liability ISP

Online prize promotions, sometimes a problem!

Regulations on prize promotions are quite tricky in Italy making their performance a complex puzzle, especially for foreign operators.

Updated on 12 September 2016

It happens more and more that some of my clients come to me and say “I want to launch a prize promotion open to users located in the US and in any European country; it will award $ XXXXXX in prizes, the Ts&Cs are those drafted by my American colleagues. Can you just implement some minor changes that you deem appropriate to comply with Italian law? And by the way, you need to find a solution to avoid to go through all the formalities required by Italian law“.  The answer to this question is not straightforward in most of the cases.

Italian law on prize promotions regulates

  1. prize promotions where the prizes are awarded on the basis of the mere chance or of the ability of the participants (the so called “concorsi a premi“) and
  2. prize promotions where the prizes are awarded to anyone fulfills some requirements (e.g. anyone buys a product, or collects a specific number of coupons etc.) (the so called “operazioni a premio“).

Very strict formalities need to be followed in case of “concorsi a premi” open to Italian residents (even if they are open to participants of other countries as well). Indeed, the organizer of the contest shall:

  • appoint a VAT representative in Italy if this is not an Italian company;
  • draft the Ts&Cs of the prize promotions;
  • post a performance or an insurance bond whose value needs to be equal to the overall value of the prizes offered;
  • send to the Ministry of the Economic Development the Ts&Cs and the performance/ insurance bond at least 15 days before the beginning of the contest;
  • require the presence of a public notary on the selection of the winners (i.e. in case of drawing of the prizes, he will need to be present at the drawing) and on the closure of the prize promotions (i.e. after the delivery of the prizes to the winners, he shall draft the minutes of closure of the contest);
  • send to the Ministry of the Economic Development the minutes of closure of the prize promotions drafted by the public notary; and
  • perform the required tax payments.

Finally, it is very important to consider that Italian law prohibits any prize in cash (i.e. all the prizes need to be in kind) and any entrance fee for contests.

It appears obvious that on the basis of the legal boundaries set forth above, the organisation of online prize promotions open to US residents and all European residents would be almost impossible. The organiser would spend more time and resources in complying with all the local laws requirements than enjoying the benefits of the prize promotions.

This is a relevant issue for online companies and this is the reason why the exceptions to the above mentioned rules are so important.  However, the scope of the exceptions is very narrow and is subject to different interpretations by the Ministry. As a consequence online companies shall seek a case by case review of the prize promotions that they intend to launch.

This is a quite hard issue for advertisers and feel free to contact me, Giulio Coraggio to discuss. Also, if you want to receive my newsletter, please join my LinkedIn Group or my Facebook page. And follow me on TwitterGoogle+ and become one of my friends on LinkedIn.

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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