Staying on the Right Side of Sweepstakes Law

Sweepstakes (also called prize promotions or games of chance) are a popular tool businesses, marketers, and agencies use to build customer loyalty and collect valuable demographic information about potential consumers. But sweepstakes offers—especially nationwide sweepstakes—can run afoul of federal and state sweepstakes laws if not structured properly from the beginning.

We provide clients with full service legal services for sweepstakes and promotional marketing campaigns. We review promotional advertising copy, draft rules and disclosures, coordinate registration and bonding, handle sponsorships and licensing issues, and help ensure the structural integrity of your promotion. Our significant experience on the regulatory defense side allows us to advise clients on the risks and hot button issues in promotional marketing.

Our sweepstakes law attorneys represent ad agencies, in-house and outside counsel, large corporations, and small to medium-sized business owners. From our headquarters on Madison Avenue in New York City, and our satellite office in New Jersey, we serve client companies and entrepreneurs throughout the United States and Canada. Contact a sweepstakes lawyer at The Lustigman Firm for a prompt review of your legal obligations.

Sweepstakes Basics

A sweepstakes is a promotion in which a prize is awarded to a participant on the basis of chance, not skill. That prize can be monetary or non-monetary, such as free product or a trip. The sweepstakes sponsor cannot require people to purchase a product or to invest “considerable” time or effort in order to enter the sweepstakes.

All sweepstakes must have official rules and those rules CANNOT change once the sweepstakes has begun. Official rules must contain the following kinds of information:

• A “No purchase is necessary” statement
• Start and end dates
• Eligibility requirements (age, residency, and a list of those excluded from participating)
• Methods by which people can enter the sweepstakes, including a “no purchase” method, such as a 3” x 5” postcard
• Any limitations on the number of entries per person or household
• The odds of winning
• A description of the prize(s) and the monetary value
• How the winner(s) will be selected and notified
• Restrictions on receiving the prize(s)
• The sponsor’s name and address

These are only the most basic considerations. Your sweepstakes will also be subject to federal and state laws, which can vary greatly. The value of working with a law firm that concentrates in advertising and promotions law is that our sweepstakes law attorneys stay on top of all legal actions in this area. We can assist you in drafting sweepstakes rules, reviewing promotional marketing advertising and winner’s affidavits, analyzing the structure of your game, and ensuring that registration and bonding issues have been addressed.

Don’t Unnecessarily Risk Lawsuits or Regulatory Action, Be Sure To Consider:

• Some states require a sweepstakes sponsor to register the sweepstakes. Florida, New York, and Rhode Island require registration when the total retail value of the prizes is greater than $5,000 (or $500 in Rhode Island for retail store promotions).
   
• Florida and New York require the sponsor to bond the sweepstakes equal to the total value of the prizes. Once the winners are announced, a winners’ list must be provided to the state(s) in order to release the bond.
   
• State laws may require additional disclosures and may vary based on the value of the prizes being offered and the channels through which it is offered. Internet promotions will have additional requirements. Telemarketing sweepstakes will have mandatory oral disclosures, whereas direct mail sweepstakes must contain, in a mandatory written disclosure.
   
• Records of the prize winners must be retained for a period of no less than 4 years, and entry materials may also need to be retained.
   
• In most instances a list of winners must be posted.

At The Lustigman Firm, our sweepstakes lawyers will help you steer clear of legal conflicts with the FTC, the U.S. Postal Service, and with attorneys general and district attorneys. Contact our law office to speak to a lawyer who understands the needs of your sweepstakes.

Attorney Advertising

From its Madison Avenue office in NYC, The Lustigman Firm provides experienced legal counsel that helps protect the business interests of its advertising and promotional clients around the United States and Canada. Representative clients are located in New York, New Jersey, Connecticut, Florida, Illinois, Massachusetts, Minnesota, Texas, California, Arizona, Nevada, Ohio, Pennsylvania, Utah, Toronto, Montreal, Ontario, British Columbia, and Quebec, We are active members of the DMA and PMA.

The views, opinions, statements, analysis and information contained in these materials are those of the individual authors and do not necessarily reflect the views of The Lustigman Firm or any of its past, present and future clients. These materials (1) do not constitute legal advice; (2) do not form the basis for the creation of the attorney/client relationship; and (3) should not be relief upon without seeking specific legal advice with respect to the particular facts and current state of the law applicable to any situation requiring legal advice. These materials may only be reproduced with the prior written consent of The Lustigman Firm. These materials are provided with the understanding that the authors and The Lustigman Firm are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters, and, accordingly, such entities assume no liability whatsoever in connection with their use.