Free to Enter, Expensive to Run: Sweepstakes, Contests, and the Law of Promotions
By Casey Scott McKay ·
A promotion is a lottery unless the organizer removes one of three elements, and running an illegal lottery is a criminal exposure that ordinary marketing teams create by accident every quarter. This article explains the prize-chance-consideration test, the two lawful structures that survive it, and why the alternate method of entry has to be genuinely equal rather than technically available. It covers the state registration and bonding regimes that attach above prize thresholds, the disclosure requirements that differ by state and by medium, and the official rules provisions that decide disputes when something goes wrong. It works through skill contests and their separate judging problems, the intellectual property that user-generated entries create, and the tax and reporting obligations that arrive with the prize. It closes with the failure modes that produce regulatory attention and the ones that produce class actions.
IP and Technology > Internet | Article | Published 20 June 2025 - Updated 23 January 2026 | Casey Scott McKay - marksy.us
Summary. A promotion is a lottery unless the organizer removes one of three elements, and running an illegal lottery is a criminal exposure that ordinary marketing teams create by accident every quarter. This article explains the prize-chance-consideration test, the two lawful structures that survive it, and why the alternate method of entry has to be genuinely equal rather than technically available. It covers the state registration and bonding regimes that attach above prize thresholds, the disclosure requirements that differ by state and by medium, and the official rules provisions that decide disputes when something goes wrong. It works through skill contests and their separate judging problems, the intellectual property that user-generated entries create, and the tax and reporting obligations that arrive with the prize. It closes with the failure modes that produce regulatory attention and the ones that produce class actions.
Keywords: sweepstakes · contest · lottery elements · prize chance consideration · alternate method of entry · official rules · state registration · bonding requirement · skill contest judging · odds disclosure · abbreviated rules · winner verification · affidavit of eligibility · publicity release · prize taxation · influencer promotions · platform rules · user generated content rights · gambling exposure · class action risk
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