Sweepstakes vs. Lottery

Posted By: LostinRegLand

Sweepstakes vs. Lottery - 11/05/21 08:43 PM

When is it okay to be part of a sweepstakes vs. an absolute no because it becomes a lottery.

I read the FDIC PARTICIPATION BY STATE NONMEMBER INSURED BANKS IN LOTTERIES AND RELATED ACTIVITIES rule. It is when does it turn into consideration for something given thus triggering a lottery?

A local newspaper is sponsoring a nationwide sweepstakes to win rent or mortgage payments for a year. I am generally fairly risk adverse and was surprised to find out management agreed participation in this. Before I go to them I need more information as to whether or not this is allowable, sweepstake vs. Lottery. Prior to them making this decision I had provided them with a summary of the FDIC rule along with a link to the rule if they wanted to read it.


If you satisfy the eligibility requirements (described below), you may enter the National Sweepstakes by completing the entry form for a Local Sponsor Sweepstakes on a participating Local Sponsor Website (defined below). Following the conclusion of the Sweepstakes Period, Sponsor will select one (1) National Sweepstakes winner through a random drawing from among all eligible entries received. Participation in this National Sweepstakes constitutes entrant’s full and unconditional agreement to and acceptance of these Official Rules and the decisions of Sponsor.

ELIGIBILITY: This National Sweepstakes is open only to individuals who who are legal residents of any one (1) of the (50) United States, the District of Columbia, who are at least eighteen (18) and the age of majority under applicable law in their state, province, territory or jurisdiction of primary residence as of the start of the Sweepstakes Period. Local Promoter, may have different eligibility requirements for Local Promoter Sweepstakes, if any, as set forth on the Local Promoter’s Website.
Posted By: rlcarey

Re: Sweepstakes vs. Lottery - 11/05/21 09:05 PM

What is your bank's specific role in all of this? I really cannot tell from what you posted.
Posted By: LostinRegLand

Re: Sweepstakes vs. Lottery - 11/05/21 09:20 PM

Sponsor of the sweepstake through the local newspaper. The sponsorship will include ad spots advertising digitally and in print. The sponsorship would include the sponsor to provide prize money of $100 to a local winner.

Also as far as I can tell a page on our website will be created to allow people to fill out the entry form, or at least link to the entry form. If I am reading the sheet right from the newspaper we will get leads for prospective customers from the form.

Until the first ad was sent to just now for approval I had not realized this was approved by management so I do not have all of the details. I have asked for more and will continue to ask questions until I understand our position.

The first ad is a digital ad with a link to the website. I am asking clarifying questions now about that.
Posted By: rlcarey

Re: Sweepstakes vs. Lottery - 11/05/21 09:27 PM

If they do not have to pay to play, then it is a sweepstakes. I would be very concerned about State specific laws too however. Them providing information so that you can contact them and solicit business later might be considered "consideration" in some jurisdictions. If there is consideration given, it is no longer a sweepstakes.
Posted By: Andy_Z

Re: Sweepstakes vs. Lottery - 11/05/21 09:37 PM

There are 3 legs in a lottery, a prize, consideration and chance. Other than "local promoters" eligibility rules I'm not hearing anything which says they must buy or be a member of anything, i.e there is no "consideration." If it is clearly NOT a lottery then there is no prohibition.

If it acts like a lottery and smells like a lottery to you with more information, stay away as you could sponsor a gift, but cannot advertise or take part in the lottery itself.

From the brief description, it is not a lottery and the bank is one of several companies offering $100 as payment for advertising in a comingled ad with other "sponsors." If it is a sweepstakes, your stat laws matter. There is also reputation risk if it turns out to be a scam.
Posted By: LostinRegLand

Re: Sweepstakes vs. Lottery - 11/05/21 09:42 PM

I am reading our state law right now and it states

(6)(a) As used in this section, "consideration" means anything of pecuniary value required to be paid to the (the promoter or sponsor in order to participate in a promotional contest. Such things as visiting a business location, placing or promoter or answering a telephone call, completing an entry form or customer survey, or furnishing a stamped, self-addressed envelope do not constitute consideration.

This is in the section under Promotional Contests of Chance

Its to late on a Friday for this smile
Posted By: LostinRegLand

Re: Sweepstakes vs. Lottery - 11/05/21 09:49 PM

Thank you both!