Sweepstake and Contest Laws

Laws and Rules for Sweepstakes in Maryland

First, it helps to understand the difference between a sweepstakes, contest and lottery. In a sweepstakes, winners are chosen randomly from all participants. In a contest, the winners’ entries are usually judged and are based on a skill or criteria. In a lottery, winners are chosen at random, but in order to enter, the participant must pay. A payment is called a consideration. Only states can hold lotteries, so all private lotteries are illegal.

To avoid being classified as an illegal lottery in any state, your promotion can only have 2 of these 3 elements: prize, chance and consideration. Keep in mind, consideration can mean anything of value, including a fee or even a significant effort (i.e., time spent shooting/submitting a photo, etc.)

Here are possible combinations:

• Prize + consideration + chance = illegal lottery or gambling
• Prize + consideration = legal contest (in most jurisdictions)
• Prize + chance = legal sweepstakes

All sweepstakes in the United States must meet the following regulations:

1. No purchase necessary. You can enter the sweepstakes without buying a product or service.
2. Winners are required to pay taxes on prizes they win.

Sweepstakes are regulated nationally and by state by the following organizations:

• Federal Trade Commission (FTC)
• Federal Communications Commission (FCC)
• United States Postal Service (USPS)
• United States Department of Justice (DOJ)

State Specific Sweepstakes & Contest Laws

Besides federal considerations, every state has its own specifics laws regarding sweepstakes and contests.

Maryland (MD)

Maryland also wants to ensure no purchase is necessary. In this state, a purchase can’t be required even if the contest winners are chosen based on skill.

Contests: Maryland places prohibitions on charging a consideration, however the applicability of the prohibition is unclear. Sponsors should exercise caution charging a consideration.

Sweepstakes: are allowed as long as the sponsor awards the prize based on chance.

Prize Promotion Laws - Maryland Consumer Protection Act - Prohibition On Consideration and Mandatory Purchases

• Maryland prohibits the sponsor from notifying a person that he or she has won a prize or is eligible to win a prize, if in order to claim the prize the person must buy products or services, pay money or submit to a sales promotion or presentation efforts. This prohibition applies to all promotions included those made by direct-mail.
• Maryland prohibits offering any incentive in exchange for attending a seminar or sales presentation.

Legal Review Criteria: Dominant Factor Doctrine or Material Element Test when assessing whether or not chance determines the outcome of a promotion.

Note: the information above is for informational purposes only and should not be construed as legal advice. Sweepstakes and Contest promotional laws change and the above may not reflect the must current laws.