Sweepstake and Contest Laws

Laws and Rules for Sweepstakes in Arkansas

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:

1. No purchase necessary. You can enter the sweepstakes without buying a product or service.
2. 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.

Arkansas (AR)

Like Alabama, Arkansas also frowns on implying that someone won a prize (or is a finalist or likely to win) as a tactic to sell a product or service or to make contact with prospects. The state also expects sweepstakes winners to claim any prize they've won within 30 days after the sweepstakes ends.

Contests: are allowed as long as they do not charge a consideration. If the contest includes an element of consideration the sponsor must award the contest prize based on skill and not chance and follow all Prize Promotion Laws prize disclosures.

Sweepstakes: are allowed as long as participants do not pay consideration.

• In-package sweepstakes are allowed as long as there is a free alternative method of entry and the sponsor follows all Prize Promotion Laws prize disclosures.

Prize Promotion Laws

• These laws come into effect in Arkansas when a sponsor offers a prize with the sale of a product or services.
• Arkansas Prize Promotion Act includes written disclosure requirements, prohibited practices to prevent misrepresentation and a requirement to award the promised prizes.

Legal Review Criteria: Dominant Factor Doctrine when assessing whether or not chance determines the outcome of a promotion.

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.