Prize giveaways are relevant throughout the year, but in most cases, the big ones are organized starting in September, so the 2023 prize giveaway season begins.
Prize giveaway is just one of the marketing activities aimed at attracting target group attention. The goal can be increasing sales, increasing interaction with the target group, increasing market visibility - there are many goals and they depend on the Organizer's intention.
Giveaway as Content
From a communication perspective, a prize giveaway is not an end in itself. A prize giveaway is content we place on the market to collect additional information about participants and increase our visibility. Every prize giveaway is accompanied by a marketing campaign through which we communicate who we are, what we are, what we do, what we sell, what services we provide. But in a way that puts visual and textual presentation of the prize that can be won in the foreground if some symbolic condition is met. Everyone on this planet loves to get something 🙂.
When purchasing "ZZ" brand products you can participate in the Prize Giveaway and win an "XX device". If you want to participate in the prize giveaway, fill in the data... Winner drawing takes place... The prize giveaway and its Prize Fund are just "content" that helps you communicate with the market to attract attention. To be successful, it still needs to be supported by a properly set campaign.
GDPR - For all collected data, it's important to have Participant consent!
Giveaway in Financial Terms
Financially speaking, the cost of the Prize Giveaway is borne by the Organizer itself or several of them if the Prize Giveaway is organized in cooperation with multiple Organizers (companies). The cost of the Prize Giveaway is reflected in the value of the Prize Fund. The cost must be clearly stated for each item (prize) on the prize list within the Prize Giveaway Rules. Also, the Organizer pays a fee of 5% on the determined Prize Fund amount and pays it to the Croatian Red Cross.
In addition to the mentioned cost of prizes themselves, 5% fee for CRC and potentially Notary Public cost, we also have marketing campaign cost for which it's important to define a budget. Of course, also weigh which communication channel will help us most attract attention. Usually it's a combination of multiple channels in a precisely defined time period.
Giveaway in Legal Framework
Legally speaking, this year on 1.1.2023, an amendment to the Gambling Act came into force since we entered the monetary union and our official currency is now €. Since then, Gambling Act NN 87/09, 35/13, 158/13, 41/14, 143/14, 114/22 comes into force, you can read more here.
Although the Gambling Act states that the Minister of Finance will prescribe Rules on organizing prize giveaways, currently only the one from 2010 NN 8/10 is available and the currency is still HRK with incorrect indication that stamps are needed. When applying through e-Tax, there is no need to pay stamps.
Regarding additional rules required by the Law, here are some key guidelines:
- The Prize Giveaway Organizer must submit the Prize Giveaway Rules and proof of payment to the Tax Administration (5% CRC) no later than 15 days before the start of the Prize Giveaway.
- Since last year, it's no longer necessary to submit Rules to Tax in physical form, but the application can be made online through e-Tax, exact instructions are here.
- Prize giveaway rules, in accordance with Gambling Act regulations, are determined by the Organizer and apply after receiving approval from the Ministry of Finance and their publication in electronic and other public media.
- The Prize Giveaway Organizer cannot form a prize fund with Participant payments.
- The Prize Giveaway prize fund can consist exclusively of goods and services that the Winner cannot exchange for money, and whose total value at market prices cannot exceed 132,722.81 euros per prize giveaway.
- If the prize fund worth more than 663.61 euros after the end of the Prize Giveaway has not been distributed, the Organizer is obliged to sell it at public tender, and pay the proceeds from the sale to the state budget within 90 days from the expiration of the prize collection deadline. Exceptionally, this provision does not apply to prizes whose value has become void upon expiration of a certain period.
- For prizes whose value exceeds 663.61 euros, confirmation of prize collection by the Winner is required.
- The Prize Giveaway drawing must be attended by a three-member commission which must include a Notary Public if the value of individual prize exceeds 6,636.14 euros, or the former 50,000.00 kuna.
Prize Contest, Giveaway or Giveaway Contest
What does the Law say about prize contests, giveaways or popular giveaway contests?
"A quiz (knowledge game) is not considered a prize giveaway. A quiz (knowledge game), within the meaning of this Act, is a game that takes place in public, in which one or more pre-qualified Participants compete in skill, dexterity and knowledge from various fields according to the Organizer's rules with mandatory Participant presence at the quiz venue, where victory depends exclusively on achieved results in the given topic. One or more pre-qualified players are included in the knowledge game exclusively based on demonstrated skill and dexterity, or knowledge."
Translated, this would mean it's possible to organize a Prize Contest (not use the term Prize Giveaway) without Tax registration. In that case, the Participant of such a contest must be able to reach the prize through their competence or set rules so that every Participant is also a Winner.
Here are several examples:
- First 5 fastest participants win "XY" brand gift package
- Leave us your grass-cutting picture in the comments. Participant with most likes wins a lawnmower.
- Write in comments why you specifically need to win "XY" brand gift package. Participant with most likes on their comment wins the gift package.
- Leave us a picture of your hairstyle in the comments of this post from a chair in our "XY" salon. The picture that collects the most likes wins a free haircut.
- Leave us a picture of your nails in comments on this post. To participate, it's important that the picture is taken in one of our "XY" salons holding our branded cup. Everyone who leaves a picture gets a 10% discount on their next visit.
What is acceptable?
- Like and/or comment on a post
- Post or message on the page
- Like or reaction as a form of voting
What NOT to do:
- Condition sharing the page or post
- Condition Like on one or more pages
- Condition tagging yourself or others on the post When conducting such a Prize Contest, it's important that every Participant has access to the Rules and contest conditions.
Be careful that the Giveaway or Prize Contest doesn't have Prize Giveaway elements because that can put you in an uncomfortable position where you can get fined.
Penalty Provisions of the Gambling Act
"Article 74.
(1) A fine of 660.00 to 66,360.00 euros will be imposed for a misdemeanor on a legal entity:
- who organizes a prize giveaway contrary to provisions of this Act (Article 69.),
- who organizes a prize giveaway without approval of Prize Giveaway rules (Article 69. paragraph 5.),
- who organizes a prize giveaway contrary to rules for which they received Ministry of Finance approval (Article 69. paragraph 5.). (2) For the misdemeanor from paragraph 1 of this Article, responsible person in the legal entity will also be fined 660.00 to 6,630.00 euros.
Article 75. A fine of 660.00 to 6,630.00 euros will be imposed for a misdemeanor on a natural person:
- who organizes a prize giveaway contrary to provisions of this Act (Article 69.),
- who organizes a prize giveaway without approval of Prize Giveaway rules (Article 69. paragraph 5.),
- who organizes a prize giveaway contrary to rules for which they received Ministry of Finance approval (Article 69. paragraph 5.)." Mischka can help you organize a Prize Giveaway or Prize Contest. Get in touch!
