How to run a sweepstakes on social media legally

How to run a sweepstakes on social media legally

Do you want to run a sweepstakes on social networks and are wondering how to do it legally? In this article we give you all the keys to the legal and fiscal obligations of social media sweepstakes and we tell you how to write the legal rules of your sweepstakes.

Legal and fiscal obligations of social media sweepstakes

The first aspect to consider in relation to the organization of online sweepstakes developed on social networks, or on any digital platform, lies in the existence of onerousness in the participation of users in the sweepstakes.

In other words, if the user must pay an amount of money to participate in the draw, the organizer is legally obliged to request the corresponding authorization for the organization of the draw from the Directorate General for the Regulation of Gambling to be able to carry out this activity.

Once this requirement has been considered, and in cases where participation is free of charge, the organizer will only have to draw up and make available to the participants, in a straightforward and simple manner, a document relating to the legal basis of the prize draw. This must contain all information relating to the organization of and participation in the prize draw.

In this regard, it should be noted that it is not compulsory to notarise legal bases before a notary. However, carrying out this action gives greater credibility and legal certainty to the sweepstakes or promotional action that you decide to carry out.

Likewise, and in relation to data protection obligations, if personal data is requested from users for their participation in the prize draw, the organizer must request consent for the processing of such data for the purpose of correctly managing the user’s participation in the prize draw (and other additional purposes for which it may wish to process such data).

Considering the above, it is usual that in a prize draw organized through social networks, participation does not imply having to provide personal data for each participant, although in the case of the winner, data will have to be requested so that the prize delivery can be correctly managed (such as, for example, name, surname, delivery address, etc.).

In this case, in the data collection form provided for this purpose, an opt-in or tick box must be enabled, which the user must tick to consent to the processing of his/her data for the management of the prize delivery.

On the other hand, and about the tax obligations in the organization of an online sweepstakes where the choice of the winner is based on random systems, it is important to stress that the organizer must pay a gaming tax of 10% of the total value of the prize awarded, the payment of the aforementioned tax being made through form 685.

It should also be borne in mind that prizes from sweepstakes or draws are subject to withholding or payment on account of Personal Income Tax (IRPF) (art. 101 IRPF Law) at the fixed rate of 19%, the amount of which exceeds 300 euros, and that this withholding must be paid by filing the self-assessment form 111 “Withholdings and Payments on Account of IRPF”.

This payment on account may be passed on to the winner or may be assumed by the organizer. However, this aspect must be specified in the legal bases of the draw, so that when the winner is informed of the result of the draw, he/she must be informed that he/she must assume this withholding by submitting form 111 after payment of the amount of the tax by the winner.

Other aspects to be taken into account

In addition to the legal requirements regulated in the current legislation on gambling, the organizer must take into account the content and limitations established in the legal policies of the social network on which the sweepstakes to be organized is to be published (such as, for example, limitations or prohibitions on obliging the participant to carry out certain actions in order to participate).

How to write the legal bases for a prize draw on social media

The wording of the legal bases document of a prize draw must be clear and simple for easy comprehension by the participants, and must contain at least the following information:

• Identification of the organizer of the prize draw.
• Whether participation in the prize draw is free of charge or implies a cost for the user.
• Details of the notarization if the rules have been notarised.
• Territorial scope and participation requirements.
• The dates on which the draw begins and ends.
• Possibility that the organizer may extend the deadlines for participation in the prize draw.
• Description of the prize (estimated market value, characteristics, model, etc.).
• Date and form of communication of the winner and the way the prize will be delivered to the winner.
• Data protection clause indicating the identification of the data controller, the purposes for which the data will be processed, the legitimacy of the processing, the rights that the participant may exercise in relation to his/her data, the period of conservation of the data, whether it will be transferred to third parties, etc.
• Taxation, i.e. to whom income tax deductions are to be made in the event that the prize to be won is worth more than EUR 300.
• Clause for cases of exemption from liability on the part of the organizer about the dynamics of the prize draw.
• Clause for cases in which users may be excluded from participation in the sweepstakes.
• Applicable law and jurisdiction.
• In addition, express authorization must be requested from the participant to transfer their image rights if they wish to publish a photograph of the winner on one of the organizer’s social networks.