Sweepstakes, Contests, and Lotteries Defined:
Contests, on the other hand, draw a winner based on some merit. The person with the funniest pick-up line, most moving essay, most beautiful photograph, tastiest recipe, or whatever will be chosen as the winner.
Lotteries are prize drawings where people must pay money to buy a chance to win. Lotteries are highly regulated, and are usually only legal if they are run by the government.
The Difference Between Sweepstakes and Contests:
This rules out the second element of an illegal lottery: winners chosen by chance. This means that it is legal to charge a fee to enter contests or to have an element of consideration that is beneficial to the sponsor (i.e., a recipe that will be used in product advertising).
Examples of Skill Contests:
- Nivea for Men Up 4 Anything Dream Week Contest, which looked for photo & video submissions showing how guys would train for a special vacation.
- Miami Herald Cartoonist Search Contest where cartoonists vied for the chance to be featured in the Miami Herald.
- 7 Crowns Recipe Contest, where the best recipe earned a free vacation.
Examples of Sweepstakes:
- DIY - $350,000 Best Built Home Sweepstakes which awarded a random winner $350,000 cash to remodel or purchase a house.
- HGTV - Big Backyard Splash Sweepstakes which offered a vacation and $100,000 cash to the lucky winner.
- Honda - Ride the Wave Sweepstakes which gave a randomly chosen winner a trip to Disney and a new car.
Basic Sweepstakes Laws:
- Winners Chosen by Chance
To avoid being classified as an illegal lottery, sweepstakes must ensure that at least one of these elements is missing. Because prizes and luck are central to sweepstakes where the winners are drawn at random, legitimate promotions can never have consideration.
That means you will never have to pay to enter legitimate sweepstakes and purchasing a product will not improve your odds.
Note that contests, where the winners are chosen based on skill, can legally charge a fee to enter, because the element of chance is not present in the giveaway.
Some states have their own sweepstakes rules; for example, sponsors in New York must bond prizes valued above $5,000. For more information, see my articles about sweepstakes laws and regulations.
Why Do Sponsors Hold Prize Giveaways?:
Remember to try sponsors' products whenever possible, to be polite and gracious when asking questions about sweepstakes, and to thank them in writing for your wins. Read more about sweepstakes etiquette to learn how you can encourage sponsors to hold more giveaways.