Q: How do you go about running a contest or drawing online for shoppers? Are there certain legal requirements you must follow?
A: Before I answer your question, I want to be extremely clear that my response should not be construed as legal advice. Please see an attorney for clarification on the current laws and the type of promotion you wish to hold.
That said, there are many laws in the United States regarding sweepstakes and contests, and being on the Internet, you’ll have to consider whether you want to open it up internationally and dealing with laws of other countries.
Federal laws in the U.S. prohibit illegal lotteries, defined as contests involving the elements of prize, chance, and consideration (money or something of value).
When you don’t charge money and the winner is selected randomly, it is not a lottery.
You have probably seen sweepstakes rules that include the provision, “void in Florida and New York.” The reason for this is that those states have specific laws relating to contests and sweepstakes.
In Florida and New York, promoters are required to register and post a bond if the prize pool is valued at $5,000 or more.
Again, be sure to consult with an attorney who has a background in sweepstakes and contests before running one yourself.