Many use the words “sweepstakes” and “contest” interchangeably, but there’s a big difference between the two. The one you choose changes how your sweepstakes (or contest) is managed, how it’s structured, how users will interact with it, which contest rules or sweepstakes rules to use and how winners are selected.
Read on to learn the differences. It’ll help you understand what type of promotion will work best for you.
Game of Skill or Chance?
The first thing you should know is that there are 3 items that legally help define whether a promotion is a sweepstakes or contest:
- A prize
- The element of chance
- Consideration (something of value or effort)
A legal sweepstakes or contest should have only 2 of the 3 items above. If your promotion has all 3, you might be running an illegal lottery.
Which 2 of the 3 you have will dictate whether it’s a game of chance (sweepstakes) or a game of skill (contest).
What’s “consideration” in this context? It’s not so much about “careful thought” as it is about a “payment or reward” in return for a chance to play the game. So, for example, a fee to enter your sweepstakes (which can be illegal, see above) is consideration. Even time or effort (like writing an essay) can be consideration.
This is important for contests, which ask that entrants put forth effort or something of value in order to be considered. You might ask participants to shoot a photo, design a craft, write an essay or compete in a physical challenge. These are all non-monetary means of consideration.
Consideration is allowed in contests, although it may be restricted in some states. Couple that consideration with a prize and you have the 2 elements needed for a legal contest. The element of chance or luck must not be included as all entrants must be judged based on a defined set of criteria (i.e. creativity or originality) and chosen based on skill.
Can a sweepstakes have consideration, whether it’s monetary or effort/time? No. This is why you see “No purchase necessary to enter” in sweepstakes rules. While there are sweepstakes that offer an entry with a product purchase, those promotions always offer a free entry method (mailing in a postcard or sending an email, etc.) as well.
The Element of Chance
In game of luck like a sweepstakes, the element of chance is necessary. Here, winners are simply selected randomly from all entrants. No entrant has an advantage over another when it comes to their chances of being chosen as a winner. As a result, entrants can only increase their chances of winning by entering multiple times if it’s allowed by the brand.
Contests can’t include luck or “chance” elements to ensure that the promotion will not be deemed an illegal lottery. Every entry must be judged equally based on the defined criteria.
Be careful of inadvertently adding luck or chance to your contest. Are you allowing fans to vote for winners? This might be considered chance if it’s the only method of picking a winner. Allow fans to vote for finalists instead, with the finalists then judged by judges who choose the winner.
Contests Don’t Require a Free Method of Entry
Depending on the state in which you offer your contest, you may be allowed to require entrants to purchase your product or even pay an entry fee. You are not required to provide a free method of entry. On the other hand, a sweepstakes must always have a free method of entry, otherwise it will be considered as an illegal lottery.
Contest Management Time
Since all contest entries must be judged before a winner can be selected, a contest takes significantly more time to manage than a sweepstakes. With a sweepstakes, winners can be chosen at random using software which will allow you to take a hands-off approach to winner selection. For this reason, contest management can be a bit more onerous, depending on setup.
Why Use a Sweepstakes Versus a Contest
A major difference between a contest and a sweepstakes is that contests are mostly used to get your customers to create content that can be used in various ways. You can use it to market your brand, for example, or simply to gain insights into customer behavior. A contest also helps you identify those customers who are brand loyalists.
More importantly, a contest is about connecting with your customers on a deeper level. As a result, you’ll be able to reward your customers for putting in the effort to engage with your brand.
On the other hand, sweepstakes are ideal for brand awareness. Big brands often use it to stay “top of mind,” while others use it to increase awareness and start a relationship with potential customers.