Qld charities urge crackdown as private prize draws compete for funds

Queensland charities have been lobbying the state government to impose restrictions on private companies they say are undermining their fundraising efforts by running prize draws for profit.

Under state laws, companies can run prize draws to promote their goods and services and reward customers for their loyalty. However, some companies appear to have been established largely for that purpose: rather than sell tickets, they sell memberships – in a car club, for example – which grant free entry into the draw.

Charities including the Endeavour Foundation and yourtown raise funds by running art unions for homes, cars and holidays. They argue the companies that advertise prize draws online are subject to less regulation and may be confused for genuine charities.

Charities are concerned their lottery fundraisers now have to compete with private companies running so-called trade promotions.Credit: Aresna Villanueva

A charity lotteries alliance was in talks with the Queensland government before it went into the caretaker period ahead of the October 26 election.

“These non-charitable entities are a direct threat to Queensland consumers and the capacity of Queensland’s charitable sector to deliver services to some of our state’s most vulnerable,” said alliance spokesman Andrew Thomas, chief executive of the Mater Foundation, which also runs art unions.

“[Alliance] members estimate a loss of some $61.6 million as a direct result of for-profit trade promotion businesses.”

In a statement, the Justice Department confirmed it was an unresolved issue.

“The department is investigating options to address concerns around certain private businesses potentially disguising pay-to-enter games as trade promotions, to the detriment of genuine charities,” it said.

While the ongoing value of club memberships may be questionable, the government last year investigated companies operating out of Queensland and found their activities were “consistent with promotional game requirements under the Act”.

However, trade promotion terms and conditions do not specify the number of entries in each draw, and therefore the chance of winning, or the amount of money made by the company.

While some companies claim to donate to charity, the amounts are often relatively small.

Thomas suggested any change would require “political will”.

“The current regulatory framework for charitable lotteries is robust, provides significant consumer protection and a high level of oversight to government,” he said.

“Unfortunately, the same cannot be said for trade promotions, whose end goal is to profit from generous Queenslanders while flagrantly stripping charitable organisations of desperately needed funds.”

Documents obtained under the Right to Information Act show Queensland’s Liquor and Gambling Reference Group first discussed the issue last year. At the time, it said the government was “considering legislative changes to prevent the exploitation of promotional game laws by private entities who conduct lotteries for major prizes (such as a car or house) in competition with genuine charities”.

Efforts to contact several companies running trade promotions proved unsuccessful.

The alliance is also lobbying other state governments.

The Australian Securities and Investment Commission said it did not have jurisdiction over trade promotions, while the Australian Competition and Consumer Commission said it was largely a state issue.

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