Sweepstakes

Sweepstakes are 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 the United States, sweepstake sponsors are very careful to disassociate themselves from any suggestion that players must pay to enter, or pay to win, as this would constitute gambling. Sweepstakes typically involve enticements to enter a consumer promotion with prizes that range from substantial wins such as cars or large sums of money to smaller prizes that are currently popular with consumers. There should be no monetary cost to the entrant (although some sweepstakes require entrants to subscribe to a promotional mailing list, potentially exposing the entrant to an increase in junk mail, spam email, or telemarketing calls) and sweepstakes winners should also not be required to pay any kind of fee to receive their prizes.

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Wikipedia