Category: Sweepstakes

Sweepstakes Risk Assessment for Businesses & Consumers Alike

Running a sweepstakes carries significant risks for both the businesses hosting them and the consumers entering them. These risks have become more complex due to stricter regulatory enforcement and the rise of AI-driven fraud. Here is a breakdown of what makes a sweepstakes “risky” from both perspectives. 1. For Businesses: The “Legal Minefield” If a business makes a mistake in the structure or marketing of a sweepstakes, they can face

July 13, 2026

Back to School Promotion Planning

There are a lot of shoppers and eyes online in July, August and September. Perfect timing for running online promotions geared toward back-to-school. And now is the perfect time to start planning! Simple Back to School sweepstakes with great prizes is always popular as there is low or no barrier to entry, yet the reward can be high. A social sweepstakes may work for a campus event. User-generated content contests

June 30, 2026

Regulated Industries and Sweepstakes

Some regulated industries require special disclosures and/or have special legal requirements for running sweepstakes. These regulated industries include alcohol, tobacco, gasoline, dairy, banking, pharmaceuticals, and cause-related marketing. It is absolutely essential to know the laws of these industries, or partner with a promotional marketing firm who works with legal counsel who is familiar with these laws, before undertaking a contest or sweepstakes. Navigating sweepstakes in these sectors requires careful planning

June 23, 2026

Determining the Odds of Winning

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

June 8, 2026

Federal & State Lottery Laws Explained

According to Federal Lottery Laws, it is illegal to operate a lottery through the mail or over the telephone. The “Standard Lottery Rule” is a legal baseline that defines an illegal lottery. The 3 Elements of an Illegal Lottery – A sweepstakes crosses the line into an illegal lottery if it contains all three of the following: Prize: Something of value is offered. Chance: Winners are chosen randomly. Consideration: Participants

June 3, 2026

How the High Cost of Gas Affects Your Promotional Offers

High gas prices have driven a shift in consumer behavior and marketing tactics. Americans are driving less and changing vacation plans, leading companies to reallocate marketing budgets toward digital giveaways. Sweepstakes now increasingly focus on offering “free” gas money and food to attract cash-strapped consumers. The current combination of higher fuel costs, inflation, and restricted traffic in the Strait of Hormuz has pushed the national average for regular gasoline to

May 21, 2026

Sweepstakes Prizes are Considered Income by the IRS

In the eyes of the IRS, a sweepstakes prize is not a “gift,” it is income. Under the Internal Revenue Code, specifically Section 61, “all income from whatever source derived” is taxable unless a specific exception exists. Because sweepstakes winnings are considered “other income” (similar to a bonus or a second job), they are subject to the same federal and state income tax rates as your regular salary. Here is

May 21, 2026

How to Avoid Deceptive Advertising

In the context of sweepstakes, deceptive advertising occurs when a promotion uses misleading statements, omissions, or visual trickery to give a participant a false impression of their odds, the prize value, or the requirements to win. The Federal Trade Commission (FTC) and state Attorneys General monitor these closely. If a “reasonable consumer” would be misled by the advertisement, it is considered deceptive. Common Forms of Deceptive Advertising 1. The “False

May 20, 2026

What is Equal Dignity in Sweepstakes?

In the world of sweepstakes, Equal Dignity (also known as the “Equal Dignity Rule”) is a legal principle ensuring that people who enter for free have the same chance of winning as those who pay. Because “paying to enter” a game of chance constitutes a lottery—which is illegal for private businesses to run—companies must provide an Alternative Method of Entry (AMOE). The Equal Dignity Rule dictates that this free entry

May 20, 2026

What is a Potential Prize Winner?

In lawful and promotional contexts, a potential prize winner is someone whose entry has been selected in a contest or sweepstakes, but whose eligibility hasn’t been officially confirmed yet. Unlike how many onlookers have speculated on message boards that it seems to be a scammy term, rest assured, it is not (unless being used by a scammer, of course!). Think of it as a “pre-verification” stage. If you get a

May 15, 2026