Sweepstakes Law: Prize Limits, Registration and Bonding

April 17, 2017

sweepstakes-lawPrize Amounts Can Have Sweepstakes Law Implications

Businesses are increasingly turning to sweepstakes and promotions as a means of attracting new customers and solidifying relationships with existing customers.  In this pursuit, business owners may be tempted to offer bigger and more expensive prizes in order to generate maximum buzz, but high ticket prizes may come with additional sweepstakes law requirements.  Specifically, prizes above certain cash (or cash equivalent) thresholds may trigger sweepstakes registration and bonding requirements in three states: Florida, New York and Rhode Island.

Do Prize Amounts Trigger Specific Legal Requirements? 

If the value of the prizes in a given promotional contest (in the aggregate) exceeds $5,000, the states of Florida and New York require that the applicable sweepstakes sponsor register and bond the subject sweepstakes.  In addition, Rhode Island requires that a sweepstakes be registered if the prize amount exceeds $500 (in the aggregate), but no bonding is required and the registration requirement only applies to contests that are conducted by brick and mortar-businesses via a retail outlet.

There is significant paperwork involved in the registration and bonding process.  As such, sweepstakes sponsors should consult with a qualified sweepstakes lawyer in order to determine if a given prize (or prizes) exceeds the applicable thresholds and if there are any approaches that could eliminate this added expense.

Avoiding Registration and Bonding Requirements

With the guidance of experienced sweepstakes lawyers, businesses may be able to avoid triggering registration and bonding requirements.  For example, a sweepstakes could be broken up into smaller contests that each run over the course of one month with one prize awarded, rather than over the course of one year with twelve monthly prizes that are awarded.  In addition, sweepstakes sponsors that want to award a large prize, but also want to avoid expending the time and resources associated with the registration and bonding process altogether, can bar residents from Florida, New York and/or Rhode Island from entering the applicable contest.

Sweepstakes Lawyers Can Keep Your Eyes on the Prize(s)

Sweepstakes laws relating to registration and bonding can be confusing, and there are significant costs involved if you do not take the necessary precautions to ensure that your promotional contest matches your budget and goals.  Proper planning and qualified legal guidance from experienced sweepstakes lawyers are crucial to ensuring a successful promotional campaign.

Please note that this is only a brief overview of some of the legal issues involved in running a sweepstakes and other promotional contests and, as such, remember to obtain guidance from an experienced sweepstakes attorney prior to conducting any promotional game or sweepstakes.

If you are interested in learning more about this topic or require assistance in connection with your sweepstakes and promotional campaigns, 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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