Get The Marketing Benefits Of Sweepstakes
While Minimizing Legal Risk
Sweepstakes, promotions, giveaways, and contests of all forms are seeing exponential growth from companies large and small due to their proven effectiveness in meeting marketing goals. With the widespread use of social media and the proliferation of the influencer marketing ecosystem, promotional strategies involving sweepstakes, giveaways, and contests, among other similar strategies, are being further propelled and widespread due to the strong potential for success. While these kinds of strategies are powerful growth drivers, there are a host of legal risk considerations to account for.
As marketing lawyers at RICHT, we know the value of promotions and help guide clients to see the rewards from their efforts while mitigating legal risk. After all, the laws governing sweepstakes, contests, and lotteries are state-specific, with federal law factored in. For example, New York and other states have nuanced requirements, including potential registration and bonding. Further, depending on the context of the sweepstakes, there are additional ramifications and scrutiny, such as the sweepstakes by Elon Musk in a heated election cycle and subsequent action by a controversial local district attorney.
Understanding Promotions: Lotteries, Sweepstakes, and Contests
Promotions typically revolve around the concept of a prize. When a prize is offered alongside some form of consideration for entry and chance, it constitutes a lottery. Conversely, if there is no consideration involved but winners are selected by chance, we are dealing with a sweepstakes. In cases where consideration is required, but winners are chosen based on skill, we refer to this as a contest. These classifications come with significant nuances, particularly regarding what constitutes “consideration.” For instance, even if no monetary payment is involved, the level of effort required for entry can be substantial enough to qualify as consideration.
In promotions that require a purchase—where buying something grants an opportunity to win a valuable prize—an Alternate Method of Entry (AMOE) is essential. This ensures compliance with legal standards by transforming the promotion from a potential illegal lottery into a legitimate sweepstakes. The inclusion of a “no purchase necessary” AMOE effectively eliminates the consideration element, allowing broader participation.
Guiding Clients in a Fractured Legal Landscape
The sweepstakes and related promotions are a fractured legal landscape that can be complex and overwhelming for the outside observer. There are also ancillary legal considerations to factor in, ranging from terms and conditions, privacy law, copyrights, trademarks, and even the Bank Secrecy Act. For example, it is important to ensure that sweepstakes terms or “official rules” align with other agreements, as was illustrated in the Coinbase sweepstakes case that went before the Supreme Court.
Our aim is to ensure clients can focus on meeting the goals of their promotions, whether it be sweepstakes, giveaways, or contests, while ensuring that relevant legal considerations are appropriately accounted for and risk is mitigated.
Avoid Costly Enforcement Action
Affordable Flat Fees
Sweepstakes & Promotions Law Services We Offer
Sweepstakes, Giveaways, & Contest Compliance
Structuring, Registering, & Operating Promotions
Non-Profit & Charitable Marketing Compliance
Drafting of Terms, Official Rules, & Affidavits of Eligibility
Lotteries & Illegal Gambling Considerations
Client Sectors We Help Navigate Sweepstakes & Promos
Sweepstakes & Other Promotions Compliance Resources
Philadelphia DA Sues Elon Musk Over Voter Sweepstakes: 'Illegal Lottery'
The Philadelphia district attorney’s office filed a lawsuit Monday to halt Elon Musk’s plan to award $1 million to registered voters in swing states, according to court documents obtained by Newsweek.
Dogecoin Sweepstakes Case Heads to the Supreme Court
A Coinbase promotion tried to harness the popularity and whimsy of the memecoin, but participants say they missed the fine print.
Publishers Clearing House Pays $18.5 Million in ‘Dark Patterns’ Suit
Publishers Clearing House, the direct marketing company that uses sweepstakes to sell magazine subscriptions, agreed on Monday to pay $18.5 million to settle a lawsuit brought by the Federal Trade Commission, which accused the company of using what’s known as dark patterns to trick customers into paying for products or giving up their data.
Planning a Giveaway: Legal Considerations for Contests and Sweepstakes
Giveaways are an effective avenue for promoting a product or business—from the early days of mail-in contests to today’s online entries, sweepstakes have been a powerful marketing tool for decades.
Apple Beats ‘Loot Box’ Video Game Gambling Suit for Good
Apple Inc. exited a proposed class suit alleging it entices teens to gamble by acquiring “loot boxes” for games downloaded from its App Store, when a California federal court again said the plaintiffs lacked standing and didn’t raise viable claims because loot boxes aren’t illegal.
