Many entrepreneurs organise so-called consumer competitions as part of promoting the sale of their products or their business. Generally, in relation to consumer competitions, three basic forms may be distinguished, which differ according to their gaming concept (model). Firstly, there is a consumer lottery, which is prohibited; secondly, there is a consumer competition which is subject to regulation by the Lotteries Act (Act No. 202/1990 Coll., on Lotteries and Other Similar Games, as amended) and notification to the competent tax office; and as a third model, it is possible to designate a so-called marketing competition, which is not subject to regulation (the aforementioned terminology is merely indicative and does not derive from legal definitions).

It is usually in the interest of the operator of a consumer competition that his consumer competition should not be conceived in such a way that it constitutes a consumer lottery or a competition subject to regulation by the Lotteries Act and notification to the Ministry of Finance of the Czech Republic.

The provision of Section 1(4) of the Lotteries Act defines consumer lotteries in a relatively complex manner, namely as: (a) competitions, surveys and other prize events in which the operator undertakes to pay out to participants determined by drawing lots or other random selection monetary prizes, savings books, securities, insurance etc. and immovable property, and in which participation is conditional upon the purchase of certain goods, services or other products and proof of such purchase to the operator or the conclusion of a contractual relationship with a provider of goods, services or other products or participation in a promotional or advertising event of the provider or the operator, whether directly or indirectly through another (further) person…; (b) competitions, surveys and other prize events in which the operator, under the aforementioned conditions - that is, the conditions set out in point (a) - “undertakes to provide participants with non-monetary performance, services or prizes in goods and products etc., if the total of all non-monetary prizes for all games operated by the operator expressed in monetary terms exceeds CZK 200,000 in one calendar year and the value of an individual prize exceeds CZK 20,000.”

The provision of Section 1(4) of the Lotteries Act also defines competitions, surveys and other prize events which, whilst not being a consumer lottery, may only be operated on the basis of fulfilment of the notification obligation to the locally competent tax office. These are “competitions, surveys and other prize events … operated by one operator, in which the total of non-monetary prizes for one calendar year does not exceed CZK 200,000 and the value of an individual prize does not exceed CZK 20,000…” Such competitions, surveys and other prize events are subject to the notification obligation if they otherwise satisfy the conditions set out in (b) above.

The gaming concept (model) of a competition which does not fall within the above-mentioned definitions is not subject to regulation by the Lotteries Act and therefore constitutes a so-called marketing competition. The question of whether it is this “unregulated” gaming concept or not should, where appropriate, be consulted with a specialist in this matter.

When organising a consumer competition, the processing of consumers’ personal data will also regularly occur, and in many cases the obtaining of such personal data is indeed the principal purpose of organising the competition. It is therefore necessary to bear in mind also the obligations relating to the processing of personal data (both towards data subjects and other private entities, as well as towards public authorities) and the regulation of relationships relating to the possible sending of commercial communications. We briefly addressed these issues in previous circulars. In the event that the competition is organised by an external entity (advertising agency), it is advisable to properly regulate liability relationships with such person. Last but not least, in connection with the organisation of consumer competitions, it is necessary to pay attention also to tax matters (taxation of prizes).

This text was translated from Czech to English using an AI translator.