Georgia Court Dismisses Lawsuit against "Deal or No Deal" Sweepstakes

Deal or No Deal, the popular game show where contestants can win up to a million dollars by selecting the right suitcase, also allowed home viewers to play along and enter a sweepstakes with the chance of winning $10,000 grand prizes and iPods. However, the sweepstakes came under fire in court because of the premium fees that entrants paid for entering by text message.

Text messaging is a new way of entering sweepstakes that is quickly gaining popularity. Being able to reach entrants through their mobile devices is quick and easy for sponsors. Furthermore, many of these text messaging sweepstakes are charging premium fees on top of standard messaging charges - in the case of the Deal or No Deal sweepstakes, text message entrants were paying $0.99 per text in addition to their standard fees.

Do Premium Text Messaging Fees Fall Under 'Consideration'?

The premium fees for the text messaging portion of the sweepstakes brings up the subject of consideration. In order for a promotion to be considered a sweepstake and not an illegal lottery, the sponsor cannot directly make money from the sweep.

Many sponsors offer an alternate entry method to avoid the issue of consideration. For example, they might have winning codes printed on specially marked packages of their products, but give the general public the possibility of mailing in for a free code with equivalent odds of winning. Those kinds of sweepstakes are generally considered legal. In the case of the Deal or No Deal Sweepstakes, people could enter online for free.

However, the case was not clear cut. Brandweek reports on a court case in Michigan where a company sold pull tab coupons with a chance of winning along with a free entry method, but the court ruled that selling the coupons was the same as selling illegal lottery tickets.

Deal or No Deal Case Still Leaves the Consideration Question Open

In the Deal or No Deal case, though, the Georgia Supreme Court ruled that the text messaging fees did not make the sweepstakes an illegal lottery and dismissed the case. The reasoning went something like this:

1. The plaintiffs alleged that they, and all other entrants, could recover the $0.99 fee because it was part of a gambling contract. In Georgia, gambling contracts are void, and the losers of such contracts can sue to get their money back.
2. The judges ruled that the $0.99 was never at stake, since it was paid outright. There was no chance of the entrant winning back that $0.99, and therefore it was not part of a gambling contract.

To support its ruling, the court quoted other cases, such as Las Vegas Hacienda v. Gibson which stated that "offering prize to winner of competition does not constitute wagering contract if the offeror does not participate in the competition and has no chance of winning the prize."

Because the crux of the case rested on the allegation that the text messaging fee was part of a gambling contract, the issue of consideration was not covered in this ruling. It will be interesting to see whether premium fees will continue to be a part of text messaging sweepstakes in the future.

Related Articles:
What Are Contests and Sweepstakes? | Georgia Supreme Court Ruling on the Deal or No Deal Sweepstakes