Sweepstakes Laws & Rules vary widely from State to State. Below we have the most common Laws and Rules. This information is meant to be a reference only and not all-inclusive of the laws and rules that apply to each individual Sweepstakes. You should Always read the Official Rules of any Sweepstakes you are entering. It will give you all the information you need on Eligibility, Prizes, Method of entry and other important rules specific to the individual contest.
General structure of winning a sweepstakes prize
Almost every sweepstakes in the United States offering prizes valued at US$600 or greater will typically follow the following structure outlining the lifetime of a sweepstakes:
Creating the sweepstakes promotion for a sponsor or sponsors;
Advertising the sweepstakes, prize structure, and the official rules;
Opening date for receiving entries;
Closing date for receiving entries;
Drawing date to judge winning entries.
Sweepstakes promotion judges contacting prize winner;
Winner filing publicity release with sponsor’s sweepstakes promotion agency;
Winner filing affidavit of eligibility (compliance with official rules) with sponsor’s sweepstakes promotion agency;
Winner filling any required federal or state tax forms with sponsor’s sweepstakes promotion agency;
Winner receives prize.
By law, the sponsors of sweepstakes must not require the prize winners to pay any shipping or handing charges in order to win or receive their prizes.
Sweepers frequently send out SASE (self-addressed, stamped envelopes) to receive free game pieces, official entry forms, and copies of the official rules that are unique and pertaining to individual sweepstakes promotions.
Above From Wikipedia, the free encyclopedia
Sweepstakes Vs. Lottery and why it matters
THE BASIC LAW : WHAT IS AN ILLEGAL LOTTERY?
A promotion may be characterizedas a lottery if it has all three of the following elements:
A prize; and
Generally, “sweepstakes” (random drawings for a prize) are not classified as lotteries, because they lack consideration (i.e., something of value that the entrant must provide to participate in the sweepstakes). True “contests” (tests of skill), moreover, do not qualify as lotteries, because chance is replaced by ability and effort. Even though a sweepstakes or contest may avoid characterization as an illegal lottery, promotions are nevertheless heavily regulated by state and federal laws. Depending on how a promotion is structured (and what unique issues that structure may raise), determination of the lawfulness of a promotion could require review of the law in each state where a business seeks to undertake the promotion.
Sweepstakes are regulated by both state and federal law. Sweepstakes(typically random drawings for prizes) possess two of the three characteristics of a lottery: chance and a prize. Therefore, to avoid classification as a lottery, a sweepstakes promotion must not involve consideration. Arguably, characterization as an illegal lottery might also be avoided by eliminating the element of a prize. “Amusement” gambling, such as the playing of pinball, is not generally considered gambling, in that the only “prize” awarded is more playing time.
The Consideration Question
State legislatures and courts apply varying rules to determine what is consideration. Valuable consideration generally requires parting with cash or something of marketable value. This is the majority view and the modern view among states. A minority of states, however, apply the view that any benefit to the promoter is consideration.
Effort To Participate
The existence of consideration thus may turn on the amount of effort required to participate in the sweepstakes (and the amount of the potential benefit to the promoter). Consideration is generally not present when the entrant’s efforts are minimal and the promoter’s benefits are restrained. Thus, completing a mail-in entry form, listening to the radio, watching television, completing a simple survey,calling a toll-free number, or going into a store to enter (with no purchase necessary)—these are typically not considered steps that involve consideration.
Does The Entrant Give Something Of Value?
Consideration generally exists if the entrant must give something of value to enter the sweepstakes. The most easily identified or typical form of consideration is a requirement of a purchase or payment to enter the sweepstakes. However, consideration may also be found to exist when an entrant must exert substantial effort or time to participate in the promotion. For example, requiring an entrant to fill out a lengthy marketing questionnaire might constitute a substantial effort. Some states may find consideration to exist if the sponsor of the sweepstakes receives a benefit through the entrant’s efforts, such as a valuable competitive advantage or other economic opportunity.
Is There A “Free” Alternative?
In many cases, there is a way to avoid having a sweepstakes classified as an illegal lottery even when consideration is arguably present: Make an alternative “free” method of entry available. For example, the promoter could permit entrants to send their names on postcards without having to purchase any product or service. Yet another alternative approach is the offering of the promotion only to existing/prior customers. The promotion,in that instance, would not require new consideration for entry, and thus arguably would not contain the consideration element that could make the promotion a lottery.
Must Not Be Unduly Burdensome
The “free” entry form must not be unduly burdensome. In Seattle Times Co. v. Tielsch, 495 P.2d 1366(Wash. 1972), the court noted that, even though participants were not required to make a purchase, they were required to spend hours in following a football forecasting contest. The court held that the requirement of consideration was met, because participants were required to do something that they would not otherwise do, and because there was an arguable benefit to the promoter.
Moreover, an “equal dignity” requirement applies. There can be no discrimination in treatment of sweepstakes entrants. Those who give some consideration to enter, either by making a payment or by exerting significant effort, may not be treated differently,or more favorably, than those who do not provide consideration. The odds of winning must be substantially similar for both. If the two groups are treated differently, the differential could create pressure for entrants to give consideration, and thus might transform the sweepstakes into an illegal lottery. Trivial differences (such as the requirement of mail-in postage for free entries, versus in-store entries) in most instances will not violate the “equal dignity” rule. In Glick v. MTV Networks, 796 F. Supp.743 (S.D.N.Y. 1992), the court found that consideration was not present, even though participants were required to pay a $2.00 charge to use a “900”number. The court held that the use of the paid telephone system was merely a convenience to the participants, who could have pursued a cost-free entry system made available by the promoter.
Other Concerns About Sweepstakes
In addition to the basic lottery question, government regulators have expressed a host of other concerns about sweepstakes. Sweepstakes, in many instances, are targeted at vulnerable consumers, especially the elderly and poorly educated. Some promotions can create a false impression that a consumer has won something or that the consumer is close to winning. Others may give the false impression that a purchase improves the chances of winning the sweepstakes. To combat these kinds of concerns, some states permit sweepstakes, but require registration of the promotion with one or more government agencies. Some states have laws or regulations that restrict sweepstakes in highly regulated industries. For example, California regulations prohibit alcoholic beverage licensees from conducting promotional contests in which cash prizes are given to consumers. Promotions involving tobacco, weapons, motorfuel, time-shares and financial services (to name only a few) may also be subject to special rules. Additionally, New York and Florida, for example,require registration if the retail value of the prize given away exceeds $5,000 and the sweepstakes is run in connection with sale or advertisement of consumer products or services. In Rhode Island, registration is required if the retail value of the prize exceeds $500 and the sweepstakes is run by a retail establishment to promote its business. Some states may also require a bond from the promoter. If the promoter wishes to avoid these kinds of requirements, the rules of the promotion must specifically prohibit residents of the registration-requiring states from participating in the sweepstakes.
Some states have passed specific laws or regulations that identify information that must be disclosed to potential entrants. Generally, such disclosures must explain the rules (method of entry,eligibility, and method of determining a winner),the odds of winning, the beginning and ending dates of the contest, and where a winners list may be obtained. The identity of the sponsor often must also be disclosed.
Drafting Sweepstakes Rules
Drafting clear rules for sweepstakes promotions can guard against potential problems. The rules(when accepted by the entrant by registration for the promotion) are essentially a contract between the promoter and the participants. The rules lay out the terms and conditions under which the promotion will be conducted. The rules may help shield the promoter from liability. In addition, the rules should be designed to demonstrate compliance with all applicable regulatory requirements.
To a large extent, state regulation of gambling and promotions is highly individual. Thus, in preparing rules, attention to the rules in all jurisdictions where the promotion will be available is essential. Given prevailing legislation and rules in a majority of states, however, sweepstakes rules should generally contain at least the following elements:
A statement that no purchase is necessary to enter or win;
Details of entry procedures;
Any limits on the number of times a person can enter (for example, one entry per person or household);
The closing date of the sweepstakes and any other relevant deadlines