Federal Sweepstakes and Contest Laws

In the United States, sweepstakes promotions are regulated by the Federal Trade Commission, the Federal Communications Commission, the United States Postal Service, and the United States Department of Justice. These organizations have come up with some nation-wide rules relating to sweepstakes and contests, like:

  • Winners are required to pay taxes on the prizes they win
  • Sponsors are required to issue a 1099 form to winners who receive a prize valued over $600
  • Firearms awarded as prizes must be transferred through a Federally Licensed Firearm Dealer

Additionally, the U.S. has strict laws barring private lotteries, so in order to be legal, sweepstakes and contests have to differentiate themselves from lotteries. A lottery is defined as a promotion that is offering prizes that have value, that has winners chosen at random, and that has an element of consideration. To avoid being classified as an illegal lottery in any state, at least one of these elements has to be missing.

The state of New Jersey prohibits automatic entry into sweepstakes due to purchase unless there is also a means of entry that does not involve purchase advertised via an announcement which discloses the availability of the alternate means of entry and location where details of the alternate method of entry can be found.

New Jersey also requires prizes or gifts to be delivered to the recipient at no expense to them within 15 days of winner announcement.

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Disclaimer: This information is not complete and only aims to display the most prominent state-specific deviation from Federal laws.