Preparing an Odds Statement is a legal requirement designed to provide transparency and prevent “deceptive advertising.” Because you cannot predict exactly how many people will enter your sweepstakes, the wording of this statement depends on the type of promotion you are running.
Here is how to prepare a compliant odds statement.
1. The Standard “Variable” Odds Statement
This is the most common format for general random-draw sweepstakes. Since the total number of entries is unknown until the end, you use a statement that acknowledges the variable nature of participation.
Standard Phrasing:
“Odds of winning depend on the total number of eligible entries received during the Entry Period.”
2. Fixed Odds (Instant Win or Game Piece Promotions)
If you are running an “Instant Win” game where the prizes are pre-seeded (e.g., behind digital “scratch-off” cards or under soda caps), you must provide a mathematical ratio. This is calculated based on the total number of game pieces produced versus the number of prizes available.
Standard Phrasing:
“Odds of winning an Instant Win prize are 1 in 5,000. Odds depend on the time of entry and the number of prizes remaining at the time of participation.”
3. Tiered Odds (Multiple Prize Levels)
If you have a Grand Prize, Second Prizes, and Third Prizes, you should clarify the odds for each specific tier.
Standard Phrasing:
- Grand Prize: “Odds of winning the Grand Prize depend on the number of eligible entries received.”
- Secondary Prizes: “The odds of winning a Secondary Prize are 1 in 1,000.”
4. The “4 Ps” of Odds Disclosures
To ensure your statement isn’t considered “deceptive,” it must meet the Clear and Conspicuous standard enforced by the FTC:
- Prominence: The odds statement should be in a font size that is easy to read.
- Placement: It must be included in the Official Rules and is often repeated in a “short-form” disclosure on the entry page (usually near the “Enter” button).
- Presentation: Use simple, non-legal language.
- Proximity: Do not hide the odds at the very bottom of a 20-page document without referencing them in the main promotional materials.
5. Compliance Checklist
Regulatory scrutiny on “transparency” has increased. When drafting your statement, ensure:
- Uniformity: The odds must be the same for both “Paid” entries (if applicable) and “Free” (AMOE) entries.
- Estimate Accuracy: If your state requires an estimate (some localized regulations do), ensure your “estimated number of entries” is based on historical data or a reasonable projection.
- Transparency: Sponsors should provide real-time updates when an Instant Win Game Grand Prize is claimed and verified. This is a crucial compliance best practice to prevent advertisements from being misleading and the promotion from being classified as an illegal lottery. The official rules governing this Instant Win Game should clearly state that the odds of winning is dependent upon the number of prizes remaining at time of game play. If users continue to play for an advertised prize that is no longer available, the game risks being flagged for deceptive practices.
Example Odds Section for Official Rules:
ODDS OF WINNING:
The odds of winning a prize depend on the total number of eligible entries received. For example, if 10,000 eligible entries are received and there is 1 Grand Prize, the odds of winning would be 1 in 10,000. A purchase will not improve your chances of winning.
To read more posts by Marden-Kane, please visit our main blog page or Contact Us.