Lotteries at parties – when we operate legally?

Lotteries are undoubtedly a very effective way to diversify business and marketing events. A pinch of emotions accompanying the selection of a lucky card, number or business card and satisfaction with a possible win can bring nice memories and positive associations with the company commissioning the event. Although such games and plays are common, their organizers are often unaware of the legal risks associated with them.

Definition of gambling

Due to the law in force in Poland, the word “draw” should trigger a warning alarm in the organizer’s head. According to the Gambling Act, a game in which the outcome depends particularly on the case, is a gambling game and its organization involves several obligations and limitations. However, this is not always the case – after all, in many knowledge contests, such as “One of Ten” or “Millionaires”, there is a process of “drawing” the participant or question. Looking at such contests comprehensively, however, it cannot be denied that in the end, winning depends largely on the knowledge of the participant and not on chance. A “draw without gambling” can also be dealt with when participants draw for themselves one prize each – provided that each prize has the same or almost the same value (e.g. only differ in color). Winning in such a case is not due to luck, and the whole game can then be considered as a promotional action.

The line where “gambling” starts is unclear. This has been experienced, among others, by the organizers of once conducted SMS competitions – in which the prize was given to the person who sent the message (e.g. with the correct answer) in the shortest possible time. For many years these games were considered as “knowledge contests” or “reflex contests”, with which no significant problems or formalities were associated. However, due to increasing abuse of these types of games, they have become a matter of interest for public authorities, ultimately leading to the recognition that they are gambling games whose organization requires official authorization.

There was also a lot of controversy over the organization of “fun casinos”, including in particular poker tournaments and blackjack games (the “eyelet”). Following a series of controversial incidents involving poker players and customs inspectors, the prevailing view today is that “casino fun” is not gambling within the meaning of the Act, as long as the game is not competing for cash or in-kind prizes. Symbolic prizes of purely sentimental value, such as diplomas or modest cups, may be considered.

Consent and permission to gamble

But what if we would like to give the participants of our event something more than just a pretend casino or knowledge contest and let them taste the real gambling? Please note that organizing, among other things, cash lotteries and number games (Lotto type) is a state monopoly. Their arrangement by a private entity is therefore prohibited in every case. The games that are within the reach of event organizers are:

• a poker tournament – the organization of which involves only minor formalities (making an entry), provided that the value of the prize pool does not exceed 50% of the value of the so-called base amount (the base amount is a variable value, which is currently less than PLN 5 thousand),
• fantasy lotteries (drawing of winners from persons who have purchased a lottery, prizes exclusively in-kind) or fantasy bingo (playing bingo with prizes exclusively in kind) – which the organization also only requires submission of an application provided that the value of the prize pool does not exceed the base amount; in the case of such games organized by public benefit organizations, the limit is 15 times the base amount (for one game) and 30 times the base amount (for one year).

Notification of the games shall be made to the director of the tax office within whose jurisdiction the games are organized and operated, no later than 30 days before the day on which the game starts. All other games that exceed the above-mentioned limits, as well as, among others, promotional or audiotext lotteries, require a permit, which involves the payment of fees and a long series of formalities.

How to organize a party without legal risk?

There is no doubt that the organization of games with elements of randomness entails some legal risk. Therefore, in controversial cases, it is worthwhile to consult a lawyer in advance. It is also possible to receive an official interpretation of the Minister of Finance on the qualification of a specific game, however, consideration of such an application requires the payment of quite a high fee (twice the base amount).
The case is all the more important as there are severe financial penalties for organizing illegal gambling, both for the organizer and the participants. In the case of games that require notification, the organizer is liable to a fine of up to PLN 10 thousand, and in the absence of a license, the penalties may reach several dozen or even several hundred thousand. In extreme cases, such action may even be punishable by imprisonment, following the Fiscal Penal Code. The penalty threatening participants is primarily the loss of the prize and a possible fine.

To avoid any risk, it is worth considering removing the random element from the game. You can also keep the random element in the game – with no rewards of any real market value. Other play cases always require individual legal analysis. By the way, it should be noted that regardless of the random or non-random nature of the game – its performance practically always involves the processing of personal data. Therefore, in such cases, it is always necessary to remember about the requirements of FAMILY, including in particular the obligation to secure personal data, which in the case of events is a particularly difficult challenge.

A chance to liberalize the rules?

Polish gambling regulations are strict without limestone compared to other countries. Perhaps this is the reason for the misconception that the organization of small games of chance does not require any formalities. After all, e.g. in many Western films, we see the characters organizing such games even spontaneously (e.g. when promoting a newly opened shop or for charity purposes).

Not so long ago there was a spark of hope that Poland would also move towards more liberal standards. The judgment of the Provincial Administrative Court in Łódź of 8 February 2019 stated that in the case of a game where prizes in kind are issued but participants enter the game completely free of charge (i.e. without the need to buy a ticket or a promotional product), e.g. solely for ‘liking’ the organizer’s profile on a social networking site, we are not dealing with a game covered by the obligations of the Gambling Act. This ruling certainly contains a very bold interpretation of the regulations, as the Gambling Act lacks an explicit statement that completely free games do not require any permits. Therefore, it is worth waiting whether this ruling will not be overturned or whether decisions and rulings against it will be issued. However, there is a chance that soon, the organization of such free random games, e.g. at events and social networking sites, will be permitted without strict statutory obligations and limits. Such an interpretation has a logical justification. It seems that a game in which participation does not generate a risk of loss on the part of the participant should not be subject to special supervision.

The article was published in “Think MICE” magazine.