ARTICLE
22 July 2021

Can A Sweepstakes Require A Purchase To Enter?

KM
Klein Moynihan Turco LLP

Contributor

Klein Moynihan Turco LLP (KMT) maintains an extensive practice, with an international client base, in the rapidly developing fields of Internet, telemarketing and mobile marketing law, sweepstakes and promotions law, gambling, fantasy sports and gaming law, data and consumer privacy law, intellectual property law and general corporate law.
Sweepstakes and similar promotional contests can be cost-effective means of marketing a product, service or brand based, in part, on the buzz generated by the allure of prizes.
United States Media, Telecoms, IT, Entertainment

Sweepstakes and similar promotional contests can be cost-effective means of marketing a product, service or brand based, in part, on the buzz generated by the allure of prizes.  Sweepstakes can also be a useful method for generating sales/purchases.  However, various laws can make generating sales via promotional contests a risky endeavor if the purchase of a product or service is a requirement for obtaining entry in a sweepstakes.   

While a sweepstakes operator may allow entry in a sweepstakes promotion via the purchase of a product or service, unless a free alternative means of entry ("AMOE") is also provided, it is likely that the sweepstakes would violate applicable lottery laws.  Given the potential for severe legal repercussions for violation of any of these laws or regulations, it is essential that sweepstakes sponsors retain attorneys who have experience in sweepstakes promotions law prior to offering such contests to consumers.

When Can a Sweepstakes Require a Purchase to Enter?

As mentioned above, a sweepstakes can allow for contest entry to be achieved through a purchase, but only where an AMOE is provided as well.  Below are some key legal considerations to be aware of when designing an AMOE (which is by no means an exhaustive list):

  • Entrants who utilize the AMOE must be given the exact same opportunity, with the exact same odds, to win each sweepstakes prize.
  • Sweepstakes sponsors are not permitted to offer paying entrants the opportunity to obtain more entries than are available to AMOE entrants.
  • The AMOE method may not be overly burdensome or time consuming.  If this rule is not adhered to, the AMOE entry method could run afoul of the "consideration" element, thus rendering the promotion an illegal lottery.
  • Clear and concise disclosures should be included in the contest rules, as well as in all applicable marketing material, that no purchase is necessary to enter the sweepstakes, and that a purchase will not increase the odds of winning.

Sweepstakes Lawyers Can Help You Comply with the Law

The criteria for establishing an AMOE that complies with the complex patchwork of jurisdictional laws can be difficult to fully account for.  Further, significant legal and regulatory liability may result if a sweepstakes sponsor does not take the necessary steps to ensure that its promotional contest is compliant with those laws.  Where a sweepstakes sponsor plans to require a purchase to enter a sweepstakes, obtaining legal guidance from experienced sweepstakes lawyers is crucial to ensuring that the game meets all legal and regulatory requirements related to offering an AMOE of equal dignity.

Please note that this is only a brief overview of some of the legal issues involved in implementing a compliant AMOE.  As such, remember to obtain guidance from an experienced sweepstakes attorney prior to conducting any game promotion or sweepstakes. 

Similar blog posts:

Sweepstakes Guidelines: Laws, Rules and Regulations Governing Sweepstakes Promotions

Coinbase Sued for Misleading Sweepstakes Advertising

Running a Sweepstakes? Beware of Triggering the Sweepstakes Consideration Element

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.

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