In the organization of sales promotions with delivery of prizes distributed with the play of chance and valid at a national level it must be borne in mind that some provincial jurisdictions have issued regulations that rule their implementation.
I will refer in this work, briefly, to the regulations in force in the provinces of Mendoza, Neuquén, Río Negro, Salta and Tierra del Fuego, which are – according to my experience –from the jurisdictions in which there exist regulations, those that raise most of the advertisers’ questions[1].
• Province of Mendoza.
As set forth by section 284 of the Tax Code of the province of Mendoza, for every contest, competition, raffle or other events of any nature whatsoever, for which implementation any media is used, either print media, radio, television, the Internet, telephone, etc. a tax shall be paid, which rate shall be fixed by the Tax Act.
Artistic, scientific, cultural and sports promotion events are exempted from the tax.
The tax shall be calculated on the value of prizes, and its payment is in charge of the organizer of the promotion.
In contests, competitions, raffles or events which geographical area of development is only the province of Mendoza, the tax shall be calculated on the value of the prizes to be awarded and the rate applicable in 2020 is five percent (5%), the payment of the tax shall be credited prior to their development.
By contrast, in contests, competitions, raffles or events which geographical area of development is in several provinces, provided that there exist establishments in all of them, the tax shall be calculated on the value of the prizes awarded in Mendoza. At present, the rate applicable in this case is seven percent (7%).
On the other hand, section 284 bis of the above referred Code provides that the contests, competitions, raffles or events referred to in section 284, shall be previously authorized by the Control and Enforcement Bureau of the Ministry of Economy (Dirección de Fiscalización y Control del Ministerio de Economía) or the agency that may replace it in the future.
• Province of Neuquén.
On January 8, 2016 the “General Rules of Promotional Operations”, Annex II of the Resolution of the Provincial Institute of Games of Chance (Instituto Provincial de Juegos de Azar (IJAN)) 532/15 (In force according to Revised Text by Resolution IJAN 660/2019) came into force in the province of Neuquén.
The Rules are inspired in the provisions of the currently repealed Resolution of the National Lottery 17/2011 and they set forth the following:
a) In order to organize promotions in the province of Neuquén in which the winners are determined in whole or in part through chance, the legal persons shall register themselves in the IJAN every calendar year.
b) Said Annual Registration requires the presentation of certain documentation and the payment of an administrative fee.
c) The IJAN has a term of sixty (60) running days for the analysis of the documentation mentioned in the preceding paragraph.
d) For each promotion that the organizer intends to launch into the market, it shall pay in addition an administrative fee.
e) Also, for each promotion the organizer shall pay a fee – in addition to the administrative fee mentioned before – equivalent to twenty percent (20%) of the total value of the prizes at stake.
f) Likewise, the organizers of promotions shall pay to the tax authorities of Neuquén a Tax on the Games of Chance and Promotional Games, which rate is twenty-five percent (25%) of the value of the prizes won.
g) The authorization to launch each promotion must be requested at least fifteen (15) days in advance to the information of the mechanism or of the effective date thereof, whichever occurs first.
h) The organizers must guarantee the payment of the offered prizes, plus the amount of fees and taxes by means of a check, promissory note, cash deposit, insurance policy or bank surety.
i) Every act to select winners must be supervised by a notary public.
j) Only natural persons aged 18 may participate in the promotions.
k) The ownership rights of the prizes awarded through the promotion and which winners do not claim them must be transferred by the organizer to the IJAN.
m) Noncompliance with the Rules is punished with fines, shut-down and disqualification. The publication of the punishing order may be decided as a supplementary measure in charge of infringer.
n) Neither an individual authorization of the promotion nor the Annual Registration – either – shall be necessary when the promotions offer prizes which as a whole do not exceed ten thousand (10.000) times the value of the minimum bet of the Traditional Football Pools (Quiniela).
• Province of Rio Negro.
In June 2016 the “General Rules of Commercial Promotions and Products and Services Commercialization Stimulus” (Reglamento General de Promociones Comerciales y de Estímulo de Comercialización de Productos y Servicios), that makes-up the Annex to the provincial decree 575/2016, published in the Official Gazette of the province on May 26, 2016 came into effect in the province of Río Negro.
These General Rules are inspired also in the provisions of the National Lottery Resolution 17/2011 and in the provision of analogous Rules in force in the province of Neuquén and sets forth the following:
a) In order to organize promotions in the province of Río Negro in which the winners are determined in whole or in part through chance, the legal persons shall register themselves in the Lottery for Social Welfare Works of Río Negro every calendar year.
b) Said Annual Registration requires the presentation of certain documentation and the payment of an administrative rate, fixed by the Resolution of the Lottery of Río Negro 817/2016 in five hundred (500) times the amount of the minimum bet of the Traditional Football Pools (Quiniela) of said Lottery, that must be paid when applying for the Annual Registration.
c) The Lottery of Río Negro has a term of sixty (60) running days for the analysis of the documentation mentioned in the preceding paragraph.
d) For each promotion that the organizer intends to launch into the market, it shall pay an administrative fee, fixed by the Resolution of the Lottery of Río Negro 817/2016 in seven percent (7%) of the value of the prizes offered in Río Negro through the promotional activity that must be paid before the granting of the authorization.
e) The authorization to launch each promotion must be requested with at least thirty (30) days anticipation to the information of the promotional activity or of its effective date, whichever occurs first.
f) The organizers must guarantee the payment of the offered prizes plus the amount of fees and taxes, through a promissory note, insurance policy or bank surety.
g) Every act to select winners shall be supervised by a notary public.
h) Only natural persons aged 18 may participate in the promotions.
i) It is forbidden to offer in the promotions prizes in money. Only prizes in kind may be offered.
j) The ownership rights of the awarded prizes and which winners do not claim must be transferred by the organizer to the Lottery of Río Negro.
k) The organizer shall inform to the Lottery of Río Negro the prizes that had been awarded and those effectively paid, enclosing evidence reflecting such facts.
l) Noncompliance with the Rules is punished with fines, and in case of relapse also with arrest.
m) Neither an individual authorization of the promotion nor the payment of the rate of seven percent (7%) mentioned above shall be necessary-but the Annual Registration will be necessary- when the promotions offer prizes which as a whole do not exceed twenty-five thousand (25,000) times the value of the minimum bet of the Traditional Football Pools (Quiniela) determined by the Lottery de Río Negro.
• Province of Salta.
Pursuant to the provisions of the Resolution of the Enforcement Authority of the Games of Chance (Ente Regulador del Juego de Azar) of the Province of Salta -“ENREJA”- 26/05, every kind of commercial promotion carried out in the province of Salta, for products or services, that use events with future and uncertain results – to determine a winner – shall be settled by procedures or resolutions with the play of chance and which purpose is the development of a promotional activity of products, services, shows, etc. shall be previously authorized by the ENREJA.
The promotional contests, competitions, raffles or entertainments for free, which offer prizes that in whole do not exceed one thousand Argentine Pesos (AR$ 1.000) shall be informed to the ENREJA, requiring authorization, but are exempted from every payment for proceedings and supervision and control fee.
The provisions of Resolution ENREJA 26/05 have a strong similarity with the regulations of the repealed Resolution of Lotería Nacional S.E. 17/2011 – even though they are not identical.
Prior to the launching of a promotion, its organizer shall inform the following to the ENREJA:
a) Specification of the promoted products, services or shows.
b) The mass media through which the action shall be developed.
c) Terms and conditions of the contests, raffles or competitions[2],
d) Term in which the awarded prizes shall be paid[3],
e) Means through which the payment of the prizes shall be guaranteed. If prizes are in kind, their market value shall be informed.
f) Procedure whereby the winner or winners of the promotion shall be determined and, as applicable, day, hour and place in which the procedure shall be carried out.
g) Measures that shall be adopted to provide more transparency and security to the procedure for the selection of the winner or winners.
h) Estimation of the program of prizes or of the cost budget, as applicable.
At the time of presentation of the application to obtain the authorization of a promotion, a deposit shall be made to the order of ENREJA as a fee to obtain the application, that shall be discounted from the amount that should be paid later of five percent (5%) of the program of prizes of the game.
In the event that the promotion is authorized, the difference arising from subtracting the deposit mentioned in the preceding paragraph of five percent (5%) to the total amount of the scheduled prizes shall be paid.
Those who participate in the organization of a promotion and the owners of the promoted products or services shall jointly and severally undertake the obligations emerging therefrom, attaching to the presentation of the application for the approval of the promotion the instrument evidencing said circumstance.
The organizer shall inform to the ENREJA, with the frequency and in the manner specified by it, the prizes that had been awarded and those effectively paid, attaching the acknowledgements evidencing said issues, as well as the payment of the tax on prizes set forth by National Act 20.630, when applicable. In each opportunity the list of winners with their personal data shall be submitted.
The awarded prizes that are not effectively paid or delivered to the winners at the expiration of the term provided for in the terms and conditions of the contest, raffle or competition shall be deposited to the order of the appointed beneficiary institution, in the account specified to such end. When the prizes are in kind, its equivalent in cash according to its market value shall be deposited to the order of the beneficiary institution.
The development of every act for the selection of winners shall be supervised by a notary public. A certified copy of the document dawn by the notary public shall be submitted within forty-eight (48) hours following each raffle.
The organizers shall keep a complete list of the winners of the prizes, evidence of their reception and of the non-awarded prizes for three (3) years as from its termination, and available for the enforcement authority.
• Province of Tierra del Fuego.
The law of the province of Tierra del Fuego, Antarctica and South Atlantic Islands N° 409 (published in the Official Gazette of said province on August 7, 1998), sets forth in its section 2nd, as regards what concerns here, that “Every promotion and sale stimulus of commercial products, of services and every advertising promotion carried out by using or proposing to consumers and/or third parties the participation in raffles, chances of any type or prizes for which it is mandatory the acquisition by any means or manner, of goods, tickets, vouchers, coupons or any other type of things, objects or documents that entitle their owners to participate, must be duly authorized by the Provincial Institute of Betting Regulation (Instituto Provincial de Regulación de Apuestas)…”
Annex I of provincial decree 178/12 (Rules for Promotions), in its section 1st, has – again, as regards what concerns us here – a similar wording, although it does not mention the obligatoriness of acquisition by any means or manner, of goods, tickets, vouchers, coupons or any other type of things, objects or documents that entitle their owners to participate.
Even though the wording of the regulation of section 2nd of Act 409 is defective, it is clear – in my opinion – that promotions in which prizes are distributed with the play of chance and in which the acquisition of a product authorizes consumers to participate in the action are comprised in the need to obtain an authorization from the Provincial Institute of Betting Regulation (Instituto Provincial de Regulación de Apuestas-IPRA-).
In other words, when a resident in Tierra del Fuego may participate in a promotional action that distributes prizes, with the play of chance, from that province and in which the purchase of a product authorizes said participation, the promotion shall be authorized by the IPRA.
In order to organize promotions with the play of chance in the province of Tierra del Fuego, it is not necessary to obtain an Annual Authorization.
Promotions carried out in Tierra del Fuego which include “raffles, chances of any type or prizes” shall be previously authorized by the IPRA.
- The authorization for the launch of the promotion must be applied for by submitting a note of the organizer to the IPRA.
- The maximum duration of the action cannot exceed sixty (60) days.
- The maximum value of the prizes at stake in Tierra del Fuego cannot exceed AR$ 100,000, (One hundred thousand Argentine Pesos).
- It must be proved that the organizing company is registered with the Superintendency of Corporations (Inspección General de Justicia).
- A “Debt-free Certificate” issued by the General Revenue Service (Dirección General de Rentas) of the Province of Tierra del Fuego must be submitted.
- The final invoice or invoices evidencing the acquisition of the prizes and the payment vouchers of said invoices must be submitted.
The IPRA requires that the application for authorization be filed with at least sixty (60) days anticipation to the starting date of the mechanism of the promotion.
For each promotion that is intended to be launched in Tierra del Fuego, the organizer shall pay a canon, for a sum equivalent to ten percent (10%) of the market value of the prizes at stake in Tierra del Fuego.
The making of promotions not authorized by the IPRA is punished with the imposition of fines, which amount is equivalent to fifty percent (50%) of the value of the prizes at stake in the province. The fine is gathered with the payment of the charge equivalent to ten percent (10%) of the value of the prizes, that must be paid to apply for the authorization to launch a promotion in said province and which is equally required when the authorization had not been applied for.
The raffle or raffles included in the promotion must be supervised by a notary public.
As it can be seen, the compliance with the provincial regimes referred to above requires the investment not only of time, but also of large amounts of money that, basically must be used to pay rates, fees, charges and taxes.
That is the reason why frequently many advertisers, when organizing promotional actions with prizes distributed with the play of chance, exclude them from one to several or all these jurisdictions.
More flexible regulations and less tax burden would ease the inclusion of the provinces in the geographical area where the promotional actions are in force.
The repeal of the regulations – unnecessary, I believe, because the promotions are sufficiently regulated by national regulations[4] – and the elimination of local rates, fees, charges and taxes that are levied upon them, would cause for sure the “automatic” inclusion of said provinces within the scope of the promotional actions that currently exclude them.
The noticeable desire for the implementation of regulations and probably the voracity for tax collection – seeking the financing of unpayable and ineffective States which grow bigger and bigger every day, – has prevented it up to now and will certainly prevent it in the future.
What a pity!
[1] Other provinces that have issued regulations also, at different times, do not apply them in practice, that is the reason why the interest by said regimes is relatively low and in some cases, null.
[2] The Terms and Conditions shall contain, at least the following:
1. Complete list of prizes to be awarded, specifying the quantity of each of them and the specification of their quality or model, if any.
2. Mathematical probability of the award of prizes, if the adopted procedures allow to know it, and if it is not possible, at least an estimation thereof.
3. Expenses that may appear for the beneficiary of the prizes award.
4. Starting and termination dates of the promotion and its geographical area of development.
5. Complete requirements for the participation.
6. Detailed procedure to award the prizes.
7. Procedures or media through which the award of the prizes shall be informed.
8. Place and date of delivery of the prizes.
9. Intended destination for non-awarded prizes.
[3] Term that cannot exceed thirty (30) running days computed as from the date of determination of the winner; except when the prizes are registrable assets or that should be paid by a third party other than the organizer, pursuant to the terms and conditions of the mechanism of the promotion, which may be extended to sixty (60) running days computed in the same way.
[4] Basically, by the Emergency Decree 274/2019 and its regulatory and supplementary regulations.