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Exercise Caution When Running a Bitcoin Sweepstakes Promotion

Earlier this week, Stryve Foods, Inc. (“Stryve”) announced the launch of its Bitcoin sweepstakes – allegedly the first of its kind by a meat snack purveyor. Participants will be given the chance to win one of five prizes, each equal to $1,000 USD in Bitcoin. Note that our office has not reviewed the Official Rules for Stryve’s Bitcoin sweepstakes and, as such, does not take a position as to their regulatory propriety. Notwithstanding the nature of the prize(s) awarded, sweepstakes operators must ensure that their promotions comport with applicable regulations. As our readers are aware, misleading prospective sweepstakes entrants can result in a class action lawsuit and/or regulatory action.

The Coinbase Bitcoin Sweepstakes Lawsuit

A few years ago, Coinbase hired a third party to design, market, and implement a Bitcoin sweepstakes. Numerous consumers created accounts and executed trades through Coinbase in order to participate in their sweepstakes promotion. Only after completing these steps, however, did the consumers allegedly learn that there was an alternative, free means of entry (“AMOE”) available to sign up for the Bitcoin sweepstakes. A separate “rules and details” webpage made clear that consumers could also enter the sweepstakes by sending Coinbase a 3×5-inch index card containing their personal information. Plaintiffs claimed that, had Coinbase properly disclosed this AMOE, they would not have paid money to enter the sweepstakes. Plaintiffs subsequently filed a class action lawsuit against Coinbase in the Northern District of California.

Tips to Consider When Running a Bitcoin Sweepstakes

The Coinbase sweepstakes matter has been ongoing for a few years now. As our readers may be aware, prolonged litigation can be quite time consuming and costly. Companies that are interested in launching Bitcoin sweepstakes promotions should employ best practices to reduce the possibility of finding themselves in a similar situation. Sweepstakes operators must exercise caution when drafting sweepstakes contest rules, disclaimers, and entry disclosures. For example, the sweepstakes contest rules and associated terms should:

Make clear that no purchase is necessary to enter the sweepstakes.

Include statements explaining that a purchase will not increase the odds of winning.

Not include contradictory or confusing messaging or advertising regarding sweepstakes AMOEs.

Make clear that entrants who utilize the sweepstakes AMOE will be given the same odds of winning as those who enter by paying.

Sweepstakes regulations are quite nuanced and differ by jurisdiction. As such, it is important that sweepstakes operators and marketers obtain guidance from experienced sweepstakes attorneys.

The attorneys at Klein Moynihan Turco have decades of experience in guiding companies with their sweepstakes promotions. If you require assistance in this area, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for information 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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Photo by Jievani Weerasinghe on Unsplash

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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