How to run a legal online giveaway

How to run a legal online giveaway

Online giveaways have become a common marketing tool. However, organizing one without complying with the applicable regulations can lead to penalties. In Spain, the legal framework governing online giveaways combines aspects of gaming law, data protection, advertising, e-commerce and taxation.

Below we summarize the basic legal requirements, the most common mistakes, and the key differences between giveaways, contests, and promotional campaigns.

Basic legal requirements for running online giveaways

These are the legal requirements you must meet in order to hold a legal prize draw:

1. Applicable Legal Framework

The main reference in Spain is Law 13/2011 on Gambling Regulation, which distinguishes between licensed games and promotional giveaways that are exempt.

When the giveaway is held online, Law 34/2002 on Information Society Services (LSSI-CE) and Organic Law 3/2018 on Data Protection (LOPDGDD)—together with the EU General Data Protection Regulation (GDPR)—also apply.

In addition, each social network (Instagram, TikTok, Facebook, etc.) has its own promotional policies, which must be followed alongside national law.

2. Promotional giveaways: when authorization is not required

Giveaways organized for advertising or promotional purposes, which are free to enter and do not involve monetary stakes, do not require prior authorization from the Directorate General for the Regulation of Gambling.

However, if participation involves payment, if chance plays a significant economic role, or if direct profit is generated, a specific license may be required.

3. Clear and Accessible Official Rules

The official rules act as a contract between the organizer and participants. They must include:

• Organizer identification.
• Participation requirements.
• Start and end dates.
• Prize description.
• Method for selecting the winner.
• Data protection and image rights.
• Liability, taxation, and complaint procedures.

The rules must be published before the giveaway begins and be easily accessible. For high-value prizes or large-scale campaigns, it is advisable to record the rules before a notary public.

4. Personal data protection

Any collection of personal data must comply with the GDPR and the LOPDGDD. Organizers are required to:

• Inform participants about who processes their data and for what purpose.
• Obtain explicit consent if data will be used in future marketing campaigns.
• Define retention periods and apply appropriate security measures.

If the giveaway takes place on social media, it must be clearly stated that the platform is neither responsible for the data processing nor sponsors the promotion.

5. Tax aspects

Prizes, whether in cash or in kind, may be subject to taxation.

• In promotional giveaways, the Gambling Activities Tax (10%) often applies.
• If the prize value exceeds certain limits, the organizer must withhold and declare the tax to the Spanish Tax Agency.

The rules should clearly state who bears the taxes and expenses related to the prize.

6. Transparency and Winner Announcement

The method for selecting the winner must be objective, transparent, and verifiable.

Organizers may use certified random-draw software or involve a notary.

The results must be communicated in accordance with the published rules, while protecting participants’ privacy and keeping evidence of the process.

Common Mistakes When Running Giveaways on Social Media

Although social media makes giveaways easy to promote, it is also where most legal breaches occur. Some of the most frequent mistakes include:

• Failing to publish or link to the official rules.
• Requiring actions prohibited by the platform (e.g., mass tagging, sharing on personal timelines).
• Not informing users how their personal data will be used.
• Omitting age restrictions or excluding participants arbitrarily.
• Failing to announce results or delivering prizes late.
• Not declaring prizes or addressing tax obligations.
• Suggesting that the social network sponsors or endorses the giveaway.

These mistakes can lead to sanctions from consumer authorities, data protection agencies or even violations of platform terms of service.

Differences between giveaways, contests and promotional campaigns

Although these terms are often used interchangeably, each has different legal implications:

Giveaway

The winner is chosen by chance among participants who meet the entry requirements.

No skill or judgment is involved.

If participation is free and for promotional purposes, no gambling license is required.

Contest

The winner is determined by merit or skill (e.g., creativity, voting, jury decision).

Since chance does not play a role, the Gambling Act does not apply. Instead, advertising and consumer law governs this type of promotion.

Promotional campaign

Aimed directly at advertising or customer loyalty, it may include giveaways, contests, direct gifts, or discounts.

In such cases, organizers must comply with competition, consumer protection, and tax regulations.

Understanding these distinctions is essential to applying the correct legal framework and avoiding liabilities. Organizing an online giveaway is an effective way to engage audiences, but it requires proper legal planning. Complying with rules on official terms, data protection, advertising and taxation not only avoids penalties but also conveys professionalism and transparency.

At LETSLAW, we advise companies, agencies and creators on drafting official giveaway rules, data protection compliance and tax obligations for online sweepstakes. If you’re planning to launch a giveaway or contest, our team can help you do it fully legally and safely.