Sweepstakes - Sweepstakes in The United States

Sweepstakes in The United States

In the U.S., sweepstakes sponsors are very careful to disassociate themselves from any suggestion that players must pay to enter, or pay to win, as this would bring them into conflict with federal lottery laws. Sweepstakes typically involve enticements to enter a consumer promotion for prizes that range from fantastic wins such as cars or large sums of money to smaller prizes that are currently popular with consumers in the United States. There should be no monetary cost to the entrant to participate in the sweepstakes prize drawing (although some sweepstakes require entrants to subscribe to a promotional mailing list, potentially exposing the entrant to an increase in junk mail, spam email, or telemarketing calls) and sweepstakes winners should also not be required to pay a fee of any type to receive their prizes.

Because of their potential for abuse, sweepstakes are heavily regulated in many countries. The U.S., Canada, and individual U.S. states all have laws covering sweepstakes, resulting in special rules depending on where the entrant lives. The U.S. Federal Trade Commission exercises some authority over sweepstakes promotion and sweepstakes scams in the United States. Notably, sweepstakes in Canada and several European countries require entrants to solve a (elementary school level) mathematical puzzle or answer a (fairly simple) knowledge question, making it (in theory at least) a contest of skill, in order to overcome requirements that would classify sweepstakes as a form of gambling. There are similar laws in Brazil, where sweepstakes must include a “cultural contest”, often giveaway questions like “which brand gives you a house?”

As an example relating to state laws pertaining to sweepstakes promotions within the United States, Tennessee residents are prohibited by a policy of the Tennessee Alcoholic Beverage Commission (and not a state law) from entering sweepstakes online sponsored by manufacturers of wines and liquors; however, Tennessee residents may enter many of these same sweepstakes promotions by entries delivered by the U.S. Postal Service. Another example is wherein Tennessee state law prohibits sweepstakes agencies and sponsors from requiring sweepstakes prize winners to submit to "in perpetuity" publicity releases.

Most corporate-sponsored sweepstakes promoted in the United States limit entry to U.S. citizens, although some allow entry by legal residents of both the United States and Canada.

Among the most popularly known sweepstakes in the United States were the American Family Publishers Sweepstakes (now defunct), Publishers Clearing House and Reader's Digest Sweepstakes, each of which strongly persuaded entrants to purchase magazine subscriptions by placing stickers on contest entry cardstock while promising multi-million dollar (annuity) winners who will be "announced on TV." The American Family Publishers sweepstakes traditionally used paid advertisements during NBC's The Tonight Show to announce its grand prize winners (for many years, its celebrity spokesman was Ed McMahon). All three companies eventually paid millions of dollars in fines and penalties to a variety of States who initiated legal actions against them. Only Publishers Clearing House currently uses sweepstakes as a promotional device, and as recently as 2010 paid $3.5 million to settle charges as part of a multi-state investigation. :

Sweepstakes are frequently used by fast-food restaurants to boost business. One of the most popular has been the McDonald's Monopoly "instant-win " game-piece promotion (free game pieces are made available by requests through the U.S. mail) although the odds of winning the McDonald's Monopoly jackpot prize are usually much greater than the odds of winning many U.S. state lotteries. Soft drink companies also sponsor many sweepstakes, such as the Pepsi Billion Dollar Sweepstakes game and the Pepsi Stuff loyalty rewards program that allowed Pepsi drinkers to accumulate points from packages and cups and redeem them for merchandise. Pepsi Stuff was Pepsi's largest and most successful long-term promotion ever and it ran for many years in the US and in many countries around the world. Other sponsors may require the submission of a UPC of a company product (with provision for receiving a "free" UPC) for entry into the sweepstakes drawing.

Sweepstakes must be carefully planned to not only comply with local laws but curtail forms of entrant fraud and abuse. Before home computers were popular, a common method of entry was a mailed, plain 3" × 5" index card with the entrant's name and address. Massive computer-printed entries made a new requirement that entries must be "hand-printed". Laser printers able to mimic ink pen writing are also a problem for sponsors. In most sweepstakes, entrants and their relatives must not be related to the sponsor or promoter.

Many state lotteries also run a second chance sweepstakes in conjunction with the retail sale of state lottery scratch cards in an effort to increase consumer demand for scratch cards and to help control the litter problems associated with the improper disposal of non-winning lottery tickets. As a lottery tickets are considered to be bearer instrument under the Uniform Commercial Code, these lottery scratch card promotions can be entered with non-winning tickets that are picked up as litter.

Many sweepstakers meet locally in "clubs" and nationally at a yearly convention, which 800 people attended in 2006.The 18th National Sweepstakes Convention was held in June 2007 at Dearborn, Michigan. Sweepstakes conventions are hosted by a local club in a different state each year.