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Prize Promotions and Competitions In Singapore

Why use prize promotions and competitions?

Prize promotions (also known as free prize drawings and sweepstakes) and competitions can be invaluable for your business, particularly a new or startup business. There are many reasons your should consider a prize promotion or competition. Prize promotions and competitions can:

• create ‘buzz’ around your product or service;

• encourage people to visit your website;

• help to expand your email list;

• provide your with valuable market research;

• strengthen the relationship between you and your customers.

What laws or regulations apply?

Singapore has many laws regulating gambling, however, prize promotions and contests are specifically excluded from gambling regulations. In Singapore you can legally conduct both prize promotions (also known as sweepstakes) competitions (also called contests). Under the Betting and Sweepstake Duties Act, there may be tax implications for your company or the individual taking part in the promotion or contest.

Promotions

In this context, a promotion will mostly likely be a free prize drawing. Best practices for promotions in which the winner is chosen by chance and a prize is awarded are:

participants do not pay to enter. Payment is interpreted to mean that a participant renders a financial sacrifice in order to obtain a chance to win, except when the amount is irrelevant; and the conditions for participation are clearly and unambiguously stated; and the promotion or prize does not provoke in participants a psychological pressure to buy the promoted product(s) or service(s).

Competition

A competition (contest) where a prize is awarded is legal, even if payment is involved. The winner should be chosen based on skill rather than chance, or not primarily based on chance. A competition is considered primarily based on chance if the determination of the winner and losers is not substantially determined by skill, knowledge, and attentiveness of the participants, but solely or mainly by coincidence.

The conditions for awarding prizes through a promotion or competition should be transparent, meaning, among other things, the information about how winners will be notified must be provided to the participants. Prizes should not be so valuable that participants feel a psychological pressure to buy the product or service. The terms and conditions of the promotion or competition should be displayed.

What are the risks of noncompliance?

Violations of the Betting and Sweepstake Duties Act will generally result in a fine. Upon payment of any fine(s), no further proceedings against offenders will be taken.

Betting and Sweepstake Duties Act