How to run an art union in NSW
An art union is a lottery where the winners are chosen through a ticket draw. The prize pool must be more than $30,000.
An art union can only be conducted to raise funds for non-profit organisations such as:
- sporting clubs
- social clubs
- registered clubs
- political parties
- trade unions
- incorporated associations.
Art union operators must have written authorisation from the non-profit organisation to raise funds on its behalf. A minimum 30% of the gross proceeds must be paid to the non-profit organisation.
Is an authority required?
To conduct an art union, an authority must be obtained from NSW Fair Trading.
Apply for an authority
The application fee depends on the length of the authority.
Notification of commencement of gaming activity
If the gaming activity requires an authority, the operator must provide a copy of the gaming rules to NSW Fair Trading at least 10 working days before the proposed promotion takes place.
Gaming activities cannot commence until notification is given via this notification form.
Who can play?
Anyone can enter an art union unless they are:
- conducting the gaming activity, including determining who is to win a prize in the gaming activity; or
- involved in the management of any benefiting organisation
Children can participate unless the art union’s rules have an age limit.
There is no maximum total prize value. However, the maximum cash prize that can be awarded as a separate prize mustn’t exceed $30,000.
Prizes can be anything not on the prohibited list:
- a firearm, ammunition, an imitation firearm or a prohibited weapon within the meaning of the Weapons Prohibition Act 1998
- tobacco, smoking or vaping product
- cosmetic surgery and other procedures under Division 1A of Part 3 of the Poisons and Therapeutic Goods Act 1966
- more than 20 litres of liquor with an alcohol content not exceeding 20% by volume or more than 5 litres of liquor with an alcohol content exceeding 20% by volume
- any prize that contravenes any other law of this State or the Commonwealth. For example, the Charitable Fundraising Act 1991 (NSW) and Gaming Machines Act 2001 (NSW)
For real estate prizes, the operator must maintain and insure the property up until the property is transferred to the winner.
The operator must also pay for all expenses involved and comply with all legal obligations relating to the property.
The rules should outline how an unclaimed prize will be dealt with.
- If a prize isn’t claimed within a set period of time it can be forfeited and another draw can take place to determine a new winner. Otherwise, the prize must be preserved until it is awarded to the winner.
- Every reasonable effort must be taken to contact the prize winner. If contact can’t be made, the operator must retain the prize for the time period stated in the rules.
- If no time is specified, the prize must be kept for at least 3 months after the draw. After this, steps may be taken to redetermine a winner.
- Perishable prizes, such as a meat tray, can be disposed of or sold for a reasonable price. The money (after sale or disposal costs) must be held in trust for the winner.
Prize winner notification
The rules of the art union must state:
- how prize winners will be determined, notified and announced
- the period for which prizes will be kept if the winner isn’t present at the draw
- the period for which prizes will be held until they’re awarded to the prize winner
- the circumstances in which a redetermination of prize winners may occur.
If the rules don’t specify a period, the prize winner can’t be redetermined until at least 3 months after the original prize winner was determined.
In these circumstances, unclaimed perishable prizes may be sold or disposed of.
All prizes must be carefully preserved until they are awarded or until they have been disposed of in accordance with Part 4 of the Community Gaming Regulation 2020.
When a prize consists of more than $5,000, if the prize winner requests, you must pay the amount that exceeds $5,000 by electronic transfer. If the prize winner doesn’t request electronic transfer, you must pay the amount exceeding $5,000 in a manner agreed with the prize winner (other than cash).
There is no restriction on who can sell tickets in an art union.
Anyone who sells tickets must return all ticket butts, unsold tickets and the gross proceeds of ticket sales to the operator before the draw takes place.
Tickets should include:
- name of person or organisation conducting the activity
- benefiting organisation (if applicable)
- authority number (if applicable)
A player's right to a prize isn't affected due to an error in the production of tickets or cards.
Changes to the art union
An operator can change how the art union is conducted as long as the change mean the gaming activity is still conducted fairly and impartially.
The operator must notify players of the change or make the information publicly available within a reasonable time before the activity takes place.
Changes may include:
- prizes or prize value
- the date or method prize winners are determined
- the authority holder
- a significant change in the number of tickets
Any substantial change must be reported to NSW Fair Trading by filling out a Changes to Gaming Activity notification form.
The art union rules must be clearly advertised so potential participants can make informed decisions about entering.
Where it’s not possible to publish the rules in an advertisement or on a ticket, the included information must state where the rules can be found such as a website.
Advertising material must not:
- encourage a breach of the law
- depict children participating in the gaming activity
- suggest that winning will be a definite outcome of participating in the gaming activity
- suggest that participating in the gaming activity will definitely improve a person’s financial prospects
If your gaming activity requires an authority, all advertising material must clearly display the authority number.
Legal requirements for organisers and operators of gaming activities.
Unless participation is free, you may incur reasonable expenses for:
- the cost of producing or obtaining the tickets or cards
- advertising and promotion
- hiring or operating a device, or premises
- the cost of prizes, and prize money
- salaries, wages and commission paid to persons assisting in the conduct of the gaming activity
- auditing accounts relating to the gaming activity
- other amounts that, under an authority, a person or organisation is permitted to deduct from money received in connection with the gaming activity.
Commission and remuneration
Generally, funds received from an art union can’t be used for commissions or remuneration. Exemptions apply if:
- the commission or remuneration is for services rendered in connection with the activity, and
- payment is provided under a written agreement with the person or organisation conducting the activity, and
- the agreement specifies the services to be rendered, the commission or remuneration to be provided and the term of the agreement.
Deposit of proceeds
You must deposit proceeds from your gaming activity into an account at an authorised deposit-taking institution no later than 2 business days after the money is received.
Keeping appropriate records is essential to maintain the trust and confidence of the community and the integrity of gaming activities.
All operators must keep records for at least 7 years after the gaming activity ends. Records must include:
- all expenses incurred
- the date on or period during which the art union was conducted
- the date on which prize winners were determined and announced
- prizes offered and their total value
- the gross proceeds
- proceeds paid to the benefiting organisation and the ratio of those proceeds to the gross proceeds received, expressed as a percentage
- prize winner names and contact details and the prizes won
- a statement of the income and expenses related to the art union, including assets and liabilities
- the total amount of money (including donations) received from participants
- the number of tickets generated
- the number of tickets sold or distributed
- the number of unsold tickets
- the names and contact details of all persons who bought tickets in the lottery, as shown on ticket-butts or computer records
If the annual gross proceeds of the art union exceed $250,000, accounts must be audited by a qualified auditor. This includes accounts that relate to receipts and expenses.