Sweepstakes, contest, game, raffle, giveaway. These are all words that people use to describe an event where prizes are given away to a winner chosen for skills displayed via an entry or at random. But what are the differences between these types of promotions?
Legally, what matters most in a promotion is how the winners are selected or drawn. Here is what you need to know about sweepstakes vs contests and more.
What Is a Game?
A game is any promotion in which a winner is selected as the outcome. It can be a game of skill or a game of chance. For example, a contest is a game of skill while a sweepstakes is a game of chance.
Many courts uses what is called the “Dominant Factor Test” in order to determine if a promotion in question in a game of chance or skill. This allows the courts to determine whether luck or skill is the most important aspect in the selection of a winner.
What Is a Sweepstakes?
A sweepstakes is a promotional drawing in which prizes are given away to participants. There is no purchase required to enter and the sweepstakes winners are selected at random from a pool of all of the eligible entrants.
Contest vs Sweepstakes
A contest is also a promotional drawing in which prizes are given away. However, there is one major difference: skill. Participants in a contests are judged by their entries according to a pre-defined set of criteria.
From the pool of participants, the “best” entry is selected to win and is awarded a prize. The criteria upon which an entry could be judged include a skill, such as proficiency at writing or drawing, or arbitrary opinion such as the popularity of an entry among fans.
Raffle vs Lottery
A raffle is a type of promotion where participants buy tickets in exchange for the chance to win a prize. The main difference between a raffle and a lottery is that there will always be a winner since all of the purchased tickets are entered into the raffle draw.
Raffles may also be considered as a form of gambling by regulators given that entrants make a payment of some form in exchange for a chance to win. This is why raffles are limited to non-profit organizations where allowed. As a result raffles must comply with state and local raffle laws which are different from sweepstakes laws. Furthermore, certain states also prohibit online raffles.
Giveaway vs Sweepstakes
A giveaway is a promotion where everyone who enters wins a prize. People use the word “giveaway” as a blanket term for contests, sweepstakes, raffles, and lotteries, as all of them give participants the chance to win a prize. The term does not clarify whether the giveaway is a game of skill or chance so the “Dominant Factor Test” must still be applied to determine the type of promotion.
Although all of these terms are used interchangeably by the general public, there are clear differences in the eyes of the law.
Sweepstakes, contest, or game? Which is more popular?
Sweepstakes by far are the most popular promotional tool. Out of 385 promotions Sweepstakes represent 80% of all Prize promotions.