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 Wisconsin
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.
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.
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 - Wisconsin Prize Notices
Like all states, Wisconsin views Payment of any kind as a consideration.
Wisconsin views the following not considerations:
Listening to a radio program.
Watching a TV program or commercial.
Completing and mailing an entry form.
Providing a proof of purchase.
Completing an entry form at an event as long as the entry form can be submitted in an area in which an admission fee is not required.
Visiting a retail store as long as participants are not required to make a purchase or pay for admission.
Wisconsin’s in-pack or purchase-to-enter sweepstakes promotions are legal as long as the following conditions are met:
A free method of entry (i.e. Alternative Method of Entry) is available to all.
Product packaging contains Abbreviated Rules with methods of play and promotion End Date.
Sponsor provides the retailer with enough free play forms or codes.
Sponsor does not misrepresent chances of winning.
Sponsor randomly seeds or distributes all game pieces and retains records of the random distributions for at least 365 days.
Sponsor randomly Awards all prizes if the game pieces are not used.
The name and addresses of all winners with prizes over $100 must be available to the state of Wisconsin upon request.
In Wisconsin a prize notice disclosure is required when:
The sponsor represents that a person has won or is eligible to win a prize. The sponsor may not request or accept payment from the winner before the winner receives the written prize notice.
The sponsor is allowed to offer a prize as part of an incentive to attend a sales presentation, but the presentation can’t begin until the sponsor tells the participant of the prize and awards it.
In general, it's advisable that any sponsor includes written prize notice disclosure within the Official Rules of any promotion that charges a consideration in Wisconsin.
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.