We all know that companies don’t run sweepstakes out of the goodness of their hearts. Sweepstakes are an advertising method designed to generate revenue. So you can see how it might be attractive to be able to charge entrants for the chance to win. Do sweepers ever have to pay to enter sweepstakes and contests?
You Never Have to Pay to Enter Sweepstakes
If the giveaway’s winner will be drawn at random, the sponsor cannot charge you to enter. This means not only can the sponsor not charge you directly to enter, but they can’t demand that you buy their products, or do anything else that would bring them income directly.
So how can companies run sweepstakes like the ones where you’ll find out if you’ve won when you open a box or twist the cap off of a bottle of soda?
When companies offer a chance to win with a purchase, they have to also offer a non-purchase entry method that has the same odds of winning. So while one entry method may require a purchase, there has to be another way to enter for free.
Contests Have the Option of Charging to Enter
When the winner will be determined based on the skill of the entrant and not at random, the company offering the giveaway has the option of charging a fee to enter.
You’ll occasionally see short story contests or photography contests that charge a fee for the chance to win. But many sponsors offer free-to-enter contests in order to ensure more people enter.
There are other advantages to sponsors to holding creative contests. For example, a company that holds a recipe contest could publish the winning entry on their product packaging, which could entice more people to buy.
Why Are Contests and Sweepstakes Treated Differently?
By law, companies are not allowed to hold private lotteries. There are three elements of a lottery, and if all three elements are present, the giveaway is illegal: a prize that is worth something, a winner drawn at random, and a cost to enter. If any one of these elements is missing, the giveaway is not an illegal lottery. In a creative contest, the element of a randomly-drawn winner is eliminated, so it’s not necessary to remove the fee to enter to be legal.
For more information, see The Difference Between Contests, Sweepstakes and Lotteries.
Other Interesting Posts:
3 Reasons Why It Makes No Sense for Sponsors to “Plant” Winners
No Purchase Methods of Entry – What Are They, and How do You Use Them?
5 Ways to Get Disqualified from Sweepstakes