gaming/lotteries regulator or fair trading body.
If you’re planning a promotion and want to reduce risk before you invest in ads, inventory, or prize partners, it can be worth getting operating a competition advice tailored to your promotion mechanics and audience.
A good trade promotion should be easy for customers to understand and easy for you to administer. Legally, the big themes are transparency, fairness, and accuracy in your marketing.
Here are the key legal areas to focus on before you hit “post”.
1. Clear Terms And Conditions (Your “Rules Of Entry”)
Your trade promotion needs written rules - usually published as terms and conditions - setting out how the promotion works.
This is not just best practice. In many cases, it’s a practical necessity to show your promotion is being run fairly, and to protect your business if there’s a dispute about eligibility, prize delivery, or how the winner was chosen.
Typical items to include in trade promotion terms and conditions:
- Promoter details (your business name and ABN/ACN where relevant)
- Entry period (start and end date/time, including time zone)
- Eligibility (age, residency, employee exclusions, etc.)
- How to enter (and whether it’s free, purchase-to-enter, or both)
- Maximum entries (for example, “one entry per person” or “one entry per transaction”)
- Prize details (what the prize is, the value, any limitations, and how it is delivered)
- How and when the winner is selected (random draw vs judging criteria)
- How winners are notified and published (and what happens if the winner can’t be contacted)
- Any permit details (if applicable)
- Liability exclusions (appropriately drafted and consistent with the Australian Consumer Law)
For many small businesses, the most efficient approach is to prepare dedicated competition terms & conditions that match the exact promotion you’re running (rather than copying a generic template that may not match your mechanics).
2. Consumer Law: Don’t Mislead Or Overpromise
Trade promotions are advertising - and advertising is heavily influenced by the Australian Consumer Law (ACL). The ACL applies to most Australian businesses and covers how you market, describe, and sell to customers.
A core rule is that you must not engage in misleading or deceptive conduct. This is broader than “don’t lie”. It includes creating an overall impression that could mislead customers.
In a trade promotion context, common risk areas include:
- Advertising a prize that isn’t actually available in the way customers reasonably expect
- Failing to disclose important conditions (for example, a travel prize that excludes key costs)
- Changing the rules mid-promotion without properly managing the legal risk
- Using unclear entry instructions that cause confusion or unequal chances of winning
It’s also worth keeping Section 18 of the ACL in mind when preparing your campaign messaging. If you want a plain-English breakdown, Section 18 is a good reference point for understanding the “misleading or deceptive conduct” risk that can come up in promotions.
If your trade promotion involves purchase-to-enter (for example, “Spend $30 to enter”), you’ll want to be especially careful about pricing statements.
For example, issues can arise if:
- the advertised price is unclear (for example, hidden fees or add-ons)
- you suggest a discount or “special” price that isn’t genuine
- the promotion encourages a spend threshold but the customer can’t reasonably achieve it due to unclear exclusions
Pricing compliance isn’t just about good marketing - it can be a legal issue too. Having a basic understanding of advertised price laws will help you avoid the most common pitfalls when promotions involve purchases.
4. Permits (When You Might Need One)
Whether you need a permit depends on factors like:
- which state(s) or territory(ies) your promotion reaches
- whether it’s a game of chance or skill
- the total prize pool value
- whether entry is free or tied to purchasing
In many Australian jurisdictions, a permit is not required for standard trade promotion lotteries (including many prize draws), but that is not universal - and the detail can depend on the specific rules in each state/territory, as well as the prize value and how entry works. Some jurisdictions may still require a permit in certain scenarios (for example, above a particular prize pool value), and even where a permit isn’t required there are often mandatory conditions about how the promotion must be run (for example, how winners are drawn, record-keeping, and how unclaimed prizes are handled).
Because permit rules can change and can be jurisdiction-specific, it’s important to check the current requirements based on your promotion’s structure and where entrants are located, and to document the relevant permit number in your terms and conditions if you do need approval.
If you’re planning a national campaign (especially online), you may need to design the promotion to satisfy multiple regulators at once - which is one reason why getting advice early can save a lot of time later.
Many trade promotions are built around collecting customer information - names, emails, phone numbers, shipping addresses, and sometimes even user-generated content like photos or testimonials.
From a legal perspective, you should be clear about:
- what information you’re collecting
- why you’re collecting it (for example, to administer the promotion)
- who you disclose it to (for example, prize fulfilment partners)
- how long you keep it
- whether you will use it for marketing after the promotion ends
If you’re collecting personal information, it’s common to need a Privacy Policy, and you should also think carefully about consent wording (particularly if you’re adding entrants to an email marketing list).
Trade promotions usually involve marketing - sometimes a lot of it. If you’re promoting your campaign via email marketing, you’ll want to ensure your subscription and consent flow is compliant (especially if your promotion encourages sign-ups).
Even well-meaning businesses can get into trouble if they assume “someone entered a giveaway” automatically means “they consented to marketing”. It depends on what you told them at the time of entry, and how you captured consent.
If email is part of your strategy, it’s worth being familiar with email marketing laws so your promotion doesn’t accidentally turn into a compliance headache.
Also, if you’re running the promotion through social media, remember that platforms often have their own rules (for example, requirements about acknowledging the promotion is not sponsored or endorsed by the platform). Those are separate to Australian law - but you still need to follow them to avoid takedowns or account restrictions.
The right documents will depend on the type of promotion you’re running, how entrants participate, and how you’re using customer data. But there are a few documents that come up again and again for Australian small businesses running trade promotions.
- Trade Promotion Terms and Conditions: Your main rules document that sets eligibility, entry mechanics, prize details, draw/judging process, and key legal protections.
- Privacy Policy: Explains how you handle personal information collected during the promotion, including marketing use (if any).
- Consent wording / collection notice: The entry form wording that tells entrants what you’re doing with their data (and whether they’re opting into marketing).
- Supplier or sponsor agreement (if relevant): If a third party is providing prizes or contributing to the campaign, a written agreement can help prevent confusion about who is responsible for what.
- Website terms (if the promotion runs through your site): Helps set expectations about site use, content uploads, and technical issues (particularly for photo/video competitions).
Even if your promotion is relatively small, clear documentation is what makes the campaign easier to run, easier to defend, and easier to scale.
It’s normal to feel a bit overwhelmed when you realise trade promotions involve more than just picking a prize and writing an Instagram caption. The good news is that most promotions can be run smoothly if you plan upfront.
Here’s a practical checklist you can work through before you launch:
- Is it a game of chance (random draw) or game of skill (judged)?
- Is entry free, purchase-based, or both?
- Will entries be accepted Australia-wide?
2. Map Out The Customer Journey
- Where will people see the promotion (Instagram, website, in-store)?
- Where will they enter (DM, online form, email reply)?
- What information do they need to provide?
- How will you store and manage entries?
3. Prepare Clear Rules And Prize Details
- Draft trade promotion terms and conditions that match what you’re actually doing.
- Make sure the prize description is accurate and not “too good to be true”.
- Think through fulfilment: shipping, redemption deadlines, exclusions, and any third-party involvement.
4. Check Permit Requirements Early
- Check the rules for the states/territories where entrants are located.
- If you need a permit, factor in approval time before your launch date.
5. Align Your Marketing With Consumer Law
- Make sure key conditions are visible (not hidden in tiny text or hard-to-find links).
- Avoid confusing or exaggerated claims about prizes, odds, or eligibility.
- If it’s purchase-to-enter, ensure your pricing messages are consistent and compliant.
6. Get Privacy And Consent Right
- Only collect the information you genuinely need.
- Be clear about whether entry also signs them up to marketing (and capture consent properly).
- Ensure your Privacy Policy and entry form wording match.
7. Plan Winner Selection And Record-Keeping
- Set a clear draw/judging date and method.
- Keep records (entries received, how the winner was chosen, winner notification).
- Have a process for unclaimed prizes and re-draws (if required).
Trade promotions can be a powerful growth tool - but they work best when your legal foundations are solid, so you can focus on making the campaign successful (instead of putting out fires mid-way through).
Key Takeaways
- Trade promotions are promotional campaigns run by businesses that offer prizes or incentives to encourage engagement, leads, or sales.
- In Australia, trade promotions are regulated, and rules can differ depending on whether your promotion is a game of chance or game of skill, and which states/territories your entrants are in.
- Having clear terms and conditions is one of the most important steps for running a compliant and well-managed promotion.
- Your advertising and promotion messaging should comply with the Australian Consumer Law, including avoiding misleading or deceptive conduct and getting pricing claims right.
- If your promotion collects personal information (especially online), you should address privacy and consent properly, including having an appropriate Privacy Policy.
- Because requirements can change and differ between jurisdictions, it’s important to check current state and territory rules (including whether any permits apply) before launch.
If you’d like a consultation on setting up trade promotions for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
