Sweepstake and Contest Laws

Laws and Rules for Sweepstakes in Minesota

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.

Minesota (MN)

Minnesota promotions must let entrants know of any fees (shipping, handling, etc.) to enter or claim a prize with a notice in 10-point, bold face type on the prize listing: “You must pay $--- to receive this item.”

Contests: are allowed as long as the sponsor awards the prize based on skill and not chance.

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

Prize Promotion Laws - Minnesota Prize Notices and Solicitations

• In Minnesota, if a person has to pay money as a condition of receiving, entering, competing or acquiring information about a prize, the sponsor must provide the person with a written disclosure statement called a “prize notice”. There are specific statutory requirements for placement, font, and wording of the prize notice disclosures.
• If a participant pays money to enter a contest and wins, the sponsor must deliver to the winner the prize as described and promised within 30 days. The prize can be in the form of a voucher or a prize of equal or greater value, or a monetary payment of equal to the approximate retail value of the promised prize.

Legal Review Criteria: Dominant Factor Doctrine 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.