Laws and Rules for Sweepstakes in Arizona
First, it helps to understand the difference between a sweepstakes, contest and lottery. In a sweepstakes, winners are chosen randomly from all participants. In a contest, the winners' entries are usually judged and are based on a skill or criteria. In a lottery, winners are chosen at random, but in order to enter, the participant must pay. A payment is called a consideration. Only states can hold lotteries, so all private lotteries are illegal.
To avoid being classified as an illegal lottery in any state, your promotion can only have 2 of these 3 elements: prize, chance and consideration. Keep in mind, consideration can mean anything of value, including a fee or even a significant effort (i.e., time spent shooting/submitting a photo, etc.)
Here are possible combinations:
- Prize + consideration + chance = illegal lottery or gambling
- Prize + consideration = legal contest (in most jurisdictions)
- Prize + chance = legal sweepstakes
All sweepstakes in the United States must meet the following regulations:
- No purchase necessary. You can enter the sweepstakes without buying a product or service.
- Winners are required to pay taxes on prizes they win.
Sweepstakes are regulated nationally and by state by the following organizations:
- Federal Trade Commission (FTC)
- Federal Communications Commission (FCC)
- United States Postal Service (USPS)
- United States Department of Justice (DOJ)
State Specific Sweepstakes & Contest Laws
Besides federal considerations, every state has its own specifics laws regarding sweepstakes and contests.
In Arizona, you must register your contest (not sweepstakes) with the attorney general's office. When registering, you'll also need to supply a sworn statement that no additional fee was added to the purchase prize in connection with the contest.
Contests: are allowed as long as they do not charge a consideration.
- It is viewed as risky to charge a consideration for a contest in Arizona unless the contest qualifies as an intellectual, skill-based contest and has been registered with the state.
- The statutory definition of gambling in Arizona indicates that a game in which participants risk something of value can qualify as gambling, no matter if the game is skill-based or chance based. Arizona case law indicates that this definition of gambling does not mean that every skill-based game with a prize and consideration qualifies as gambling.
- A skill-based contest can be designed so that it's not seen as gambling, it is permissible to charge participants payment.
Sweepstakes: are allowed as long as participants do not pay consideration.
Arizona Cannabis or Marijuana Sweepstakes or Contest Laws
- Cannabis or any product containing cannabis, such as food or drinks are not allowed as prizes.
- Purchases of any related products can't be required for entry.
- Make sure that your sweepstakes is only open to entrants age 21 or older with proof of age.
- Any ads must have a disclaimer about the state's legal age for marijuana products, if any.
- Similar to the tobacco and vaping industries, brands cannot use any type of marketing that can be construed as trying to appeal to children (characters, mascots, games, etc.)
- Don't advertise your brand or giveaway in public (or private) places where children may be present, including billboards, buses/vehicles, television, and radio.
- Don't use Facebook, Google, or any other advertising or marketing channel that specifically prohibits promotions involving illegal drugs to promote your giveaway.
- Do not allow mail-in entries as this could be considered as interstate commerce.
Legal Review Criteria: Uncertain
Note: the information above is for informational purposes only and should not be construed as legal advice. Sweepstakes and Contest promotional laws change and the above may not reflect the must current laws.