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.

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. Nickelodeon’s Sweepstakes Official Rules offer a good example.

What about Mobile or 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.

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 at support@momares.com

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

How to Judge a Contest: Guide, Shortcuts and Examples

How to Judge a Contest

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 where participants enter and compete by submitting original writing.

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.”

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.

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!

How to Choose the Right Sweepstakes Prize

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Offering a prize that resonates with your target audience is key in attracting future customers. We like to say that, whenever possible, your prize should be your product or service. If you’re a pet product retailer, giving away a year’s worth of free pet food is a good idea as it’s something your customers would want.

But if giving away your product or service is not possible or simply not very exciting (like free tax return services or a year’s worth of car insurance) this is when you need to get creative about your prize.

Yes, you can always give away cash or a gift card, but the idea is to tie your business to a prize that is attractive to your customers.

You want to be speaking to your customers even if it’s through a third-party brand.

Here’s what I mean… let’s say you own a chain of ski rental shops. Your business is renting skis, not selling. Awarding $1,000 worth of ski gear may be out of the question, plus it does not fit your business model. Not a good mix.

What you know is that your customers are skiers and visit ski resorts and facilities.

One prize that would work very well would be an all-expenses paid ski trip to the Four Seasons Resort in Vail, Colorado, with rental ski gear provided by your business.

You get to speak to skiers, your prospective customers, by offering them something they would love to win. It’s also a way to tie your brand to a bigger brand (Vail, Colorado and the Four Seasons) or a brand that reaches new customers for you.

Think of Regal Cinemas partnering with Pepsi to offer a trip to the Oscars. Regal Cinemas is piggybacking on the Pepsi brand and the Oscars event to elevate their brand and attract new customers. And you can do the same, no matter what niche you’re in.

How to Pick The Perfect Sweepstakes Prize? Answer the following questions…

  1. What market is my business in? (Sports retail, pet products, insurance, car rental, etc…)
  2. What does our ideal customer look like? Gender? Age? Marital Status? Geographic location? Income level?
  3. What’s your budget for the prize?
  4. What is the prize you will give away? How many?
  5. Is the prize something that people will get excited about? Not just want, they have to desire it!
  6. Does this prize resonate with your target audience?

Here’s an example:

Market: Fashion
Ideal customer: Female, ages 21-35, single or married, income level of $45,000+
Budget: $4,000
Winners: 1
Prize: $4,000 Shopping Spree
Is prize exiting to your prospective customers? Yes
Is the prize relevant to your business? Yes

Think creatively when selecting a prize. If you are an action sports retailer, a professional photography session of the winner and friends surfing your local break would be a great prize. If you sell Ford cars, a trip to meet the 2015 Ford Mustang Master Sculptor Kevin Goff at the Ford Motor Company Engineering Design Center sounds awesome. Both prizes tie well into and enhance the brand. The right prize is key to designing a successful sweepstakes and is also fundamental to reaching new customers and elevating your brand.

Comments? Tell me on Facebook, Twitter or email me at marcos@momares.com.