A sweepstakes promotion is one in which a prize is awarded to a participant on the basis of chance rather than skill. The prize can be monetary or non-monetary. Interested participants must not be required to purchase a product or to invest “considerable” time or effort in order to enter the contest.
All sweepstakes must have official rules and those rules cannot change once the contest has started. Rules must contain the following information:
- * A “No purchase is necessary” statement
- * Start and end dates
- * Eligibility requirements (age, residency, and a list of those excluded from participating)
- * Methods by which people can enter the contest, including a “no purchase” method, such as a 3” x 5” postcard
- * Any limitations on the number of entries per person or household
- * The odds of winning
- * A description of the prize(s) and the monetary value
- * How the winner(s) will be selected and notified
- * Restrictions on receiving the prize(s)
- * The sponsor’s name and address
These are only the most basic considerations. Sweepstakes are also subject to federal and state laws, which can vary greatly. Your legal department or company attorney can assist you in drafting sweepstakes rules, reviewing promotional marketing advertising and winner’s affidavits, analyzing the structure of the game, and ensuring registration and bonding issues have been addressed.
Some states require a sweepstakes sponsor to register the sweepstakes. Florida, New York, and Rhode Island require registration when the total retail value of the prizes is greater than $5,000 (or $500 in Rhode Island for retail store promotions).
Florida and New York require the sponsor to bond the sweepstakes equal to the total value of the prizes. Once the winners are announced, a winners’ list must be provided to the state(s) in order to release the bond.
State laws may require additional disclosures and may vary based on the value of the prizes being offered and the channels through which it is offered. Internet promotions have additional requirements. Records of the prize winners must be retained for a period of no less than four years, and entry materials may also need to be retained. In most instances a list of winners must be posted.
