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 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 US Postal Service.

Tennessee also prohibits sweepstakes agencies and sponsors from requiring sweepstakes prize winners to submit to “in perpetuity” publicity releases.

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