Definition and Scope
the Competitions standard governs competitions, prizes, and promotional incentives offered by Islamic financial institutions to their customers. The standard establishes the Shari'ah framework that distinguishes permissible customer rewards from impermissible gambling. Its scope covers: 1. Prize draws linked to banking products (savings accounts, credit cards, deposits) 2. Achievement-based competitions and loyalty rewards 3. Knowledge-based competitions and quizzes 4. Promotional gifts and incentives The standard does NOT cover profit distributions on investment accounts (governed by Mudarabah standards) or Zakat-related distributions.
Shari'ah Basis: Ju'alah (Reward Contract)
The Shari'ah foundation for permissible competitions is the contract of Ju'alah (جعالة) — a unilateral promise of reward for the performance of a specified task. In classical Fiqh, Ju'alah is exemplified by saying "whoever finds my lost camel shall receive 100 dirhams." The key features are: • The reward is offered for a specific, identifiable action — not for mere participation or luck • The offeror (the bank) is bound by its promise once the participant completes the required action • The participant is NOT bound — they may choose not to participate • The task must be lawful and clearly defined Ju'alah provides the legal basis for competitions because it ties the reward to achievement or effort, not to chance. This is the fundamental distinction from Maysir (gambling), where gain or loss depends entirely on luck.
Permissibility Conditions (the Competitions standard, -3)
For a competition or prize scheme to be Shari'ah-compliant, ALL of the following conditions must be met: 1. Selection Based on Objective Criteria: Winners must be selected based on measurable, objective criteria — NOT pure chance or random selection. The criteria may include deposit size, account activity, tenure, or knowledge demonstration. The selection method must be verifiable and auditable. 2. Customer Action Required: Participants must perform a meaningful action to become eligible. Examples include maintaining a minimum deposit balance for a specified period, opening a new account, achieving a savings target, or completing a financial literacy quiz. Passive eligibility (being a customer with no additional action) is insufficient. 3. Transparency in Rules and Selection Process: The competition rules, eligibility criteria, selection method, prize details, and timeline must be clearly communicated to all potential participants BEFORE the competition begins. Hidden terms or post-hoc changes to selection criteria are prohibited. 4. No Entry Fee Constituting a Gambling Stake: Participants must NOT be required to pay a fee to enter the competition. If a fee is charged, it transforms the arrangement from Ju'alah (reward for action) into Maysir (gambling — paying money for a chance to win more money). The prohibition applies regardless of what the fee is called (entry fee, registration fee, processing fee).
Types of Permissible Structures
the Competitions standard recognizes several categories of permissible competition and prize structures: 1. Achievement-Based Rewards: The bank rewards the customer who achieves the highest measurable outcome. Examples: the customer with the largest savings deposit at quarter-end wins a prize; the most active mobile banking user (by transaction count) receives a reward; the customer who refers the most new accounts earns a bonus. Selection is entirely objective and merit-based. 2. Action-Based Entry: The bank defines a specific action that qualifies customers for a prize pool. Examples: "Open 5 accounts during the campaign period and become eligible for a prize draw"; "Maintain a minimum balance of $10,000 for 90 consecutive days to qualify." The draw element is permissible because the ENTRY requires meaningful customer action — the draw simply selects among qualified participants who all met the objective threshold. 3. Knowledge Competitions: Quiz-based or skill-based competitions where winners are determined by correct answers, speed, or demonstrated knowledge. Examples: Islamic finance trivia contests, financial literacy quizzes for customers, educational challenges linked to the bank's products. These are the most clearly permissible because the outcome depends entirely on the participant's effort and knowledge.
Impermissible Structures
The following structures are prohibited because they constitute Maysir (ميسر, gambling) or violate the conditions above: 1. Pure Random Lottery: A draw where every customer's name is entered automatically and the winner is selected entirely at random. No customer action is required beyond being a customer. This is Maysir because the outcome depends purely on luck, not on any effort, achievement, or skill. 2. Paid Raffle Tickets: Any arrangement where customers pay a fee for a chance to win a prize. Even if the fee is small, the structure is: "pay money → chance to win more money" — this is the classical definition of gambling. It does not matter if proceeds go to charity; the fee-for-chance structure is inherently impermissible. 3. Unclear or Manipulable Selection Criteria: Competitions where the selection criteria are vague, subjective, or can be manipulated by the bank. For example: "the bank's management will select the winner based on overall relationship quality" — this lacks objective measurability and opens the door to favoritism. The Shari'ah board must be able to verify that the selection was genuinely based on the published criteria.
Prize Funding and Source of Prizes
The standard requires that prizes be funded from the bank's own funds (shareholders' equity, retained earnings, or marketing budgets) or through merchant partnerships where a third party sponsors the prize. Critically: • Prizes may NOT be funded from customer deposits or investment account pools — this would mean customers are unknowingly paying for prizes awarded to other customers • The cost of prizes must be treated as a marketing expense on the bank's income statement • Merchant-sponsored prizes (e.g., a car dealership provides the prize vehicle in exchange for brand exposure) are permissible provided the merchant's business is Halal • The Shari'ah board must approve the source of prize funding as part of the competition approval process
Marketing Incentives vs. Gambling: The Line Between Them
The distinction between a permissible marketing incentive and impermissible gambling rests on three tests: Test 1 — Action or Luck? If winning depends on the participant's action (deposit amount, account opening, quiz answers), it is Ju'alah. If winning depends purely on chance (random draw with no qualifying action), it is Maysir. Test 2 — Free or Paid? If participation is free (no entry fee), the Maysir concern is reduced. If the participant must pay money for a chance to win, it is gambling regardless of other features. Test 3 — Transparent or Opaque? If the rules are published, the criteria are objective, and the selection is verifiable, the structure supports permissibility. If the process is hidden, subjective, or manipulable, it fails Shari'ah scrutiny. A competition that passes all three tests is permissible. Failure on ANY single test renders the structure impermissible.