Historically, companies have used sweepstakes and contests to market their products and services. It is undeniable that these tools attract new customers and help to retain existing ones. The basis for such promotions certainly appeals to many consumers: the chance to win something. But did you know that there are significant differences between the two promotion types? Readers of our blog know that there are practical and legal requirements for each, which must be squared away prior to accepting entries. So before you embark on a new promotional campaign, the best course of action is to consult with an experienced sweepstakes attorney to be sure that you do not run afoul of any regulations.
Critical Differences Between a Sweepstakes and a Contest
When deciding whether a sweepstakes or a contest would work best for your business, there are certain differences you should be aware of. First, the most critical difference concerns whether the promotion is a “game of skill” or a “game of chance.” To arrive at this determination, it all boils down to how the winner is chosen. A sweepstakes winner is chosen at random (in a game of chance), while a contest winner is chosen based on skill (in a game of skill). Some examples of games of skill include essay writing contests, trivia games, song writing contests, and the like.
Another difference between sweepstakes and contests is whether an entrance fee may be collected. For sweepstakes games, there must be a free, alternative means of entry (“AMOE”). This means that if a promotion requires payment to enter, the sponsor must also afford entrants a free AMOE. AMOE entrants must have the same odds of winning as paid entrants. Keep in mind that the free method of entry should not be an extensive social media to-do list. The simpler, the better. As for contests, however, companies can typically charge would-be participants to enter a game of skill, without offering an AMOE. These are crucial differences that must be addressed when considering which format to choose.
Similarities Between Sweepstakes and Contests
When setting up either of these promotional games, companies must consider, in advance, the following issues: eligibility, means of entry, prize(s), promotion duration, among others. Concerning eligibility, sweepstakes and contests typically require entrants to be at least 18-years of age to enter. This requirement takes away the potential for legal challenges concerning the advertising or marketing of games to minors. Further, please note that the Child Online Privacy Protection Act (“COPPA”) prevents businesses from collecting personal information from children under 13 years of age without parental/guardian consent. The prize(s) are obviously an essential element of any sweepstakes or contest. The sweepstakes/contest rules must spell out the type and number of prize(s) to be awarded during the promotion period. And finally, companies must identify the duration of the contest or sweepstakes, including applicable start and end dates.
Ready to Set up a Sweepstakes or Contest Promotion?
Once you have decided that you want to run a sweepstakes or contest, it is important to determine which method to go with. As we have indicated, a promotion is only as sound as its governing rules. The contest rules must be carefully thought out and prepared, because such promotions and related marketing are highly regulated at both the state and federal level. In addition, the court of public opinion can come down hard on businesses that sponsor sweepstakes and contests that are alleged to have deceived or harmed consumers. To avoid complications and any potential lawsuits, businesses should be sure to seek counsel before running any contest or sweepstakes promotion.
If you are interested in learning more about this topic or require assistance with setting up a contest and/or sweepstakes promotions, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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