Sweepstakes promotions are sweeping the nation. With each month and season comes a new and innovative contest. Entities in the not-for-profit sector are getting in the game as well! From Draft Kings, to the National Collegiate Athletic Association (“NCAA”), to the Queens Public Library and countless others, if you’re not running a sweepstakes promotion, you might be missing out! Please note, however, as we have explained in many of our blog posts, there are state and federal regulations that must be complied with in order to run a lawful sweepstakes promotion. Failing to adhere to applicable laws could expose your business to unwelcomed regulatory action. As such, before embarking on a new promotional campaign, it is wise to consult with experienced sweepstakes law attorneys.
Federal Law Applicable to Sweepstakes Promotions
There is not just one federal entity charged with sweepstakes contest oversight. Several agencies govern various aspects of promotion administration and advertising, including: 1) the Federal Trade Commission (“FTC”); 2) the Federal Communications Commission (“FCC”); 3) the United States Postal Service (“USPS”); and 4) the United States Department of Justice (“DOJ”). Each branch has jurisdiction to police specific sweepstakes promotion matters. For example, according to the FTC, sweepstakes sponsors are required to inform prospective entrants of “the nature or value of the prizes, that entering is free, and the terms and conditions to redeem a prize.”
FCC regulations require that television and radio stations that run sweepstakes promotions accurately disclose their respective contest rules and entrance eligibility criteria. Additionally, the United States Postal Inspection Service (“USPIS”), among its other duties, protects consumers from potential predatory sweepstakes scams and promotions. Finally, the Consumer Protection Branch of the DOJ works with the above-mentioned agencies to enforce applicable laws.
State Laws Applicable to Sweepstakes Promotions
Most sweepstakes are conducted throughout the United States, and, therefore, trigger the need to comply with multiple state laws. These regulations can cover registration, bonding, and reporting, among other requirements. For example, New York sweepstakes law regulations require that sweepstakes operators that offer contest prizes that, in the aggregate, exceed $5,000 during the contest term, file Game of Chance Registration Forms (the “Form”) with the New York Department of State thirty (30) days before the start of the applicable sweepstakes promotions. There is a $100, nonrefundable filing fee associated with filing the Form. Businesses that fail to register with the New York Department of State are subject to a Class B misdemeanor. In other jurisdictions, consider that applicable laws may have related, but nuanced regulatory differences.
General Sweepstakes Law Requirements
In addition to the restrictions mentioned above, any properly constructed sweepstakes promotion must adhere to certain threshold requirements. Among other considerations, the following factors should be kept in mind when setting up a sweepstakes promotion:
- Consumers must not be required to pay to enter. There must be a free, alternative means of entry (“AMOE”).
- Eligibility requirements must be spelled out.
- Odds of winning must be disclosed.
- The contest rules must specify the number and type(s) of prize(s) to be awarded.
- Sweepstakes start and end dates must be detailed.
How to Comply with State and Federal Sweepstakes Laws
To run a successful sweepstakes promotion, it is essential that the contest comply with applicable state and federal laws and regulations. The best way to ensure a successful promotion, and to avoid legal risk, is to consult with experienced sweepstakes law attorneys.
If you are interested in learning more about this topic or require assistance in connection with setting up a sweepstakes promotion, please e-mail 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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