As businesses try to attract viewers to their websites, social media pages and online ad campaigns, online contests have become more prevalent. The opportunity to win a prize can provide consumers with an incentive to visit an advertising page, view a video, reply to a survey or take other action. Businesses who offer contests must be aware of the applicable state laws that regulate sweepstakes, contests and lotteries. In the online world, which knows no state boundaries, this means that businesses may need to consider many different state laws — register with state authorities as needed — because the online world knows no state boundaries.
However, the various state laws do exhibit some common themes. In general, a sweepstakes or contest includes the elements of a prize, and randomness or chance. If the contest also requires consideration, then it may be considered an illegal lottery in many states. Consideration is not limited to payment, but can also include a requirement that the user perform certain tasks (such as a purchase a product, or even visit a website multiple times).
In order to comply with the laws of various states and avoid registration requirements, advertisers who implement online contests should keep multiple rules in mind:
- clearly post the official rules of the contest;
- provide a means of entry that requires no fee or other consideration;
- ensure that employees of the contest sponsor (and their families) are not eligible to participate;
- clearly describe the type and number of prizes that will be awarded;
- explain how and when the winner will be notified; and
- publish the closing date for submission of entries.
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