Federal Sweepstake and Contest Laws

Federal Sweepstakes Laws & Contest Rules

In the United States, sweepstakes promotions and contests are regulated by several Federal organizations. They have developed nation-wide rules relating to promotions that must be followed. A few rules are:

  • paying taxes on any prizes won,
  • recording winnings with the government, and
  • transferring firearms through federally licensed dealers.


There is also regulation around private lotteries, which are illegal in the U.S. In order to be legal, sweepstakes and contents need to differentiate themselves from lotteries. A lottery is defined by law as a promotion that has all three of the following elements:

  • The promotion is offering prizes that have value
  • The winners of the promotion are chosen at random
  • There is an element of consideration

In order to NOT be classified as an illegal lottery, at least one of these elements needs to be missing. Because prizes and luck are central to sweepstakes, the element of consideration is usually eliminated.

 

State Specific Sweepstakes & Contest Laws

Besides the federal considerations, every state has its own specifics regarding sweepstakes and contest law. For example, New York, Florida, and Rhode Island all require promotions to be registered and bonded and nearly a quarter of all states have restrictions on offering alcohol as a prize.

 

There are many more, so select a state below to learn about its specific laws.