Sweepstakes and promotional contests are excellent ways for businesses to market their respective products and services, particularly when used in combination with Internet and mobile media. Numerous state and federal laws apply to such games—and businesses must understand these laws, as well as any social media rules, that may apply to their sweepstakes and promotional contests.
A Game of Chance
Games of chance are deemed illegal lotteries across the country unless one of the following elements that constitute a lottery is removed: (1) a prize awarded to the winner; (2) chance in determining the winner; and (3) consideration for entry in the game. Because the sweepstakes model is premised on the awarding of a prize through chance, consideration (typically monetary) is the element most frequently removed by providing a free, alternative method of entry (often referred to as an “AMOE”).
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