Sweepstakes and Competitions
Authors: Hatice Ekici Tağa, Sümeyye Uçar, Bensu Özdemir
Provided that they comply with the relevant legal regulations, chance-based sweepstakes and skill/information/ability-based competitions are generally permissible in Turkey. Principally, sweepstakes are classified as 'cash prize’ and 'non-cash prize’. The General Directorate of the National Lottery Administration ("Administration") is the competent authority to arrange the sweepstakes in both categories. Addition to this, the right to plan, arrange and organize chance-based games for 'cash prize’ belongs solely to the Administration. However, it is possible the plan, organize and arrange of chance-based games for non-cash prizes by persons and institutions with the permission that is obtained from the Administration within the scope of the Regulation of the Turkish General Directorate of National Lottery on Lotteries and Draws with Non-Cash Prizes (“Regulation”).
The purpose of this Regulation is regulating the procedures and principles regarding the protection of the rights and interests of the participants by allowing the arrangement of chance-based games for non-cash prizes, monitoring and controlling them. In this context, if the monetary value of the promised prize is higher than TRY 154.06 (approx. Euro 15) for the year of 2021, it is necessary to obtain legal permission from the Administration for chance-based games with the non-cash prizes.
If the required permission is not obtained from the Administration, promotion and advertisements cannot be made, and a campaign cannot be started regarding sweepstakes. The prize given should not violate other legislative provisions or public orders. In this context, products such as guns and tobacco products cannot be awarded as a prize.
In all kinds of promotions and advertisements of the sweepstakes; the following information must be incorporated:
· Administration’s permission number, and the date when the permission was granted.
· Those under the age of 18 cannot participate and even if they do, they cannot receive the prize.
· The tax and other legal obligations other than the taxes included in the price of the goods and/or services subject to the prizes will be paid by the winners.
In terms of taxes, the winner is responsible for all tax liability associated with the prize. However, sweepstake organizers must pay an inheritance and gift tax of 10% of the total value of prizes on offer. Organizers of competitions, sweepstakes and competitions are responsible for submitting the declaration by the evening of the twentieth day of the month that follows the month when the sweepstake or competition was held. The inheritance and gift tax amount will be requested from the winner and it will be paid by persons organizing the sweepstakes/competitions.
Within the scope of the Regulation, it is obligatory to start the sweepstakes at the address, date and time approved by the Administration and specified in the letter of permission.
The process of selecting winners must be open to the general public to observe, and the winner must be selected in the presence of a Turkish Notary Public and within the framework of the procedures and principles specified in the letter of permission. The results of the sweepstakes will be announced by the organizers as previously communicated to the Administration and the participants. The results of the sweepstakes must be announced and notified to the winners, the announcements must be easily visible and readable by everyone. The prize must be delivered to the winners at the date announced previously, and this period cannot be more than one year after the beginning of the promotion.
Contrary to this, permission of the Administration is not required for the following organizations for which:
· The participants that meet a previously decided criteria are awarded a prize; or
· The entrance fee is not charged, and the competition does not promote or sell a particular good or service; or
· There is not a random draw/lottery occurs, and the winners are selected according to previously specified rules, or
· The winners are selected by means of a draw/lottery held in the presence of all the participants in the competition.
According to the Decree on National Lottery w. no 320, if the organizations that are not in compliance with the relevant rules are arranged, an imprisonment penalty between 2 months to 2 years and a monetary fine from TRY 100,000 to TRY 10,000,000 (approx. Euro 9,700 to 970,000) may be imposed. Additionally, such non-compliant activity may be evaluated in the scope of Consumer Protection Law and may be deemed to be a misleading activity and/or unfair commercial activity. In this case, the relevant authority may apply an administrative fine up to TRY 457,308 (approx. Euro 45,000). Furthermore, the Administration may prohibit the organizer from arranging a prize promotion for two years.