When a Promotion Is Not Gambling
When a non-gambling business plans a prize campaign, the first question is whether the planned game is an object of regulation at all. Article 4 gives the way out: games conducted using machines, devices, the internet, the telephone, specially equipped electronic means and other means, in which no element of chance is provided, are not attributed to lotteries, gambling or promotional games. The purpose of such games is the testing or demonstration of the participants’ special knowledge, intellect, dexterity, adroitness or other special ability.
Thus, if the outcome of a competition depends on the participant’s knowledge or skill and chance is excluded, the law does not treat the game as gambling business, and the gaming permit regime does not apply to it. This is the point that settles the legal boundary between a competition and a draw: even a single element of chance transfers the game into the regime of promotional games.
The Regime of Promotional Draws
If the winning in a campaign depends on chance, it falls within the concept of a promotional draw. Article 3 defines it: a promotional draw is a game during which the organiser plays out a prize fund under a publicly published, established rule and conditions. It is conducted for the purpose of the fast and effective sale of a specific type of product or service, and also in the case determined by the Government. The occurrence of a win is a matter of chance and cannot be specially arranged.
For promotional draws the law establishes three characteristic rules: the ticket is issued free of charge; the permit for organising one is issued to the manufacturer of the specific product or service, or to its representative, except in the case determined by the Government; and it is prohibited to impose a fee for participation in the draw in any form. This last rule is violated most often in practice: the “buy and receive a code” model is legitimate, because the price attaches to the product and not to participation, but a direct charge for participation is unlawful.
Its Place in the Permit Catalogue
Article 11 places the organisation of promotional draws as the first item on the list of activities subject to permitting. A permit under this article is issued only to an entrepreneur registered in Georgia, and the permit for organising a promotional draw is issued for a term of 1 year. This means that a prize campaign of a non-gambling business in which an element of chance exists still requires a permit procedure: the permit is issued to the manufacturer or its representative, and every new stage proceeds with separate consent.
The Government’s special capacity also sits here: the law provides that the Government may entrust the conduct of promotional draws to the Revenue Service — in that case the procedure and conditions of conduct and the prize fund are determined by the Government. This regime has historically been used for socially oriented draws, and its existence must be taken into account when planning a campaign.
Competition or Draw: A Practical Test
Three questions stand before the qualification of a campaign. First: who determines the winner and how — a jury assessing knowledge or skill, or does chance decide? Second: can the participant actually influence the outcome — if not, that is an element of chance. Third: what is the condition of participation — a free ticket with the purchase of a product, or a direct charge? The answers to the first two questions determine the regime; the third determines the campaign’s legality within the chosen regime.
It also matters that mixed models — where part of the stage rests on knowledge and part on chance — often fall entirely into the draw regime, because the final outcome is still a function of chance. Therefore the mechanics of a campaign must be built at the level of the rules so that the element of chance is either fully excluded, or fully acknowledged and subjected to the permit procedure.
Frequently Asked Questions
Does a knowledge competition need a permit?
No, if the element of chance is excluded and the outcome depends on the participant’s knowledge, intellect or dexterity — such a game is not attributed to the list provided by law.
To whom is a promotional draw permit issued?
To the manufacturer of a specific product or service, or to its representative, except in the case determined by the Government; the permit is issued only to an entrepreneur registered in Georgia.
Can a participation fee be charged?
No — charging a fee for participation in a promotional draw in any form is prohibited, and the ticket is issued free of charge.
For what term is a promotional draw permit issued?
For a term of 1 year, and each new stage requires separate consent, so the calendar of a multi-stage campaign must be planned together with the permit term.
How We Help on Legal.ge
We will determine the qualification of your campaign — competition or draw — build the rules so that their regime is clear, and, where necessary, carry the obtaining of the promotional draw permit from the manufacturer’s status to the stage-by-stage consents. Contact us on Legal.ge — the qualification of a prize campaign is exactly where design passes into law.