Two New Zealand men ran illegal text lottery

August 18, 2006

Two New Zealand men, Richard Stuart Hayes and Troy Jonathon Elliot, have been convicted of running an illegal mobile text based competition after 27 winners did not receive the car prizes. The pair were found guilty yesterday in a decision reached by Judge Nicola Mathers in District Court, following a February hearing.

The two convicts, whose names were suppressed until yesterday, are the directors of the company which ran the 'TxtDrive' competition in March 2004, the Watch and Win Company. The company had hoped to gain a profit of 2.5 million, but due to lack of interest and entrants they could not afford to honour the daily prizes as they had only raised $414,595.

"I am satisfied that the (DIA) has proved to me beyond reasonable doubt that Mr Hayes and Mr Elliot organised an illegal lottery. I consider they deliberately entered into the scheme and were careless as to the legality of this novel scheme." Judge Mathers said.

During the 27-day competition, cellphone users had to send a $0.99 text message during television adverts on for the opportunity to win a  car a day or free products from.

Settlements have been reached with the winners; only one received a car.

Hayes and Elliot argued that it was not a lottery but a sales promotion, which means it didn't need to be licensed by the DIA.

Mark Woolford, DIA lawyer, said "Internal Affairs had to prove that the Hayes and Elliot organised the competition, that it was a lottery under the definition of the Gaming and Lotteries Act 1977, and that it was not authorised as a lottery by Internal Affairs."

A sales promotion is defined as "Any competition promoted by a manufacturer, distributor, wholesaler or retailer for the purpose of promoting the sale of goods or services." Judge Mathers said she was satisfied the TxtDrive competition was an illegal lottery.

The two men are to appear back in court on 6 October, they face either a fine of $4,000 or three months in prison under the maximum penalties.