Sweepstakes Laws, How to Run a Compliant Sweepstakes

Digital promotions such as Sweepstakes are a great way to promote a new product launch, increase engagement on social media and encourage customer loyalty. However, when running a sweepstakes, there are many legal considerations you should be aware of to ensure you are running one that is considered legal.

The most effective way to run legal sweepstakes is to have strong sweepstakes official rules in place that are drafted by a qualified sweepstakes lawyer through a sweepstakes administrator such as Realtime Media. Below are some of the considerations and details that a sweepstakes lawyer will use to draft the sweepstakes official rules.

What’s the Difference Between a Sweepstakes and a Lottery?

The main difference between a sweepstakes and a lottery is whether the method of entry is purchase based or whether there is an AMOE or free means of entry. A lottery, with the exception of state-run lotteries, is illegal and requires a purchase or payment to enter with no guaranteed chance to win. A sweepstakes gives entrants equal consideration and random, fair chances to win and do not require a purchase. If you decide that you’d like to run a sweepstakes, it’s important to have a robust and detailed set of sweepstakes rules in place to help prevent any legal complications or confusion regarding the method(s) of entry.

No Purchase Necessary

One of the most important factors that any sweepstakes lawyer will consider and analyze when drafting sweepstakes rules is whether a purchase is required to enter the promotion. Participants in a sweepstakes cannot be required to pay or provide something of value to enter. This is the distinction between a legal sweepstakes and an illegal lottery. To circumvent this, if there is one method of entry that is purchase based, organizers need to offer a free method of entry, commonly referred to as an AMOE or alternate method of entry. Without an alternate method of entry, your sweepstakes could be in danger of violating United States law.

Why Do I Need Sweepstakes Official Rules?

It is strongly recommended that all sweepstakes be clearly defined and controlled by a set of official rules. The sweepstakes official rules are a set of agreed-upon terms between the sweepstakes sponsor and the entrants and are designed to protect and provide clarity for all parties – both your brand and your consumers. Entering the sweepstakes requires the entrant to agree to the terms outlined in the official rules.

Without sweepstakes official rules drafted by a qualified sweepstakes lawyer, your promotion could potentially violate sweepstakes laws and leave you liable for fines and potential lawsuits. This could turn your marketing promotion into a disaster.

The sweepstakes official rules must outline the following information:

1. No purchase is necessary or there is an AMOE listed as a free method of entry.

One of the most important components of the official rules is a disclaimer that a purchase is not necessary to enter the promotion. The sweepstakes official rules must clearly define an AMOE for entrants, if there is a purchase-based method available.

1. The start and end dates of the promotion.

The sweepstakes official rules must include details of the promotion period as these dates and times determine when entries will be accepted and ensure that it is clear when the promotion starts and ends.

1. Any eligibility requirements for consumers entering.

Prerequisites to entering the promotion must clearly be defined in the official rules. Eligibility requirements can be things like age, location, and any exclusions. Exclusions could be employees, affiliates, or family members of the sweepstakes sponsor or other affiliated teams. There are many nuances to eligibility and our sweepstakes lawyers can help you determine how to structure this for your needs.

1. How to enter the sweepstakes.

The sweepstakes official rules must clearly state how users can enter the promotion across all eligible methods of entry available.

1. Limitations on the number of entries by a user.

Any limitations on entries, such as “one entry per day” must be written in the official rules and enforced. The cumulative number of entries that a user can obtain should also be listed, in many cases.

1. A description and ARV (approximate retail value) of the prize(s)

Rules must include a description of each prize, the approximate retail value for tax and reporting purposes, and any conditions, such as expiration dates or restrictions on prize use. For example, if awarding a vehicle, a winner may need a driver’s license or other documentation.

1. How the sweepstakes winner(s) will be selected.

The selection process of winners must be stated in the sweepstakes official rules, as well as the details of the notification process and the policy on alternate winners.

1. The sweepstakes sponsor’s name and address.

Entrants should be able to find the sweepstakes sponsor and address easily within the official rules.

Sweepstakes Laws by State

This is a very important consideration when you are planning your sweepstakes. Depending on the states where your sweepstakes will run, there may be state-specific legal requirements. For example, in Florida you are legally required to Bond & Register your sweepstakes prize pool, at least 7 days in advance, if it exceeds $5,000. Without a knowledgeable sweepstakes lawyer, you may not understand all the nuances that go into ensuring that your sweepstakes is legally compliant, especially if your promotion is active in multiple states. That is why working with a professional sweepstakes administrator such as RTM can be helpful. Be sure to visit our sweepstakes laws by state blog article for some specific details and to learn more.

How Can I Get Sweepstakes Rules for My Promotion?

Rules are necessary for any sweepstakes or giveaway; they are the foundation of any successful promotion and provide protections and clarity for the sponsor as well as for consumers. That's why it’s important to have them drafted by a sweepstakes administrator and qualified sweepstakes lawyer such as the team here at Realtime Media. Having your rules written by a qualified sweepstakes lawyer will help ensure that you and your company are protected from fines or lawsuits and that the structure of your promotion makes sense with your marketing goals. Additionally, having official rules in place will foster transparency and trust with your target audience. Contact Realtime Media today to inquire about our sweepstakes legal services.