SWEEPSTAKES AND CONTESTSa bonanza of brand awareness or a potential minefield for the unwary

Sweepstakes and contests are two common promotional games that can significantly increase brand awareness and can quickly create a "buzz" around a new product. However, there is a vast array of laws and regulations that pose numerous pitfalls to the unwary game promoter or sponsor. Putting on a sweepstakes or contest involves much more than simply announcing the promotion, collecting entries, and giving away prizes. All sweepstakes and contests will be subject to both federal and state laws which can vary widely in their complexity and the affirmative steps required of the promoter or sponsor prior to conducting the game. For a nationwide game that means compliance with federal laws and the laws of all 50 states.

The most important requirement that promoters and sponsors must keep in mind is that the game cannot be considered an illegal lottery. That is the game must not require "consideration" to play, hence the common buzz words "No purchase necessary." The definition of "consideration" varies by state and may include additional prohibitions on what a potential entrant may or may not be required to do or provide to participate in the game. Other potential pitfalls that game promoters and sponsors must be aware of include: (1) registration and bonding requirements (which may require up to 30 days advance registration of a game); (2) satisfying the "alternative means of entry" requirement; (3) requirements for running an "online" game; (4) the amount and detail of disclosure required in "rules" of the game; (5) eligibility of entrants; (6) advertising of sweepstakes; and (7) fulfillment and post-fulfillment issues, including posting a list or lists of winners or sending the winners list to the required state authority and obtaining the proper releases from the winners.

A successful sweepstake or contest will provide invaluable brand awareness, goodwill, and excitement. A promotional game that does not comply will all federal and state laws, however, can lead to civil liability, civil fines, and criminal penalties.