Sweepstakes and Instant Win Games

Giving away prizes at random to a few lucky persons is a tried and true marketing technique. However, despite the popularity of sweepstakes and games, the line between a dynamic, innovative chance promotion and an illegal lottery can quickly become blurry.

Under federal and state law, a lottery consists of prize(s), distributed by chance among those persons who furnish consideration. For its chance promotion to be permissible, a program’s sponsor must neutralize at least one of the three (3) elements. Usually, the element in question is consideration: generally, a burden of some kind imposed on (or the provision of a benefit by) a person who participates in a promotion.

Beyond the lottery issue, a chance promotion must also comply with a variety of consumer disclosure, trade practice and other regulations, making the legal environment murkier still. Florida, New York and Rhode Island mandate the registration of chance promotions, under certain circumstances. A promotion communicated via the Internet may implicate the federal Children's Online Privacy Protection Act, as well as liability issues and other, related concerns that are peculiar to the medium. Depending upon the way it is advertised and structured, a chance promotion offered via mail may be subject to the federal Deceptive Mail Prevention and Enforcement Act and/or the laws of various states, such as Colorado and Texas. Finally, social media promotions must comply with, among other things, promotion guidelines and other terms of service requirements developed by Facebook, Twitter, YouTube and other social media sites.