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Running a competition can be an effective way to raise money for your community and showcase local talent. When you offer a prize of some monetary value for the competition, this qualifies as gambling. Therefore, New Zealand gambling laws will apply. The intensity of your requirements will increase as the value of your prize increases, so be sure to look into what laws may apply. In particular, if your prize is over a certain value, you will have competition recordkeeping obligations that you need to meet. It is important to keep a paper trail when dealing with valuable prizes, both for your own organisational purposes and meeting your legal duties under the Gambling Act. This article will explain how prize competitions work and what competition recordkeeping you need to do when running one.  

What Qualifies as a Prize Competition?

The laws you need to follow will vary depending on the kind of gambling activity you want to run. Five kinds of activity will classify as gambling. These are:

  • housie;
  • instant games;
  • lotteries;
  • prize competitions; and 
  • games of chance.

In particular, prize competitions are gambling activities with an element of chance and require participants to exercise some degree of knowledge or skill. A pool of participants pay an entrance fee or similar and enter to compete against each other to win money. Examples of prize competitions include:

  • tagged fishing competitions;
  • sports contests with participants entering a draw;
  • rugby tipping competitions; or
  • calcuttas.

Competitions and Licensing

The Gambling Act requires that you obtain a licence for some kinds of prize competitions before you can go through with them. If your competition meets certain criteria for class 3 gambling, you need to get a licence from the Department of Internal Affairs (DIA). You will also have competition recordkeeping requirements you need to meet based on this class gambling.

Running a Prize Competition

When running a competition, you need to explain its rules and requirements to entrants clearly. Accurately describe the prizes you offer and do not mislead participants. Tickets are the only valid way to enter the competition, and you can only give prizes to those who win. Prizes must be worth at least 20% of the competition’s gross potential income. 

When your society runs a competition, it must be for an authorised purpose. Generally, this means for a charitable purpose or some benefit to a section of the community. You also cannot offer certain kinds of prohibited prizes, such as firearms or alcohol.

Recordkeeping for Prize Competitions

If you are engaging in class 1 or 2 gambling, there are no formal competition recordkeeping requirements. However, if you engage in a class 3 prize competition, you have certain records and auditing standards you need to meet. Even if the event is a one-off, you still need to ensure you keep the necessary accurate records.

You need to produce an audit and prize statement for your relevant prize competition that you should have independently audited. You can find the correct form on the DIA’s website. A chartered accountant needs to prepare this statement, and they cannot directly or indirectly take part in competition running or be a licensed promoter.

If you are giving the proceeds raised from the competition to another society, then you may need to:

  • include a form of verification and consent from the recipient society with your statement;
  • add any extra information from the recipient society about how they use the proceeds; or
  • have a chartered accountant audit the proceeds that the society received.

Once you have drafted this statement after the competition has ended, you need to forward the document to the Secretary for Internal Affairs within three months of the date determining the competition results.

Additionally, when conducting a class 3 prize competition, you need to keep records of all: 

  • butts;
  • unsold tickets;
  • invoices;
  • statements; and
  • all other relevant documents.

You need to keep this information for six months after the date you determine the competition results. The Secretary for Internal Affairs can ask for any of this information as they need during these six months.

Key Takeaways

If you run a prize competition that classifies as class 3 gambling, you need to produce an audit and prize statement and retain various relevant documents. You also need to ensure that you comply with any rules explicitly related to prize competitions. If you would like more information or help with records for your prize competition, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a prize competition?

A prize competition is a game with an element of chance that also requires entrants to execute some level of skill. Participants compete for a monetary prize and pay for tickets to enter the competition.

What records do I need to keep when running a competition?

If you are running a prize competition that is class 3 gambling, then you need to prepare an audit and prize statement. You also need to retain relevant documentation, such as invoices and unsold tickets.

When do I need a gambling licence?

If you are conducting a gambling activity in New Zealand, such as a lottery or competition, you need a licence when the prizes’ total value is higher than $5000, and you have a turnover of $25000 or more.

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