How companies roll the dice with competitions, big prizes and long odds

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Mela Lush (centre) is co-founder and major shareholder of job site Jobs for Mums; pictured with co-founders Eva de Pont (left) and Seimoana Naisali (right).
“Chance to win $250,000 with Jobs For Mums!” That’s the catchy banner that runs across the job-search website and service Jobs for Mums.

Auckland-based business owner Mela Lush told the Herald the small company wanted to “do something special for struggling Kiwi families for Christmas”. It also wanted to plump
the site’s registered user numbers.

So Jobs for Mums took a relatively unconventional step. It used the fledgling company’s marketing budget to buy an insurance product called prize indemnity (sometimes called prize or competition insurance), and on November 7 it launched a draw to win … no, scratch that, it launched a draw to enter a draw, with the chance of winning $250,000.
But will anyone actually win? What are the chances of scoring the big prize? And what are the benefits and pitfalls of this kind of marketing?
The company appears to make much of its revenue from tailored services for job seekers looking for flexible working arrangements – the Ministry of Social Development is a major client and has a contract worth $400,000 with Jobs for Mums for the current financial year. Employer organisations also pay a fee to advertise jobs and some pay for recruiting-related help.
Lush described her seven-person operation as a “private company” with a “social purpose”; in particular she aims to promote and increase flexible working arrangements and to raise awareness of what has been called the “motherhood penalty” – the career cost of motherhood.
To enter the stakes, would-be competitors must: register as a jobseeker through the website; follow Jobs for Mums on any of three social media sites: Instagram, Facebook or LinkedIn; and share any competition post, tagging in others or Jobs for Mums.
The competition is structured as a two-tiered draw. Entries close in mid-December, when a single finalist will be randomly drawn from the pool of contestants. That finalist will then enter a second draw, the $250,000 prize for which is underwritten by insurance.
Under the policy, a loss adjuster holds a sealed envelope containing a number between one and 100. The finalist chooses a number, and if it matches the one in the loss adjuster’s envelope, the prize is won. Odds are, it won’t be.
This is spelled out in the contest terms and conditions, now displayed on the company’s website; however, for up to five days after the competition launched, the terms and conditions failed to display. More on that later.
If the big prize is not won, the finalist will receive a relatively modest alternative prize from Jobs for Mums, worth up to $3000 (a seven-day holiday for a family of four). There are also four small “spot prizes”.
Competitors’ odds of winning big are determined by the number of people who enter the competition. Lush told the Herald her site has more than 25,000 registered jobseekers (it launched in 2022), and it’s the company’s first time running a competition, so she’s unsure how many contestants it’ll attract.
If we make a rough guess that the competition attracts 1000 valid entries (one entry per person is allowed) this equates to a one in 1000 chance of winning the first draw. For the winner, there is also a known one in 100 chance of winning the second draw. The estimate produces a one in 100,000 chance (0.001%) of winning the big prize.
How good are those odds? Stu Hartley, owner of Auckland-based underwriter Events Cover, says the average punter is vastly more likely to throw a basket from the centre-court line (one in 25), or hit a hole-in-one on the golf course (one in 12500). But the odds of winning the Jobs for Mums’ big prize beat the odds of some of Lotto’s big jackpots. Lotto NZ puts the odds of a $7 ticket winning First Division at one in 383,838 (prize $1 million), and the odds of a $15 Power Dip ticket winning Powerball at one in 3,838,380 (prize up to $50).
Jobs for Mums contestants make no financial outlay, though they give up time and personal information.
Hartley has been underwriting prize insurance in New Zealand through Events Cover since 2018 – the company works with delegated authority from Lloyd’s of London.
The base cost of the product sits on a simple standard equation, he said: number of attempts, multiplied by the probability of winning, multiplied by the value of the prize.
By this calculation, the base cost of Jobs for Mum’s prize is $2500 (the insurance covers a single attempt and a 1 in 100 chance of winning). Lush declined to disclose the actual price, which, including additional costs and margins, would be considerably higher.
The product is often used in sporting promotions, like ball-kicking contests and golf tournaments. If the odds are known – Hartley said insurance companies have worked them out for a surprising array of feats performed by both amateurs and professionals – insurance can be sold.
Competitions are covered by the Fair Trading Act. They must be described accurately and they must not mislead consumers into thinking that what they stand to gain or win is better than it is.
Lush’s campaign may have been off-side on these rules for up to five days when the competition was advertised and live on the company’s website but its terms and conditions were not displayed – Lush said this was because of a broken hyperlink and the result human error, it was remedied shortly after the Herald contacted the company about it.
“When you run a competition, or other promotion offering gifts or prizes, all the conditions that apply, including any relevant time limits, must be clearly stated,” Vanessa Horne, general manager of competition, fair trading and credit, told the Herald. She noted that only the courts can decide conclusively that a law has been broken.
Two-tiered draws, which are among the most common competition forms that sit above competition insurance, have thrown up problems in the past.
In 2015, the Commerce Commission determined that Amalgamated Holdings Ltd (Event Cinemas) had likely breached section 17(a) of the Fair Trading Act during its “Win $1 million promotion”.
The section essentially says (among other things) that entities promoting gifts or prizes cannot inaccurately describe the gift or prize they intend to supply.
In the case of Event Cinemas, the complaint alleged consumers entering the promotion were not entering a draw to win $1 million as advertised, rather they were entering a draw, where the winners of that draw were given the opportunity to play a game of chance where the odds of winning the $1 million prize were one in 1000.
The commission issued a warning in the Event Cinemas case; it hasn’t brought a prosecution related to competitions and prizes in over 15 years.
Alongside regulatory risk is a more prosaic danger of annoying customers or users with over-egged promotions. Chris Butler is a Nelson-based marketing consultant and director at The Marketing Studio.
”Big prizes can drive excitement and make it attractive for people to get involved … and a big number like $1m has a nice ring to it, but there are a few things to keep in mind,” he said.
”If the competition you’re running is hard to understand and it ends up not being what people expected, that’s a downer and people will feel let down.” Social media, he noted, can amplify disappointment as well as it amplifies excitement.
Lush, who has a background in marketing, is certainly aware that, whatever a company’s intentions, campaigns sometimes misfire. She said she’s learned “valuable lessons” through the competition process, which is still in its early days, and she’d recommend that other businesses considering the option proceed with care.
Kate MacNamara is a South Island-based journalist with a focus on policy, public spending and investigations. She spent a decade at the Canadian Broadcasting Corporation before moving to New Zealand. She joined the Herald in 2020.
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