All about Sweepstakes – Vol. 4 The Fundamentals

By: Arrowhead Promotion & Fulfillment, Feb 21, 2014  1350178



I thought it would be good idea to share some basic information about sweepstakes, games and contests; what are they and how they work.  This material is intended as a brief introduction as there is always more granular detail and discussion to consider beyond the basics.

So what can sweepstakes, games and contests offer your brand and why consider them?

>Showcase your brand, get attention and breakthrough clutter,

>Reinforce, extend and enhance brand value initiatives,

>Drive customer engagement with a brand develop brand advocates,

>Help drive traffic online and at retail,

>Build buzz and promote word or mouth,

>Help generate in-store merchandising and sales velocity,

>Generate a high impact with limited budget.


>Sweepstakes cannot require a purchase and must be carefully designed to achieve objectives,

>Legal regulations governing sweepstakes are subject to varied interpretation and enforcement,

>Beyond legal requirements, consider the PR impact of the promotion especially as situations occur.

What is a Lottery?


>Lottery – As defined by the Standard Lottery Rule – when all three elements are present (prize, chance, consideration). Lotteries except those that are state operated are illegal under federal law and the laws of all fifty states.

>Prize – anything of tangible value, even if value is nominal awarded to a winner.

>Chance – winners are selected by a random process, the outcome cannot be controlled or influenced.

>Consideration – expenditure of monetary or non-monetary effort

What is Consideration? 

>Monetary consideration – a purchase or payment.

>Non-monetary consideration –  expenditure of effort to participate ie, submitting a story, recipe.

>Non-monetary requirements generally not deemed as consideration:

  • Calling toll free number,
  • Visiting a store,
  • Watching/ listening to TV or radio program,
  • Completing a survey (matter of degree),
  • Reading product brochure and answering questions,
  • Listening to sales presentations (note several states have special requirements),
  • Sending self-addressed stamped envelope to request materials,
  • Becoming a member of a social media platform, liking, tweeting, pinning, uploading photos or short videos.

Non-monetary requirements that may pose more risk as consideration:

  • Travelling to a location,
  • Disclosure sensitive proprietary information,
  • Disclosure of social security or credit card information,
  • Waiver of legal rights such as opt out from receiving phone calls or emails,
  • If task entails inherent product purchase.

Regulatory agencies governing sweepstakes, games and contests include but not limited to:

>Federal Trade Commission – FTC

>United States Postal Service – USPS

>Federal Communications Commission – FCC

>United States Department of Justice

>Federal Reserve Board

>Treasury Department/Bureau of Alcohol, Tobacco and Firearms – BATF

>State Attorneys General

>State Consumer Protection Agencies

What is a Sweepstakes or Game?


>Sweepstakes and Games cannot require a purchase (monetary or non-monetary consideration) to participate.

>Winners are determined by chance via a random selection process.

Sweepstakes – Odds of winning are based on total number of eligible entries received.

Instant Win Games – Odds of winning are pre-determined through a random prize seeded schedule via on-pack/in-pack or online venues.

>Alternate Method of Entry (AMOE) – if a purchase is involved, an AMOE  is required to assure “equal dignity” to those participants purchasing and those entering for free.

What is a Contest?


>Skill based – contest winners are determined on the basis of skill rather than chance.

>The nature of tasks entrants must perform should include genuine skill elements.

>Examples of tasks found to have genuine skill elements:

  • Athletic ability – golf, bowling,
  • Manual dexterity,
  • Knowledge based games,
  • Creative skills – writing, cooking, photography,
  • Speed, endurance
  • Strategic games – bridge, chess

What about Social Media platforms like Facebook, Twitter, You Tube….?

>Multichannel promotions involving multiple 3rd party social platforms are pervasive and growing.

>These promotions are subject to same laws and regulations that apply to traditional sweepstakes, games and contests.

>Considerations when planning sweepstakes, games and contests on social media platforms:

  • 3rd party platform rules – Does your promotion comply with 3rd party platform rules and guidelines.
  • Consideration issues – Do entry requirements constitute consideration.
  • Intellectual property issues – Does promotion violate or induce violation of 3rd party intellectual property rights.
  • Unique admin issues – does the structure pose special concerns, opportunity for cheating and use of bots is a threat and should be addressed in the rules.
  • Rules provisions – must determine how to disclose rules on platforms with limited real estate.
  • Privacy issues – notification of participants about how data is collected and used.
  • FTC compliance and endorsement guidelines – receipt of sweepstakes entry is exchange of product endorsement is a material connection and must be disclosed.

I appreciate your comments, suggestions and input and invite you to share this material with friends and colleagues you think may have an interest in this area of promotions.

Thanks for reading and for your interest!