I'm sure you've seen Coca-Cola, McDonald's and many other
mega businesses use sweepstakes marketing campaigns to bring
in business. Those companies do it repeatedly because it
has proven to be effective marketing.
This highly successful marketing technique, that you can use
in your business, must be done properly, following the
various State and Federal laws. If you don't know what to
look for, the legalities can be legal quicksand.
Sweepstakes and contests are legally very different animals
although people confuse the two. Contests are considered
games of skill. In a game of skill winners are determined
by how well they complete a given task.
Sweepstakes on the other hand, are games of chance. In a
game of chance winners are determined randomly by some
event. An example of a sweepstake would be a random drawing
to determine the prize winners, where the entrant has no
control over the outcome. In sweepstakes, to be legal, all
entries must be free, without any cost or consideration to
the entrant. Consideration could be an entry fee, a product
purchase or some other form of cost to the entrant.
Rules are a key element in legally running either one. The
rules form a legal contract, the agreement, between the
promoter and entrant and can't be changed once published.
In criminal law every crime contains various elements. For
example, in most states a promotion is not legal if it
involves three elements: prize, chance and consideration.
Therefore, in a game of skill any element of chance must be
eliminated to be legal. That allows promoters to require
consideration, an entry fee, for an entrant to participate,
except in Maryland, North Dakota and Vermont. This can be
accomplished, for example, by requiring the entrant to
submit a short writing, for judging, on a particular topic.
The judging criteria, for selecting a winner, must be
clearly set forth in the rules.
In designing your contest you should know that some states
prohibit them and your rules should clearly state the cons
test is void in the states you want to exclude. It is
important to note that the jurisdictions you want to
exclude, be specifically named. It is not enough to use a
catchall exclusion such as "void where prohibited." Some
states require registration, so as a practical matter, you
may want to exclude those as well.
Use your imagination, think of a great promotional concept,
and start taking advantage of this popular marketing
technique today.
Important Disclaimer: All information is generalized,
presented for informational purposes only, not legal advice,
and presented "as is" without warranty or guarantee of any
kind. Readers are cautioned not to rely on this information
and to consult an attorney for their specific needs. Laws
change from day to day and each individual's legal situation
and requirements are different.
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