Hawaii Sweepstakes and Contest Laws

Federal Sweepstakes and Contest Laws

In the United States, promotions are controlled by the Federal Trade Commission, the Federal Communications Commission, the United States Postal Service, and the United States Department of Justice. These organizations regulate the nation-wide rules relating to sweepstakes and contests, like:

  • Winners are required to pay taxes on any prizes won; a prize over $600 is considered miscellaneous income to the government
  • Sponsors must issue a 1099 form to winners’ of prizes valued over $600
  • Guns offered as prizes must be transferred to a Federally Licensed Firearm Dealer who will go through the process of registering the gun to the new owner
  • Official rules must clearly identify the value of the prize as the ARV or Approximate Retail Value based on the fair market value at that time

Registration and bonding will be determined by the prize value and is handled on a per-state basis.

Additionally, the United States has strict laws barring private lotteries, so 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.

Hawaii Sweepstakes and Contest Laws

In Hawaii, you are forbidden from promoting a contest or sweepstakes unless you give out all of the prizes. If the prize includes travel, you are required to have “Sellers of Travel” registration. You also cannot offer a prize of real property unless the offeror files and maintains with the director of commerce and consumer affairs a bond in a sum not less than $10,000, executed by the offeror, and naming the director as the obligee and a surety company authorized to do business within Hawaii as surety.

Disclaimer: This information is not complete and only aims to display the most prominent state-specific deviation from Federal laws.

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