Sweepstake and Contest Laws

Laws and Rules for Sweepstakes in Nebraska

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.

Nebraska (NE)

Promotions here must be “no purchase necessary,” even if contest winners are selected based on skill.

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

Sweepstakes (or as known in NE, gift enterprises): are allowed as long as the sponsor awards the prize based on chance.

Prize Promotion Laws- Nebraska Prize Promotions Act

• In a sweepstakes where participants can enter for a chance to win with the purchase of a product, the sponsor can require evidence of the purchase, as long as the payment of the product or service is not greater than it would have been without the promotion.
• In Nebraska, a consideration does not include filling out an entry form, entering by mail or telephone as long as the mailing fees are no greater than the postage of a first-class letter weighing 1 oz. or less.

Prize Promotion Laws- Nebraska Telemarketing and Prize Promotions Act

• If a sponsor is offering a prize via a telemarketing sales campaign, the sponsor may provide a verbal disclosure of the prize and requirements to obtain the prize. Nevertheless, if the sponsor has told the consumer that he or she has won or may receive a prize, the sponsor must deliver a written disclosure statement, a “prize notice”, prior to requesting or accepting money from the consumer. 

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.