We run a lot of promotions for clients. Understandably, businesses want customers to make purchases. If you require a purchase of any sort to enter into a promotion where a winner is drawn by chance, it is illegal. Against the law. As in, you can be fined. The government would consider that an illegal lottery.
There are three things to consider as you’re building your promotion:
1) Prize
2) Chance
3) Consideration
Let’s say you are asking folks to make a purchase on your website and then they are automatically entered into a drawing to win a prize. Your promotion has:
1) a prize
2) there is an element of chance involved (random drawing to win)
3) and there is consideration which is legal speak for “they had to buy something.”
Since you have all three elements, it’s no longer a simple sweepstakes, but is instead, a lottery and it is illegal for anyone besides the government to run a lottery.
When I was a kid, candy bars used to run sweepstakes all the time where you’d send in the wrapper for an entry. Sounds illegal, doesn’t it? Well, not if you also give people a FREE way to enter. In the “Case of the Candy Bars” (which Nancy Drew surely solved), there was a message on the candy bars stating where you could simply mail your contact info as an entry. The government long ago decided that the cost of a stamp is not consideration.
When we first started running contests online-only, we wondered if Internet access was “consideration” since it does, after all, cost money for a web connection. (More and more every day, it seems.) I believe it’s been decided that you can run sweepstakes with online-only entries as folks can access the Internet at public libraries. (But just to be safe, you could offer an alternative method of entry, such as mail-in.) I found this piece from the National Law Review to be helpful if you want more details.
Here’s a real-live example of what I believe is an illegal lottery being run by my beloved Louisville Cardinals. They are asking for a $25 donation for the “chance” to have your photo taken with the team’s championship trophies. Everybody who chips in $25 gets to have their picture taken with one trophy – that’s not illegal since there is no chance involved. But THEN they are going to draw winners who get their picture taken with all three trophies – sounds like chance to me.
Click on the photo below to get a closer look and to see the exact language: “Donate $25 for an opportunity at a private photo session . . .” I hear consideration ($25), chance (“opportunity”), and a prize (“private photo session”) in that statement. Do you?
Is this promotion legal?
I assumed some junior staffer who doesn’t know better put this together. I made similar mistakes when I was starting out! This is my hometown team and I don’t want to see them get fined so I messaged them on Facebook. They haven’t replied. I mentioned it in a comment on one of their posts. They deleted the post (so nobody would see my comment, I assume). OK, so now I can only assume they know they are probably doing something illegal and are hoping they won’t get caught. Maybe they have permission from the State to run this. Or maybe they’re a nonprofit and the rules are different.
Note this comment from Devon Thomas, who has listed his/her employment on Facebook as the Assistant Athletic Director – Development at University of Louisville:
At any rate, this is a good illustration of what NOT to do. If you want to require a purchase, than everybody has to get a prize, or you have to have an additional “free” way to enter. Got it?