We all know that any game involving some monetary value where contestants can wager is considered gambling. Among those, there are many whose result relies on chance, even if the skill of the contestants is also a factor. This means that most games of chance are considered a gamble and, as such, have their own regulating and restricting laws.
Apart from the numerous US casinos, games of chance have also found their way into marketing as a way of promotion. This may not seem like ʽserious gamblingʼ, so many business owners in the US easily neglect state or federal laws governing them. The fact is that you need to be really careful to make sure your promotions on the internet won’t end up with fines paid or even criminal prosecution.
Knowing the Difference
While brands have their legal counsel, they often outsource their promotions to bloggers, and the advice on running legally compliant games of chance is usually not passed on to them. As a result, bloggers use many different tactics that expose them to potential liability.
One of the biggest problems is that every promotion giveaway is considered a contest, which is far from true. The US laws vary depending on the type of giveaway. To have a contest, the winner needs to be chosen according to certain skill-based criteria (best comment, funniest photo, etc.). Rather than having a random selection process, the awards need to be given subjectively through a voting process or a judging panel.
All games where the winners are chosen by the luck of the draw are sweepstakes. These are the most common ways of promotion, where prizes range from gift cards to all-inclusive trips. There are a lot of variations of sweepstakes, even sweepstakes casinos that don’t use real money, and you can find out more at CasinoTopsOnline.
When contestants must purchase the chance to win, we’re talking about a lottery. This prize draw is the most regulated of the three, so legal counsel is highly recommended. We’ll return to this later on.
You can use a giveaway term conversationally or even in blog posts, but when writing rules and regulations for your promotional games of chance, you need to use one of these three legal terms so all contestants are aware of what they’re entering.
Laws, Plural
It is not one overall law, but many different ones. Games of chance are not only regulated by numerous state and federal laws, but also supervised by different federal agencies such as DOJ (the United States Department of Justice), USPS (the United States Postal Service), FCC (the Federal Communications Commission), and FTC (the Federal Trade Commission).
In addition to the type, US laws also vary depending on the nature of the giveaway. In case of nationwide participation, besides federal laws, contests and sweepstakes must also comply with laws of each state.
A Slip Into the Illegal
If you organize sweepstakes or contests, you must never charge an entry fee. The moment you do it becomes a lottery which is, as we’ve said, far more regulated. You also mustn’t make the winners pay for the shipment of their prizes. Although it sounds pretty clear, it’s a far more slippery terrain.
In addition to the element of chance and the prize itself, which it has in common with contests and sweepstakes, a lottery also has a third element – consideration. It is usually a monetary entry fee, but it doesn’t have to be. It is defined as ʽsomething of valueʼ, which has a pretty loose interpretation, making it difficult to manage.
Additional Layer of Complexity
There are some additional things you should consider as they can add legal complexity to your game of chance. We already mentioned you need to comply with state-by-state laws if you want to go nationwide, but that could also mean you need to comply with the laws of foreign countries. Canada has a law ruling out a random selection, meaning that your sweepstakes will become illegal if you don’t provide some additional rules or exclude Quebec.
Your promotional giveaways shouldn’t involve financial institutions, insurance, dairy, gasoline, tobacco, or alcohol industries. They have special requirements that are simply not worth dealing with for a promotion.
The same thing goes for minors – you don’t want to add the laws relating to them to the already extensive list of regulations, so make 18 years of age the minimal limit for entry.
As you can see, simply making a post is not enough to run a legally compliant game of chance in the US. You need to know the type and the nature of your game then clearly define three things based on it: who can enter (exclusion or age limit), how to enter (careful about the elements of consideration, keep it as simple as possible), and how the winner is chosen.
