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.)
Besides federal considerations, every state has its own specifics laws regarding sweepstakes and contests.
You can’t imply or say “You won!” a contest or sweepstakes as a tactic to sell something by mail.
In Alaska, you’ll need a state permit to run a game of chance (sweepstakes) or contest of skill (contest).
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 price in connection with the contest.
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.
In California, you can’t award alcohol as the only prize. Booze can be part of a prize package, however. The state also has other restrictions related to alcohol: you can’t force entrants to buy alcoholic beverages as part of entry or force them to visit a liquor store, bar or licensed retailer as part of their entry or to get entry forms. Forms must be available elsewhere as well.
Colorado wants all sweepstakes and contests to be free to enter, so you can’t ask for a purchase, even if contest winners are selected based on skill.
Connecticut also wants sweepstakes and contests to be free to enter and free of consideration. If there’s any condition or restriction to receive a prize in the sweepstakes, you’re not allowed to advertise the promotion in the state. You also can’t advertise a contest where a prize is valued at $200 or more and where the participant has to pay an entry/judging fee or has to make a purchase to help them win.
Delaware wants winner records kept longer. If your prize is valued at $25 or more, you must keep the winner’s name, address and description of their prize for 2 years after the promotion ends.
Awarding a prize valued at more than $5,000? The state of Florida will expect you to bond and register your sweepstakes 7 days before it begins. After the sweeps ends, you’ll need to provide the names and addresses of all winners. If the prize includes travel, you must also register as a “Seller of Travel.”
In Georgia, you can’t substitute the prize for one of equal or greater value. You also can’t ask entrants to participate in a seminar or sales presentation to win. (Think timeshares.)
Hawaii is another state that asks for a “Seller of Travel” registration if the prize includes travel. It also doesn’t allow promotions in which some or all of the prizes may not be awarded. If your prize includes real property (a home or condo, for example), you must file a bond of $10,000 or more, with requirements for naming the obligee and surety.
Telecommunications companies can’t combine a sweepstakes with any telecom offers in the state of Idaho.
Illinois sweepstakes must be no purchase necessary. This means no payment to receive, use, compete for, or get written information about a prize.
Indiana allows seminars or sales presentations as part of a sweepstakes, but they must be disclosed in at least 10-point boldface type on the first page of the notice or entry form.
Iowa also has rules about seminars and sales presentations. They’re allowed as part of claiming a sweepstakes prize, but the presentation can’t begin until the sponsor tells the participant of the prize and actually awards it. Another requirement, is a 'Sellers of Travel' registration, if the prize includes travel.
The state of Kansas doesn’t allow electronic machines that claim to give you a chance to win a sweepstakes or that sell merchandise while also allowing you to play a game of chance that may deliver a prize.
Kentucky is similar to Kansas in forbidding any electronic machines that claim to give you a chance to win a sweepstakes or that sell merchandise while also allowing you to play a game of chance that may deliver a prize.
The state of Louisiana is very specific about winner notification. You must tell winners they’ve won using one of these methods: posting a printed list, instant-win scratch-off tickets/cards or pull-tab tickets/cards, in writing or by phone.
Maine wants to ensure alcohol brand promotions are no purchase necessary. You can include your sweepstakes, game or contest inside alcoholic beverage packages, so long as participants don’t have to buy the beverage.
Maryland also wants to ensure no purchase is necessary. In this state, a purchase can’t be required even if the contest winners are chosen based on skill.
The state of Massachusetts prohibits sweepstakes by tobacco or tobacco-related sponsors.
Michigan also prohibits tobacco-related sweepstakes. It also doesn't allow sweepstakes where the entrant must visit a store or retail site in order to enter.
Minnesota promotions must let entrants know of any fees (shipping, handling, etc.) to enter or claim a prize with a notice in 10-point, boldface type on the prize listing: “You must pay $--- to receive this item.”
Mississippi doesn’t allow electronic machines that claim to give you a chance to win a sweepstakes or that sell merchandise while also allowing you to play a game of chance that may deliver a prize.
Missouri is fine with promotions that ask participants to go to a seminar or sales presentation to claim a prize.
It may be difficult to have a contest recognized as such in Montana, since the state recognizes 'any chance' in a promotion. Remember, a contest or sweepstakes can only have 2 of these 3 elements: prize, chance and/or consideration. Contests generally have prize and consideration (time and effort to submit an entry that will be judged based on skill). Most skill games have an element of chance, however and courts here look at any chance that affects the outcome.
Promotions here must be “no purchase necessary,” even if contest winners are selected based on skill.
Nevada is another state where a 'Sellers of Travel' registration is needed if the prize includes travel.
New Hampshire says prizes or gifts must be delivered free of charge within 10 days of announcement.
In New Jersey, prizes or gifts must be delivered free of charge within 15 days of announcement.
New Mexico says if a purchase is needed to enter a sweepstakes or contest, the sponsor must also offer an alternate method of entry at no charge.
Like Florida, New York also requires that you bond and register any sweepstakes where the prize is worth $5,000 or more. This must be done 30 days before the start date. Winners’ names and addresses must also be provided afterwards.
The state of North Carolina forbids electronic machines and devices for sweepstakes.
In North Dakota, sponsors can’t require a purchase, even if the contest winners are selected based on skill.
Ohio allows machines or sweepstakes terminal devices, as long as they’re registered and certified annually by the attorney general’s office.
If your promotion involves free and paid entries, the state of Oklahoma says free entries must be drawn from the same pool and in the same way. In other words, there must be an equal chance to win for all.
In other words: all entries free or based on purchased must be combined into one list and winner drawing must be form that one combined list.
Oregon doesn’t want you to tell entrants they’re finalists or likely to win if more than 25% of people receiving your notice or solicitation have the same chance of winning.
Pennsylvania restricts contest prizes. The total value of all prizes for a contest can’t be more than $1,000 and the total value of all prizes awarded in any 7-day period is limited to $25,000. Alcoholic beverages also can’t be part of a prize.
Rhode Island is among the states where you must register certain sweepstakes. If the prize is offered through a retailer and is valued at more than $500, you must register with the state. Registration is also needed if entry involves visiting the store to fill out a ballot or make a purchase.
Awarding prizes in South Carolina must be done within 10 days of the announcement and at no expense to the winner. Winners also can’t be asked to attend seminar or sales presentations to claim a prize.
No purchase can be necessary in the state of South Dakota. A solicitor or sponsor can’t accept payment from an individual or winner in any form.
Tennessee is the only state that restricts publicity releases. Here, you can’t ask sweepstakes winners to sign away publicity rights “in perpetuity.” Sweepstakes by alcohol brands are also restricted somewhat in that residents can’t enter them online (due to policy, not state law), but may enter them if entries were delivered by mail.
If you’re giving away a prize worth more than $50,000 in Texas, you can’t give automatic entries with each purchase.
If awarding a prize in Utah, the winner must claim it within 30 days after the sweepstakes ends.
Vermont doesn’t allow a purchase requirement, even if the contest winners are chosen based on skill. It also doesn’t allow you to ask participants for a self-addressed envelope with postage to get official rules or any other information. As a sponsor, you must provide this free of charge.
Tobacco-related sweepstakes are not allowed in Virginia. Neither are promotions where one must visit a location or store to enter.
If your prize includes travel, you must file a 'Sellers of Travel' registration in the state of Washington.
Running a bottle cap promotion in West Virginia? The state wants you to provide free bottle caps to retailers as a way to offer free method of entry.
The state of Wisconsin also wants sponsors to offer free entry and ask you to provide retailers with enough entry forms or game pieces to allow free participation by customers.
Wyoming holds laws regarding prize awards. If for some reason the prize offered is not available, you must provide: another prize you’ve listed of equal or greater value, the prize value in cash, check, voucher or certificate, or evidence that the prize will be shipped within 30 days at no cost.
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.