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 West 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.
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.
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 - West Virginia Prizes and Gifts Act
West Virginia does not view entering sweepstakes via entry form, mail-in form, toll-free phone, or visiting a retail location as consideration.
West Virginia prize promotion law prohibits deceptive practices such as simulated checks 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.
If the sponsor tells a participant that he/she is eligible or has a chance to win the sponsor must provide prize disclosures.
In West Virginia, prize disclosures can be verbal or written but if they're written there are specific requirements for placement, font and text.
A promotion is excluded from prize disclosure requirements if in order to enter the participant only has to complete a web entry form or mail-in entry form or local store entry form or toll-free phone call and the participant is not required to listen to a sales presentation or purchase any good or service.
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.