Federal Sweepstake and Contest Laws
Federal Sweepstakes Laws & Contest Rules
In the United States, there are specific Federal sweepstake and contest laws which are maintained and regulated by several different Federal organizations. These agencies have developed nation-wide rules relating to promotions that must be followed by all sweepstake and contest sponsors, regardless of the state the promotion is taking place in. 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.
Contest Laws by State
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.