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When planning an online competition for a game of skill for your business, it can be confusing discerning what regulations you have to abide by. You must comply with these regulations to ensure that your competition is lawful and can go ahead. This article will outline:

  • the difference between a game of skill and a game of chance; 
  • the prize regulations you are to comply with; and
  • the terms and conditions you should cover when organising an online competition for a game of skill in New Zealand.

Game of Skill or Game of Chance?

An online game of skill refers to a game where the player’s skill determines the outcome, whether mental or physical, rather than chance. The following are examples of online skill-based games:

  • strategy games, such as League of Legends; 
  • card games, such as bridge; or 
  • puzzles. 

In contrast, a game of chance is a game in which:

  • a direct payment or an indirect purchase is paid to participate;
  • it is played to win money or something of value; and
  • the outcome depends either completely or partially on chance. 

A game of chance is another term for gambling. Gambling includes:

  • betting, such as placing bets on racehorses;
  • lotteries; 
  • gaming machines; and 
  • games such as poker or blackjack. 

Your contest must be a game of skill, rather than a game of chance. If your online competition involves any element of gambling, it will be deemed to be remote interactive gambling. 

Remote interactive gambling refers to a game of chance or gambling played at a distance by some communication device, or through the conduct of another person. Remote interactive gambling is illegal in New Zealand and could result in a conviction and a large fine. 

Prize Regulations 

When you are organising your online competition, you will likely offer the winner or winners a prize. There are two key matters you should keep in mind when choosing and detailing the prize for your competition:

  • whether the prize is appropriate for those entering the competition; and
  • whether the competitors are well informed about the prize.

Appropriate For Participants

When determining what prize you are to award your online competition winner, you should keep in mind the competitors’ demographics. If the prize competition is open to all ages, a weekend trip for one would not be appropriate for a young competitor.

Furthermore, there are certain things that you cannot award as prizes in New Zealand. These prohibited prizes include:

  • firearms; 
  • explosives;
  • restricted weapons;
  • alcohol; and
  • tobacco and tobacco products. 

Clear Outline of the Prize 

As the organiser of a competition, you are under an obligation to not mislead the competitors as to the prize. 

To ensure that you comply with this obligation, you must:

  • clearly state all of the conditions that apply to be eligible to win the competition; 
  • accurately describe the prize that is to be awarded to the winner or winners. If the prize is not real money, you should also disclose the monetary value of the prize;
  • not mislead any competitors as to their chances of winning the competition; and
  • not offer any gifts or prizes that you do not intend to provide.  

Terms and Conditions 

When you are coordinating an online competition, it is crucial that you draft well-constructed terms and conditions. These terms and conditions act as a contract between you, the organiser of the competition, and each competitor. 

The terms and conditions should set out both your obligations and the responsibilities and requirements of the entrants. Each participant should be aware of these terms and agree to these conditions, before competing. The following are matters that you should include in the terms and conditions for your online competition:

  • the guidelines for entrance into the competition. These guidelines will include age, whether the participant has to be from a particular region, how participants should apply and any requisite skills or qualifications for competing;
  • how the competition is to operate. You should clearly outline the rules of the competition and the site, web browser or web browsers that the game will be conducted on;
  • the timeframe for the competition. If your online competition accepts international competitors, you should clarify that any times or dates are in New Zealand Standard Time or NZST; and
  • (if relevant) the judging process for the competition. These matters will include who will judge and the criteria that the judges will be looking at to determine the points and the winner.

Key Takeaways 

Planning an online competition for a game of skill can be an exciting and rewarding endeavour. However, there are certain matters and regulations that your business must comply with, to ensure that your competition can go ahead. When organising your competition, ensure that:

  • it is for a game of skill, not a game of chance;
  • the prize you have chosen is appropriate;
  • you have clearly articulated what the prize is to the competitors; and
  • you have put together a clear and well-drafted terms and conditions.

If you need any assistance in organising a game of skill for an online competition, contact Legalvision’s New Zealand regulatory and compliance lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions 

What is a game of skill?

An online game of skill refers to a game where a judge determines the outcome based on the player’s skill, rather than chance. It can be mental or physical skill.

What is a game of chance?

A game of chance is another term for gambling. A game of chance will usually require money to be paid to enter. The outcome is either completely or mostly determined by chance.

Is online gaming considered gambling? 

Online gambling can be considered gambling if the outcome is mostly or completely determined by chance. If that is the case, the online game will be deemed remote interactive gambling, which is illegal in New Zealand.

Is playing video games online a game of skill?

If the outcome of the video game is determined by the player’s skill rather than chance, it will constitute a game of skill.

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