What Every Marketer Should Know About Sweepstakes and Contest Laws in the U.S.

One of the reasons why contests and sweepstakes work so well is because consumers have faith that these promotions are legitimate and that the prizes promised will be delivered as presented. This was not always the case, but today laws are in place to protect consumers and fine companies that don’t play nice. In the U.S., the Federal Trade Commission (FTC) regulates most sweepstakes and promotions. The rest of the regulatory work is handled at the state level, with every state having their own set of laws for sweepstakes and contests. SMS sweepstakes are also bound by these rules.

Disclaimer: I’m not a lawyer and the following information is not legal advice. It’s meant to guide marketers in running promotions. You should contact an attorney for specific advice.

All sweepstakes in the United States must meet the following regulations:

1. No purchase necessary. You can enter the sweepstakes without buying a product or service.
2. Winners are required to pay taxes on prizes they win.

What is the difference between sweepstakes and contests?

  • In Sweepstakes the winner(s) is selected randomly from a group of entries.
  • In Contests the winner(s) is determined primarily on a basis of skill by a judging body. An essay contest is one example.

What should I do if the sweepstakes prize is $5,000 or more in cash or value?

  • When the approximate retail value of all prizes exceeds $5,000, the sweepstakes (contests do not need to be registered) must be registered in the state of New York and the state of Florida. Registration must be done 30 days prior to the start of the promotion in NY and 7 days prior to the start in Florida.

Do I need a surety bond?

  • A surety bond is basically an insurance policy that New York and Florida hold to guarantee the sponsor will award all prizes. If you register your promotion in Florida or New York, you will need to set up a surety bond in the amount of the prize value.

I heard that in Rhode Island you also have to register your sweepstakes?

  • It’s true, but only if you are running a retail sweepstakes with a prize valued at more than $500. A retail sweepstakes requires the participant to walk into a retail store in the state of RI to enter.

What if I’m giving prizes that are less than $5,000 in cash or value?

  • Then you are good and there’s no need to register the sweepstakes in either NY or FL.

What if my promotion is targeted to children?

  • When promoting to children, the Children’s Online Privacy Protection Act (COPPA) comes into play. Operators of commercial website(s) and online services directed to children under the age of 13 that collect personal information, like a sweepstakes, must be compliant with COPPA. This requires posting your Privacy Policy and obtaining verifiable consent from parents to the collection of information from their child. Big League Chew Sweepstakes Official Rules offer a good example.

What about Mobile, Text to Win (SMS) Sweepstakes and Contests laws?

  • I thought you’d never ask. All federal and state laws apply as in regular sweepstakes. In mobile sweepstakes or contests, where the participants enter the contest via text message (SMS), all of the Mobile Marketing Association’s Best Practices and the Telephone Consumer Protection Act (TCPA) rules should be upheld. As of 2014 the TCPA requires additional opt-in language similar to this;
  • “Message and data rates may apply. Autodialed texts will be sent to your cell phone. Consent is not required to purchase goods or services. To opt out at any time, reply STOP to [your short code]. For help, text HELP to [your short code]. View our privacy policy and terms of service.”
  • It’s extra fine print, but a small price to pay for the most effective way to build a mobile database and gather sweepstakes participants.

What about Facebook promotions?

Facebook recently simplified its sweepstakes and contest rules as follows:

  1. You are responsible for the lawful operation of that promotion, including; The Official Rules and Offer terms and eligibility requirements.
  2. All promotions should be in compliance with applicable rules and regulations governing the promotion and all prizes offered.
  3. Official Rules must include a complete release of Facebook by each entrant or participant and acknowledgement that the promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook.
  4. Promotions may be administered on Pages or within apps on Facebook

What about Instagram promotions?

  1. Every contest must include some variation of this statement of release: “Per Instagram rules, we must mention this is in no way sponsored, administered, or associated with Instagram, Inc. By entering, entrants confirm they are 13+ years of age, release Instagram of responsibility, and agree to Instagram’s term of use.”
  2. Include Official Rules and Terms of Eligibility
  3. To avoid spam, Instagram does not permit you to inaccurately tag content or encourage users to inaccurately tag content.
  4. See the 4 Instagram Contest Best Practices

What about Marijuana or Cannabis promotions?

  1. Follow the Law- with marijuana laws changing at a rapid pace, you have to be very aware of the local and state laws that pertain to marketing and advertising for any type of marijuana or cannabis-infused products. See list of general laws to follow.
  2. Prizes- in general the Sponsor is not permitted to give away cannabis or any product containing cannabis. However, this doesn’t mean that you can’t give away prizes related to you brand. See Marijuana or Cannabis prize ideas.

Running a Sweepstakes for Marijuana or Cannabis Marketing? Our Suggestions…

Need to see specific rules and laws rules and laws by state?

Would you like to see past examples of sweepstakes and contest Official Rules?

Don’t let all of the legal speak discourage you from launching sweepstakes or contests. They are one of the best promotional tools out there by far and you won’t regret your decision to hold one. Like all promotions, just make sure to cross your T’s and dot your I’s.

If you need any help with your next promotion contact us. We are here to help!

The Difference between Sweepstakes and Contests

People often use the words “sweepstakes,” “contest,” and “giveaways” interchangeably. They all mean something different and will affect the type of promotion and rules you use.

The basic definition are:

Sweepstakes are games of chance, where the winner(s) of picked randomly

Contests are a games of skill, where the winner shows the best skills within a particular set of judging criteria.

Giveaway are promotions where something is given free usually to all participants or the first of some.

In summary:  Contest winner(s) are selected by judges and sweepstakes winner(s) are randomly selected.

If you need help planning your sweepstakes or contest contact us at support@momares.com

Top 5 Benefits of a Facebook Sweepstakes or Contest

Watch Video: https://www.youtube.com/watch?v=xPgSwwHHXpY

Lately we have been asked to help set up and manage Facebook sweepstakes. Our clients are putting in a lot of time and money into social media and they want to see their efforts produce results. Facebook contests and sweepstakes are a great promotional tactic that helps engage and increase fans.

Benefits of a Facebook Sweepstake or Contest

  1. Likes – Yes, the almighty top-level metric and warm blanket of congeniality for brands. A sweepstake or promotion will attract more of your target market to “Like” your page. You can offer the sweepstakes or contests to all current fans and new fans must “Like” your page to enter. The goal here is that once they “Like” you, your posts will appear in their news feeds. This offers a chance for re-engagement with your brand during and after the promotion.
  2. Emails – You can get richer profile information on your fans by asking for email, date of birth, gender, address, zip code, mobile phone or other information as part of the entry form. This is also an opportunity to ask research or poll questions.
  3. Engagement – All brands want customers speaking positively about them and to them. Watching metrics like post consumption, link clicks and positive feedback will allow you to measure how well you’re doing in this area. By increasing engagement, you’ll also push your page updates to more fans, increase awareness, and rank higher in graph search (Facebook’s search engine).
  4. User-Generated Content – A photo, video or story contest will produce valuable content created by fans. This is the kind of content that fans love to share with their friends. They are proud of their pictures and stories and want to tell their friends about them. In return, your brand reaches new audiences through loyal fan ambassadors.
  5. Market Research – We recently asked Pet Supermarket fans to “Tell Us What You Love About Your Pet” as the sweepstakes entry. The answers were moving, funny, sometimes sad, but mostly endearing. People love their pets and love talking about them. The most interesting result was that this promotion helped us better understand Pet Supermarket customers and hear their feelings behind their relationships with their pets. These sentiments can be used later to refine the way Pet Supermarket presents its messages to customers. Think of entries as valuable market intelligence and potential ads for your brand written by customers.

No Goals, No Glory

Before you start, set your goals. How do you know you had a successful Facebook sweepstakes if you don’t know the end goal? Goals will also help you plan your sweepstakes and determine how big the prize (incentive) and promotional effort should be. Goals can include:

  1. Increase in total Likes by X% of current fans
  2. Increase in new emails by X% of current database
  3. Increase engagement or awareness

Types of Facebook Promotions

Sweepstakes – The simplest and most popular, this type of promotion collects all eligible entries and selects a winner(s) randomly. Sweepstakes usually get the most participants because they are easy to enter. Just fill out the entry form and you’re in. If gaining “Likes” or increasing your email database is the objective, sweeps are a good choice.

Contests – These require that participants present some skill within the required contest guidelines. Participants compete against each other and/or within a judging criteria. For example, a simple contest can ask participants to add a photo caption to a photo you provide or it can ask entrants to show the best picture of a sunset. The barrier to entry is higher than a sweepstakes (make sure you have a good number of fans before starting), but engagement is also higher if that’s your goal. In a contest, you’ll also need to decide how you’ll choose the winner. This article on judging and choosing a winner will help.

If you’re going to set up a Facebook promotion, give the new Facebook guidelines a look to ensure you’re compliant with their rules. If you need any help, let us know.

How to Judge a Contest: Guide, Shortcuts and Examples

What is a Contest?

A contest is an activity where skill is needed to win. Unlike a Sweepstakes where a random draw identifies the winner, in a contest the participants has to take an action that requires some degree of skill. That degree of skill depends on what the promotion or event is asking the participant to do. For example; in an essay contest, participants enter and compete by submitting original writing.

The Legal Contest Formula 

Prize + consideration (monetary fee or demonstration of skill) = legal contest (in most jurisdictions)

Are Contest Legal in the US?

Yes. All 50 States allow contest promotions. All contests are allowed as long as the sponsor awards the prize based on skill and not chance.

See Contest Rules and Laws by State.

The Judging Criteria

Contests also have an element of competition that requires the Sponsor or agency to set clear contest judging criteria so participants know how their entries will be judged. This criteria will also tell the judging body what to look for and how to assign value or rank entries.

As a marketer, you can save yourself a lot of potential trouble, and complaints, if your judging criteria is clear to all participants and judges. For example: “Essay Submissions must be in English, comply with Official Rules, meet all requirements called for on the Contest Website and be original work not exceeding 1,000 characters in length.”

The “How-To” Guide for Judging

In a contest, the judging criteria is an attempt to focus the participants, as well as the judges, on the expected outcome of the entry. Properly designed judging criteria aims to minimize the judges unconscious biases and focus their attention on the qualities that are going to be weighed and assigned a value or score. For example, a judging criteria score sheet may rank values as “33.3% for creativity, 33.3% for originality; and 33.3% for adherence to topic.”

Judges (ideally more than one) should be experts or have some degree of expertise in what they are judging. This is not a requirement, but it helps the Sponsor or contest administrator select the winner. The contestants also gain a sense of fair play when they see the winner was chosen by experts.

How to Pick Judges for the Contest

If you can’t find expert judges, then individuals or a group with a clear understanding of the judging criteria and no conflicts of interest or bias could serve as judges. Beyond the judging criteria, the judges should have seen enough examples of the work being judged to determine what is considered poor, average and exceptional within the criteria.

Judges Goals

Ultimately, judges aim to assign a total value or points to each entry and select the winner based on total amount of points earned.

Judging Shortcut

A shortcut to judging large numbers of entries is to use social media networks to judge on your behalf up to a certain degree. For example, you can run your contest on Facebook and have the fans vote for the top five entries. From there a more formalized judge or contest administrator can select the winner based on the criteria. This can work well, but there are risks associated with fan voting. One of the risks is that participants can simply ask their friends to vote for them regardless of the quality of the work. It undermines the promotional effort when a poor entry gets lots of votes. This is why we don’t recommend that fan votes make the final decision on who wins.

Protect Your Contest With Judging Criteria

Having your judging criteria set will also protect the integrity of the contest and guide judges if there is a tie. A well-articulated judging criteria will explain what to do in the event of a tie. For example; “In the event of a tie for any potential Winning Entry, the score for Creativity/Originality will be used as a tiebreaker.” Or “If there still remains a tie, Sponsor will bring in a tie-breaking Judge to apply the same Judging Criteria to determine the winner.”

Rules for Social Media Contests

Contests are allowed in all social media platforms as long as you follow state laws and the social media platform’s own set of rules.

Can You Charge Participants an Entry Fee?

Yes, as long as the winners are chosen by skill and not chance (randomly).

Remember: Prize + consideration (monetary fee or skill) = legal contest (in most jurisdictions)

Contest Official Rules Examples

Better Homes & Gardens America’s Best Front Yard Official Contest Rules

Bottom Line: Contests are a Great Marketing Tool

Contests are worth the effort and repay the sponsor handsomely. They’re fun and generate a lot of buzz, awareness and potential sales for the sponsor. Just make sure your judging criteria are set in place.  If you need any help with your contest let us know at support@sweeppea.com.

Need help witha Contest? See our Contest Management Services

Want to build a sweepstakes by text? See our features and pricing.

Morton Salt 100th Birthday Sweepstakes Prize Is Not Salt, But You’ll Need Salt!

mobile sweepstkes, momares

Not Salt

When you sell salt, giving away your product is not a good option as a sweepstakes prize. That’s why Geico doesn’t giveaway insurance or Bufferin aspirin bottles. They just aren’t very attractive prizes. Salt, as important for food flavoring as it is, it is not a very desirable prize since salt is readily available, inexpensive and boring.

A Prize They Want

This is why the folks at Morton Salt are giving away other prizes like Wüsthof Knifes and Cuisinart Mixers. These prizes, or better yet, culinary tools are all related to the things majors salt users love, which is to cook. And salt users would like to win new cooking tools thus enticing them to enter the sweepstakes and instant win game. Morton Salt has effectively tied their prizes (desirable cooking tools) and brand to an activity their number one customers enjoy in hopes that when the buy salt, they’ll buy Morton Salt.

It’s Missing Mobile Entry for the Busy Text (SMS) Addicted Mom’s

I would have liked to have seen a mobile entry component to the sweepstakes. I can image busy moms and chefs finding it way easier to text MORTON to 65047 to enter for a chance to win, instead of having to “Like” Morton on Facebook and then complete a form to enter. I do like the prize selection and instant win component. Well done Morton Salt and Happy 100th Birthday!