Do you know the laws and rules that regulate sweepstakes and contests in the U.S.? See below for insight into the various laws that apply by state.
Laws and Rules for Sweepstakes in North Dakota
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:
No purchase necessary. You can enter the sweepstakes without buying a product or service.
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.
In North Dakota, sponsors can’t require a purchase, even if the 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: are allowed as long as the sponsor awards the prize based on chance.
Prize Promotion Laws- North Dakota Sports Amusement Laws
In a 1998 opinion from the North Dakota Attorney General, it was indicated that contests charging a consideration are allowed as long as the sponsor provides a written disclaimer, in other words a ‘prize notice’.
In North Dakota, the sponsor has an obligation to award the promised prize if the sponsor requires money from the participant as a condition of awarding, competing or receiving information about the prize and if the sponsor represents to the person that he/she has won the prize.
In North Dakota, the sponsor must deliver the promised prize, voucher of the prize, alternate prize of equal or greater value or monetary payment of equal to the approximate retail value of the promised prize within 30 days.
Legal Review Criteria: Uncertain.
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.