The mobile space is currently inundated with mobile apps that serve myriad purposes. If you are in need of a mobile application for a certain function, it's more than likely that there's an app for that. Within that competitive environment, it is becoming increasingly difficult for mobile app operators to differentiate their offerings and attract users – which is part of what makes the use of promotional games and mobile app sweepstakes such an enticing option.
Promotional contests and sweepstakes are an effective and cost-efficient means to generate buzz and, hopefully, attract dedicated app users. Through the use of promotional offers, consumers can be incentivized to download an app, or make a purchase, by the alluring opportunity to win discounts, merchandize, cash or other valuable prizes.
Are There Any Legal Concerns for Mobile App Sweepstakes Operators?
Mobile App Sweepstakes Concerns
Despite the appeal of offering a sweepstakes through a mobile app, operators need to be aware of the fact that there is a complex network of state and federal laws that apply to such games, and any would-be mobile app sweepstakes operator could incur substantial legal liability if these laws are not fully complied with. In order to ensure compliance with applicable law, mobile app sweepstakes operators must first correctly identify the nature of the promotional game itself.
There are, generally speaking, two categories of promotional games: games of "skill" and games of "chance." Games of skill are typically easier to operate because they have fewer legal obstacles. Games of chance, on the other hand, are considered illegal lotteries in each state, unless one of the following three elements that comprise a lottery is removed: (1) a prize awarded to the winner; (2) chance in determining the winner; and (3) consideration for entry in the game.
Because removal of the prize undermines the promotional aspect of the game for mobile app operators, and because chance is hard to eliminate entirely (many states find that even a small trace of chance in determining the winner satisfies the "chance" element), consideration is the element most frequently removed. Consideration can be eliminated by offering a free, alternative means of entry that does not require a purchase or other costly action to be undertaken by the mobile app user. However, in order to qualify as an elimination of consideration, the free, alternative entries must be afforded the same opportunity of winning as entries from mobile app users that made purchases or otherwise paid to enter the contest.
Making Certain that Your Mobile App Sweepstakes Rules Are Legally Compliant
It is extremely important that mobile app sweepstakes operators determine all key aspects of the contest or promotion (duration, prize amounts, number of prizes, etc.) ahead of time, because once a promotion commences, and the rules are published, it is next to impossible to legally alter material terms. As such, it is highly recommended that you retain qualified legal counsel to ensure that you get the contest rules right in advance, as well as to avoid the numerous potential legal pitfalls that loom if the contest is not operated in compliance with applicable law.
If you are interested in learning more about this topic or require the preparation of contest rules for your mobile app sweepstakes, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
