Unique and highly coveted prizes provide an effective means for brands to drive consumer engagement with sweepstakes and promotional contests. Because prizes serve as the lure to entice consumers, sweepstakes operators have an incentive to offer prizes of significant value. However, business should remain mindful that certain state law requirements may be triggered where prize values exceed designated statutory thresholds.
Prize Amounts Can Trigger Specific Regulatory Requirements
Below are some of the relevant state law requirements concerning sweepstakes prize values. Note that the following list is by no means exhaustive:
- If the value of all 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 with regulatory bodies.
- For contests that are conducted via a retail outlet or other physical location, the State of Rhode Island requires that sweepstake operators register with the State if the value of all prizes in a given contest exceeds $500 (in the aggregate). However, Rhode Island does not also require bonding where prize amounts exceed that threshold.
- Florida, New York and Rhode Island have different deadlines with respect to the completion of necessary registration and/or bonding filings. Consequently, the registration and bonding process should be commenced well in advance in each state.
Steps to Avoid Registration and Bonding
With the guidance of experienced sweepstakes lawyers, businesses may be able to avoid triggering certain registration and bonding requirements. For example, a single sweepstakes with several medium sized prizes could be broken up into multiple smaller contests that each run over a shorter period of time. In addition, sweepstakes sponsors that want to award larger prizes, but also want to avoid expending the time and resources associated with registration and bonding, can bar residents from Florida, New York and/or Rhode Island from entering their applicable contests.
Sweepstakes Lawyers Can Ensure that You Are Ready to Go
Sweepstakes laws relating to registration and bonding must be taken into account early in the sweepstakes promotion planning process. There can be significant costs and delays involved if sweepstakes operators do not begin the process well in advance of the launch of their respective promotional contests. Proper planning and qualified legal guidance from experienced sweepstakes lawyers can ensure that the prospective sweepstakes promotion is legally compliant and ready to go-live when necessary.
Please note that this is only a brief overview of some of the legal issues involved in running sweepstakes and other promotional contests. As such, remember to obtain comprehensive regulatory guidance 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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