Do you know the laws and rules that regulate sweepstakes and contests in the U.S.? See below for insight into the various laws that apply by state.
Laws and Rules for Sweepstakes in Virginia
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.
Tobacco-related sweepstakes are not allowed in Virginia.
Contests: are allowed as long as the sponsor awards the prize based on skill and not chance.
Sweepstakes: are allowed as long as the sponsor awards the prize based on chance.
Prize Promotion Laws - Virginia Prizes and Gift Act
Virginia does not see witnessing a demonstration or a similar event or going to a sponsor’s premises as consideration.
Virginia prize promotion law prohibits deceptive practices such as simulated checks, invoices or charging for excessively for shipping and handling of prizes.
If the sponsor tells a participant that he/she has won a prize, the sponsor must award the prize within 10 days without obligation or expense to the awardee.
In Virginia, the sponsor must provide verbal or written disclosures to participants eligible to win a prize.
Prize notices or disclosures need to include the sponsor name, the actions that need to be completed to win the prize, any money that the participant must pay to receive the prize, including shipping and handling or purchasing another product or service and any other relevant conditions. Written disclosures include placement, font and language requirements.
In Virginia, there are no prize disclosure requirements if all the participant has to do to be eligible to win is to complete an entry form and as long as a participant is not required to listen to a sales pitch or pay money for any product or service.
Virginia 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: 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.