Advertising Law Tool Kit - Tenth Edition | 2022

72 / Venable Sweepstakes and Contests Melissa Landau Steinman mlsteinman@Venable.com +1 202.344.4972 Whether they are random-draw sweepstakes or skill contests, prize promotions are an essential aspect of most companies’ marketing strategies. Federal and state laws prohibit illegal lotteries, or promotions that include the following three elements: (1) a prize or award; (2) the element of chance; and (3) the giving of something of value, known as “consideration” (e.g., a purchase or entry fee). Legally compliant promotions eliminate one of these three elements. Promotions must always have a set of “official rules,” and advertising should include a basic “rules summary” with material terms and instructions for how to obtain full rules. U.S. federal laws regulate sweepstakes and contests conducted by mail or broadcast, and there are additional laws and requirements that often vary widely from state to state and country to country (which may include registration and bonding requirements, prize restrictions, and rules translation requirements). Failing to consider these differences when structuring promotions may create significant (and even criminal) legal risk. Digital media promotions, which often solicit user-generated content (UGC), have made legal compliance in this area even more challenging. Soliciting UGC may create significant risk, for example, when intellectual property owned by (or featuring) third parties is collected. Moreover, third-party social media platforms have their own rules for prize promotions—and may shut down those that don’t comply. And when promotions are offered online, they are available to residents of other countries unless eligibility is specifically restricted to U.S. residents—and the prize promotions laws of other countries can vary significantly from those of the United States. Because a violation of the relevant laws may trigger criminal penalties, it is important to plan your promotion carefully before running your giveaway or user-generated content contest.