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Guide to Contests, Sweepstakes, and Lotteries

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Guide to Sweepstakes, Contests, and Lotteries:

Sweepstakes are prize giveaways where the winners are chosen by luck. Prizes can range from stickers and t-shirts to houses, cars, and enormous cash wins.

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:

Many people use terms "contests" and "sweepstakes" interchangeably. Technically, however, contests are giveaways that have some element of skill to them. For example, entrants need to answer a trivia question, write an essay, or create a recipe to participate.

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:

Contests take a number of different forms. Anything where you can display a skill or a special attribute, from cooking and essay contests to cutest kid and bikini contests, is fair game. Examples of contests include: For contests that you can enter today, see the Current Contests List.

Examples of Sweepstakes:

Promotions where the prizes are given away by chance are nearly always sweepstakes. Some examples include: For sweepstakes that you can enter today, try BIG Sweepstakes to Enter Daily, the Top Car Sweepstakes and the Instant Win Sweepstakes.

Basic Sweepstakes Laws:

The U.S. has strict laws barring private lotteries. A lottery is a promotion that has three elements:
  1. Prizes
  2. Winners Chosen by Chance
  3. Consideration

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?:

Contests and sweepstakes come out of the marketing budget of companies who are looking for innovative ways to promote their products, so it is important to support sponsors whenever possible. When sweepstakes are very successful, sponsors are more likely to continue to offer prizes. For more information, read 6 Reasons Why Companies Offer Sweepstakes.

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.

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