And The Winner Is….

In this article, Kuek Pei Yee examines the laws and guidelines governing promotions, contests and competitions.

 

You walk onto the stage, you beam at the audience and try not to squint as cameras click and hite bulbs flash. You put your hand into the box and pick a token from it, whilst looking into a sea of anxious faces who would have bought numerous tickets hoping to win something. You keep your voice steady as you announce the name of the winner of the Grand Prize. The winner rushes onto the stage, you shake his hand, and you hand him the keys to a brand new car. However, as you turn around, an officer hands you a summons and a big fine. You have been charged for … gambling! The above scenario is a possibility in view of the gaming laws in Malaysia. Many companies may not be aware of such a contingency and hence, the purpose of this article is to look into this aspect of the gaming laws and guidelines that are in force.

 

THE LAW

Under sec. 2 of the Common Gaming Houses Act 1953 (Revised 1983) (“Act”), the term “gaming” with its grammatical variation and cognate expressions means the playing of any game of chance and skill for money or money’s worth and “lottery” includes any game, method, or device whereby money or money’s worth is distributed or allotted in any manner depending upon or to be determined by chance or lot, whether the same be held, drawn, exercised, or managed within or without the Federation.

 

Section 4(1)(h) of the Act provides that any person who conducts in or through any newspaper or periodical publication, or in connection with any trade or business or the sale of any article to the public; any competition in which prizes are offered for forecasts of the result either of a future or past event the result of which is not yet ascertained or generally known; or any other competition success of which does not depend to a substantial degree upon the exercise of skill; shall be guilty of an offence. Based on this provision, it quickly becomes apparent that lucky draws and games in which the winners are determined by chance are prohibited by the gaming laws.

 

GUIDING THE GAMBLERS

The enforcement of the gaming laws in Malaysia come under the purview of the Minister of Finance (“MOF”). Save for lotteries authorised or licensed under the provisions of the Social and Welfare Services Lotteries Board Act 1950, the Lotteries Act 1952 or any sweepstake promoted by a racing club established in Malaysia on the result of a horse race, it is the policy of the government to refrain from issuing any licences or permits allowing lotteries and games of chance to be conducted in Malaysia.

 

In the past, companies or businesses intending to organise or conduct promotions, contests or competitions (“promotions etc.”) were required to submit an application to the MOF for approval.

The methodology or workings of the promotion, contest or competition would be detailed in the application form. The MOF would then consider the applications, and convey their approval or otherwise to the companies or businesses in writing thereafter.

 

 

SELF REGULATION

 

This procedure of seeking MOF’s approval has since been abolished. The MOF is no longer accepting applications and issuing approvals to businesses intending to organise or conduct promotions etc. Instead, a set of guidelines was issued in April 2004, and businesses are now required to abide by these guidelines in undertaking their promotions etc. This essentially means that the businesses now take on the responsibility of ensuring that the promotions etc. are not in contravention of the gaming laws.

 

COMPLIANCE: GAME OF SKILL VS. LUCK

Promotions etc. in which the winners are determined based solely on their skill, creativity and/or knowledge, would pass the compliance test with flying colours. The element of chance should ideally not feature in any part of promotion etc. at all. (However, the examples in the guidelines do set out limited circumstances in which the element of chance may be present.) Games or contests where everyone gets an equal chance without having to make any payment is considered fair game (pardon the pun). This may include the ever popular lucky draw event held during annual dinner functions.

 

On the other hand, promotions etc. that involve (a) division of prizes; (b) a game or process determined by drawing lots or chance; or (c) contribution or consideration, whether direct or indirect, by the participants are likely to be prohibited. The gaming laws and the recent guidelines appear to target companies which are attempting to lure the public to buy their products or frequent their shops by holding competitions or “radio jackpots”. Such activities which may be as subtle as “scratch-n-win” type of contest or as grand as winning a car based on guesswork or randomly picking tickets (which were heavily promoted and sold) could tantamount to a gambling offence.

 

As a general guide businesses may refer to the examples set out in the guidelines issued by the MOF. A brief description of some of the examples of promotions etc. that are allowed or otherwise are found in the adjacent column.

 

THE PRICE OF A CHANCE

Under sec. 4(1)(h) of the Act, anyone found guilty of an offence shall, on conviction, be liable to a fine of not less than RM5,000.00 and not more than RM50,000.00 and shall also be punished with imprisonment for a term not exceeding three years.

 

In view of the grave consequences, it is strongly recommended that you ensure strict compliance with the guidelines issued by the MOF when organising promotions etc. because in the end, whether or not you succeed in evading the enforcement officers is … yet another gamble!

 

PERMITTED CONTESTS AND COMPETITIONS

  • Participants answer questions and write a slogan. All entries are examined. If there is a tie, the winner is determined based on the slogan.
  • Participants mark the position of an object in a photograph. All entries are examined. The entry with the exact location of the object is the winner. If there is no correct entry, the entry with the mark in the location nearest to the object is the winner.
  • Participants answer questions and send in the entries by post within a specified period. Each entry with all the correct answers receives a prize.
  • Customers purchasing goods of a particular value are eligible to select a token, card or coupon from a box, or scratch a card. Each eligible customer receives a prize. The value of the prizes is the same or roughly the same. [The element of chance is allowed as it merely determines the prize received by an eligible customer, and not whether the customer would receive a prize at all.]
  • Participants attend a photo shoot at a specified time and place. The winners are determined by judges based on a set of criteria.
  • Participants display a sticker on their cars. The organiser is to inform the participants of the time and location when they will spot the lucky number (e.g. the 51st car).

 

NOT PERMITTED CONTESTS AND COMPETITIONS

  • Participants answer questions. Entries are picked at random. The entry with all the correct answers receives a prize; or if all entries are examined, and there is a tie, the winner is determined by drawing lots.
  • Coupons signifying prizes are inserted into the packaging of goods. Some coupons do not entitle customers to any prizes, i.e. only lucky customers are entitled to prizes.
  • The public fill up forms. A number of forms are picked by drawing lots. The persons picked receive prizes.
  • Participants predict the outcome of a future competition.
  • Participants guess the number of items in a container or the weight of an item on display.
  • Participants display a sticker on their cars. The organizers spot the cars at random. The cars displaying the stickers win a prize.

 

 

KUEK PEI YEE ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 
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