Prize draw

A sweepstake is a type of contest where a prize or prizes may be awarded to a winner or winners. Sweepstakes began as a form of lottery that were tied to products sold. In response, the FCC and FTC refined U.S. broadcasting laws (creating the anti-lottery laws). Under these laws sweepstakes became strictly "No Purchase Necessary to Enter or Win", especially since many sweepstakes companies skirted the law by stating only "No Purchase Necessary to Enter", removing the consideration (one of the three legally required elements of gambling) to stop abuse of sweepstakes. Today, sweepstakes in the USA are used as marketing promotions to reward existing consumers, and to draw attention to a product. By definition, the winner is determined by luck rather than skill.

Sweepstakes with large grand prizes tend to attract more entries regardless of the odds of winning. Therefore, the value of smaller prizes usually total much less than that of the top prize. Firms that rely on sweepstakes for attracting customers, such as Publishers Clearing House and Reader's Digest, have also found that the more involved the entry process, the more entrants. Businesses often obtain marketing information about their customers from sweepstakes entries.

Because of their potential for abuse, sweepstakes are heavily regulated in many countries. The U.S., Canada, and individual U.S. states all have laws covering sweepstakes, so that there are special rules depending on where the entrant lives. The U.S. Federal Trade Commission exercises some authority over sweepstakes promotion and sweepstakes scams in the United States. Notably, sweepstakes in Canada, Australia and several European countries require entrants to solve an (elementary school level) mathematical puzzle or answer a (fairly simple) knowledge question or solve a (trivial) fill-in-the-blanks guessing competition, making it (in theory at least) a contest of skill, in order to overcome requirements that would classify sweepstakes as a form of gambling under their country's legal definition. There are similar laws in Brazil, usually requiring an answer to an easy "giveaway" question.

In Australia, a sweepstake is known as a competition, however the technical name for a consumer competition is a trade promotion lottery.

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