Sweepstakes Promotions

Sweepstakes promotions are powerful and cost-effective marketing tools for increasing brand awareness, as well as promoting services and products. While the expansion of the Internet and Social Media have made national sweepstakes more accessible, a myriad of legal pitfalls exist, regardless of the size of the business or economic interest involved. Given the patchwork quilt of state gambling laws, as well as Federal Trade Commission and state advertising guidelines, retaining knowledgeable legal counsel to navigate and provide advice to ensure compliance with applicable laws is a necessity.  

Lewis Roca Rothgerber Christie’s Interactive Gaming Law Attorneys assist clients with the below issues on almost a daily basis so that they can focus their efforts where they should—running their business.  

Sweepstakes Promotion Design and Structural Analysis 

State laws typically define illegal gambling using three elements: (1) the award of a prize; (2) determined on the basis of chance, including a future contingent event outside of the participant’s control; and (3) where consideration is required to be paid. A lawful sweepstakes is conducted by removing the element of consideration. The most common sweepstakes model allows participants to pay for their entry, but also provides anyone who wishes to enter the sweepstakes for free the opportunity to do so via an Alternative Method of Entry (“AMOE”). However, an AMOE cannot be used merely as a ruse designed to offer gambling, and complicated nuances have developed in several states as a result of attempts to do so. This includes evaluating whether AMOE participants face real or perceived disparities compared to paid entries, how often such promotions can occur, and the nature of the products and services that can be promoted. Therefore, we analyze the design and structure of our client’s proposed sweepstakes to avoid or mitigate potential liability.  

State Bonding and Registration | Third Party Platforms

Sweepstakes promotions are governed by the laws of each state where they are offered. While most states have common requirements, including disclosures, filing of winner's lists, and the substance of terms and conditions, there are other requirements unique to certain jurisdictions. For example, a few states have bonding and registration requirements when the prize value exceeds a certain amount.  Also, those who conduct sweepstakes promotions on third party platforms, such as Facebook, must comply with the platform’s policies and other requirements. As interactive gaming attorneys, we are intimately familiar with these state and third-party platform requirements.

Official Rules

One often overlooked but extremely critical issue is that sweepstakes official rules are just like any other binding contract. However, rather than contracting with just a few other parties, or another sophisticated company, the client is contracting with a nearly unlimited amount of users. Therefore, drafting detailed, clear, and accurate rules is crucial, given that (i) a company could face potential liability from numerous sources, and (ii) under basic principles of contract law, ambiguous or unclear provision will be interpreted against the drafter (i.e., the company). Without clarity and precision, a sweepstakes operator will be exposed to serious liability from several sources, including civil lawsuits (class action or individual), as well as government actions by state attorney’s general and the FTC, based on consumer protection issues (promoting fraudulent schemes or engaging in other forms of false or deceptive advertising on the Internet). Therefore, we assist our clients in drafting clear and precise official rules in order to limit these serious risks.   

Gaming

Anthony N. Cabot
Anthony N. Cabot
Partner
Las Vegas
acabot@​lrrc.com
702.949.8280 / vCard
Karl F. Rutledge
Karl F. Rutledge
Partner
Las Vegas
krutledge@​lrrc.com
702.949.8317 / vCard
Jason Bacigalupi
Jason Bacigalupi
Associate
Las Vegas
jbacigalupi@​lrrc.com
702.474.2641 / vCard
Mary Tran
Mary Tran
Associate
Las Vegas
MTran@​lrrc.com
702.474.2666 / vCard

Intellectual Property

Jennifer A. Van Kirk
Jennifer A. Van Kirk
Partner
Phoenix
jvankirk@​lrrc.com
602.262.0203 / vCard

Related News

01/30/2017
Online promotions can run afoul of the law
‘Mundane' online sweepstakes and contests may have gambling consequences
11/28/2016
Rutledge named Gaming Law Committee chair of American Bar Association Business Law Section
Nevada-based partner provides leadership in growing area of economic impact

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Primary Services

Interactive Gaming Services

Key Contacts

Karl F. Rutledge
Karl F. Rutledge
Partner
702.949.8317
Anthony N. Cabot
Anthony N. Cabot
Partner
702.949.8280