Sweepstake Marketing Strategy. Cash Prize.
Who in this day and age hasn’t received some sort of promotion in the mail or through email claiming that you are eligible to win a cash prize if you sign up for their sweepstake or participate in a contest?
Sweepstakes and contests have become a common marketing strategy whose intent is to focus your attention on a certain product or service. Done correctly, they can be a very effective tool, but there is a fine line, that when crossed, could constitute an illegal lottery.
Promotions using sweepstakes/contests are regulated under both federal and state law. If you are found guilty of conducting an illegal lottery, you can be fined a hefty sum, and possibly receive jail time.
So how do you know if your promotion can constitute an illegal lottery?
This is a very murky area and regulations may vary depending on where the promotion is taking place, so the first and best step would be to consult with an attorney who is knowledgeable in sweepstake and contest law. Having said that, a lottery is typically defined as having the following three components:
- A prize.
- The chance to win that prize.
- A form of payment in order to be eligible to win that prize.
The first step would be to remove at least one of the three components. The second step would be to draft the “contest rules.” These rules must be precise and detailed, using clear-cut language. These contest rules are in de facto, a contract that bind the participant and the sponsor to the agreement within the terms (contest rules). Certain terms and required disclosures must be included and a one size fits all approach to writing contest rules can spell legal disaster. Furthermore, there are jurisdictions that don’t allow contests to begin with. Others require the contest sponsor to put up a bond 30 to 60 days before the contest begins.
Contest rules should always be written by an attorney who understands the nuances of contest law. The rules and the language used need to be specific to your needs.
Until next time, I’m Attorney Francine Ward helping you protect what’s yours. Join my conversation on Law Facebook, Esteemable Acts Facebook Fan Page, Law Twitter,Esteemableacts Twitter, or in one of my LinkedIn groups, Google+ Circles.