With advertising budgets squeezed, more companies than ever are turning to relatively inexpensive contests and sweepstakes to generate buzz about their products. But, if you aren’t careful, your promotion can easily become an illegal lottery.
An illegal lottery is a promotion with chance, prize, and consideration. If you buy a ticket for a random drawing to win a flat screen TV, that’s an illegal lottery (unless run by the state, or falling within a statutory exception). The random drawing is chance, the TV is the prize, and the cost of the ticket is consideration. A sweepstakes, provided there is a free method of entry, is a lawful type of promotion because it eliminates consideration. A contest, even if there is an entry fee, is a lawful type of promotion because it is based on skill and so eliminates the element of chance. Make sure your promotion does not include all three elements, or it violates the law.
Even if you comply with state and federal law, if you run your promotion on Facebook, you have an additional layer of requirements because Facebook has its own rules. It isn’t difficult to comply – if you pay attention to detail and give yourself plenty of time to plan.
Facebook allows you to administer a sweepstakes or contest only through an application on the Facebook Platform, and you must comply with all Facebook policies. For example: don’t allow participants under 18; secure Facebook’s written permission before you begin the promotion; have each participant release Facebook from liability; don’t condition entry on providing content (such as posting on a Wall, uploading a photo, or posting a status update); don’t create the appearance that Facebook is a sponsor. There are numerous other requirements, so study them carefully as your promotion plans take shape – Facebook reserves the right to disable your account if you violate the policies!