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Promotional Sweepstakes

Prohibition of unauthorised money games and exceptions

Swiss law requires a license or concession for money games, i.e. games where there is the prospect of a monetary gain or other monetary advantage in return for a stake of monetary value or the conclusion of a legal transaction (new definition in Art. 3 lit. a of the Federal Act on Money Games, Money Games Act).

Until 2018, when conducting games of chance for advertising purposes (e.g. raffles or fortune wheels), the organizer was always required to offer an equivalent free participation option in addition to participation against a stake. Otherwise, the game qualified as a prohibited lottery.

The new Money Games Act now allows for certain money games even without a license (Art. 1 para. 2 Money Games Act). For example, money games for sales promotion in general (Art. 1 para. 2 lit. d Money Games Act) and money games organised by media companies in particular (lit. e) are permitted without a permit or license. Not all of them, however, are exempt from the requirement of an equivalent free participation option.

Sweepstakes for sales promotion

Every provider (e.g. retailer) may now use lotteries (e.g. one-armed bandits, lottery draws) and games of skill (e.g. goal wall shooting) to promote sales and make participation dependent on the purchase of goods or services, without providing for free participation.

However, the provider may only offer such game for a short time, i.e. the duration of the game must be clearly limited (according to the Federal Office of Justice,"limited duration" means approximately four-to-six weeks, but at the very most six months). Furthermore, the game must not pose a risk of excessive gambling, which is unlikely to be the case with regular customer prize games.

Where participation is linked to a purchase, the price for the goods or services to be purchased may not exceed the usual market price for such goods or services.For example, handing out free raffle tickets at the check-out pointto customers buying the regularly sold products would be in line with the requirement concerning the usual market price.

The aim of the game must be marketing intended to promote customer loyalty or draw attention to the product or brand, meaning the focus must lie on customer activation in order to boosts sales. Swiss law(still) does not permit to conduct such a game in order to generate a profit from the game itself. Further, the promotional game must be a lottery (game of chance) or a game of skill.

Casino games or sports bets may not be used for sales promotion. Such games may only be carried out by authorized organizers. In any event, the new Money Games Act thus opens up new and more flexible possibilities for the use of raffles and sweepstakes for marketing purposes.

Sweepstakes run by media companies

Media companies may also offer promotional games. However, their competitions often differ from the classic sweepstakes for advertising purposes in that a separate stake is required for participation, e.g. a call or text message to a so-called value-added service number with higher charges.

Media companies must therefore continue to offer equivalent free participation in their lotteries (e.g. by providing the legal line: "You can also participate free of charge under www.URL.ch with the same access and participation conditions"...). This means that there must not be an obligation to conclude a legal transaction in order to participate. The average participant must be able to see clearly and unambiguously that the game can also be played for free, with the same chances of winning, regardless of the stake.

The term "media company" in the sense of the Money Games Act broadly refers to companies that produce or distribute journalistic content. The medium used is not relevant. In addition to the press and the film industry, for example, the companies active in the online sector are also included.

In principle, the following activities must be carry out by a provider in order to qualify as a media company in the sense of the Money Games Act:

information with journalistic content (i.e. according to editorial criteria and with content structuring)
publicly (i.e. accessible to all or only to subscribers)
conveyed through a medium (e.g. newspaper, magazine, radio, television, Internet).

An example for such a provider and game would be a daily newspaper publisher organizing a "summer game" with weekly chances of winning a particular prize. However, a company is not considered a provider if the game is only distributed through a medium. This is the case, for example, if a car dealership places an advertisement with a competition in a newspaper.

Requirements for free participation (e.g. for media games)

According to the Federal Council's dispatch to the Money Games Act, "free of charge" also refers to the transmission costs for participation: The free participation in a game may not result in increased transmission fees. Therefore, the possibility of participation via a premium rate number does not fulfil the requirement.

"Free" means that the participation entails, maximum, "normal" transmission fees (e.g. via text message or a call at normal rates or free of charge, via an online form or by postal mail). Moreover, the transmission of the free participation option may not be more expensive than the fee-based participation option.

It appears unproblematic if the medium itself (e.g. an individual edition of a newspaper or a paid television broadcast) has been paid for. Free of charge refers to participation in the game itself. However, requiring the purchase of a membership of a newspaper in order to participate would not be considered free of charge.

Free participation must be communicated clearly and unambiguously and be just as easily accessible as paid participation. It must not have any disadvantages compared to paid participation, e.g. the number of participants must not be more limited. Such equal accessibility is (according to the Federal Council) not provided for when using an outdated technology such as WAP. Until recently, the latter was regularly included in the conditions of participation in Swiss promotional games.

The requirements of the Money Games Act do not apply to competitions without monetary stake (or without the possibility of a monetary advantage as a prize). However, the new law does not make it easier for the media industry to organize monetary games, given that the possibility of free participation is still required.

Marketing requirements for sweepstakes

Additional requirements continue to apply to the design and implementation of sweepstakes:

Conditions of participation and the advertising of the game must be transparent and clear (Art. 2 and 3 of the Federal Act Against Unfair Competition; UCA),
he data protection of the participants must be respected (in particular the Data Protection Act),
any regulations on price indication must be complied with (Price Disclosure Ordinance), and
the redemption of a prize may not be made dependent on the use of a premium rate number subject to charges, the payment of an expense allowance, the purchase of a good or service or the participation in a sales event, advertising trip or another lottery (Art. 3 para. 1 lit. t UCA).

Furthermore, certain products (e.g. spirits) are subject to marketing restrictions and prohibitions and may not be used as prizes or for purchase as a condition of participation.

Network blocking against prohibited online games

The new Money Games Act stipulates that access to online gaming must be blocked if the gaming services offered on websites are not authorized in Switzerland (Art. 86 para. 1 Money Games Act, so-called network blocking).

Telecommunications service providers are now obliged to block access to foreign-based gaming services that are on the blacklist of the Intercantonal Lotteries and Gaming Commission (Comlot) and the Federal Gaming Board (SFGB). Online casinos, sporting bets and big lotteries not licensed in Switzerland and operated by foreign providers are included on the blacklist.

Illegal offers operated from Switzerland may be excluded from the market by ordinary administrative or criminal proceedings and are therefore not subject to network blocking. The purpose of blocking is to protect licensed providers from illegal competition and to protect players from non-transparent and "not socially acceptable" offers. The corresponding "stop site" will be encountered by anyone attempting to access a blacklisted website. The most recently updated blacklists are dated March 17, 2020, and contain over 300 domain names.

Shortly after the new Money Games Act entered into force, some international providers already withdrew from the Swiss market, potentially in light of the threat of being blocked by Swiss telecommunication service providers. The regulation in Swiss gaming law thus showed the deterrent effect intended by the legislator even before the network blocking regime took effect.

One of the main reasons for the criticism broadly expressed in the legislative process aimed at the network blocking regime, questioning its effectiveness, as the network blocking can usually be circumvented by Internet users with only minimal effort and without in-depth technical skills. In addition, the circumvention of the blocking by players is not punishable.

Yet, telecommunications service providers who implement measures and orders to block access cannot be held liable under civil or criminal law for circumvention of the blocking measures by third parties, violation of telecommunications or business secrets or violation of non-contractual or contractual obligations (Art. 91 para. 2 Money Games Act).

With the blocking of access to online money games, Swiss lawmakers have, for the first time, made network blocking,ordered by the state,a legal requirement. The upcoming revised Telecommunications Act (TCA) will also provide for statutory network blocking against prohibited pornography. Repeated attempts (e.g. by the entertainment industry) to provide for corresponding blocking requirements in Swiss copyright law for access providers in case of copyright violations have not yet been successful.

SWITZERLAND

Media-Relevant Aspect Under New Money Games Act: Promotional Sweepstakes and Network Blocking

Written by Delia Fehr-Bosshard & Ann Sofie Benz

Vischer

Ann Sofie Benz

The new Swiss Federal Money Games Act came into force on January 1, 2019. The two sets of provisions that are of particular relevance in terms of media law are the revised, and partly loosened, rules on sweepstakes for promotional purposes, as well as new requirements for the blocking of foreign-based online gambling sites if the gambling services offered are not authorized in Switzerland.