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.
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.”
Contests: are allowed as long as the sponsor awards the prize based on skill and not chance. The sponsors may charge a consideration (payment to participate) but the prize cannot be composed solely of the participant’s entry fees.
Sweepstakes (or as FL calls them, Game Promotion): are allowed as long as the sponsor awards the prize based on chance. Sweepstakes offered in Florida whose prizes exceed $5,000 in Approximate Retail Value must be bonded and registered with the state.
Florida Registration, Bonding, and Operational Requirements for sweepstakes that exceed $5,000 in Approximate Retail Value of all prizes combined:
Promotional Laws - Florida- Telemarketing
Promotional Laws - Florida Free Gift Advertising Law
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.