Oct 10 2019

International Sweepstakes

The organization of sweepstakes through Internet and Social Networks like Instagram or Facebook is one of the marketing resources most used by advertisers and media agencies to capture leads.

In fact, this is a very useful method to strengthen your company brand and get more visibility between the users.

However, we should consider that it is very important to respect the normative all around the world if we want to get our Brand safe before our competence and the different authorities.

In this article we will expose the main legal issues you must consider in this area.

What should be keeping in mind when you are doing international Sweeptakes?

The organizer must bear in mind that it is necessary to comply with the law established in each country for the organization of international sweepstakes.

Therefore, in the event that the scope of organization of the draw or contest is at the international level, must study and comply with the legal requirements of each country to conduct them.

Likewise, it must be taken into account that if the promotion is developed or disseminated in a social network, it must also comply with the specific regulations of the same platform and check how this regulates it through its different policies and conditions.

In relation to the prizes in the event that the winner is non-resident, the provisions of the regulations on income tax for non-residents must be taken into account.

International Sweepstakes & Contest Laws to keep in mind?

For example, it is very important to take into account the privacy law for the users.

At this respect, the new European data protection legislation also affects the development of online sweepstakes and promotions, especially on user consent.

The General Data Protection Regulation offers several options for applying a sound legal basis to data processing.

The most widely used legal basis in the digital environment is consent. Consent is reinforced with this new regulation as it requires that it be: free, specific, informed and unequivocal, consisting of a statement or a clear affirmative action, not admitting tacit consent.

In this sense, and as this regulation has been fully applicable since 25 May 2018, in all sweeptstakes that are held, and in which personal data are collected from participants, the organizers will have to take into account all the requirements established in the General Data Protection Regulations if the sweepstakes is performed for European users.

In accordance with the foregoing, it is necessary to have a Privacy Policy adapted to this regulation which clearly specifies the treatment carried out by the organizer of the data of its users. Likewise, the organiser must have implemented the necessary technical and organisational measures to guarantee the safeguarding of the data processed.

Considerations for international companies doing Sweepstakes in Spain?

After the Law 13/2011, of 27 May, on the Regulation of Gambling (hereinafter, “Law of Gambling”), in the event that a sweepstake is to be organised in Spain without additional fees for participants, that is, if participation is totally free, it is not necessary to obtain an enabling title to carry out this type of activity.

On the other hand, in cases where participation does entail an additional cost for those users who wish to participate, then it will be necessary to comply with certain legal requirements and obtain the relevant licenses.

Another issue that we must take into account when conducting a sweepstake on the Internet is its taxation in Spain.

Under the Gaming Act, promotional sweepstakes in Spain is taxed at a rate of 10% of the value of the prize awarded, provided that the sweepstakes is based on random combinations for advertising or promotional purposes.

That is to say, it would only be taxed in the cases in which randomnes intervenes and not in those cases in which a jury decides the winners (contests).

Letslaw is a law firm focus on digital businesses.