How to Hold a Sweepstakes
Sweepstakes and other promotional contests are a common marketing tool that companies both large and small use to attract new customers or build a rapport with old ones. Despite the common nature of sweepstakes, Florida law heavily regulates them to ensure that they do not constitute unfair trade practices or gambling. The full contents of sweepstakes law are far too complicated to sum up in a blog post, and companies thinking about holding a competition or contest should consider contacting an attorney beforehand. However, there are some common mistakes that companies make that business owners should be aware of when planning a sweepstakes.
What a Sweepstakes Is
Florida law refers to sweepstakes as “game promotions.” A game promotion is “a contest, game of chance, sweepstakes, or gift enterprise,” or any similar sort of promotion. While gambling is a heavily regulated industry, the law gives companies the opportunity to hold these sorts of game promotions on a “limited and incidental basis.” Importantly, this means that the company needs to be using the game promotions for marketing, and that the company provides some other form of product or service that forms its main line of business.
Running a game promotion in violation of these sweepstakes laws can result in serious penalties. For instance, each violation can result in a civil fine of up to $1,000. The violator may also be subject to criminal penalties. The violation can be classed as a second degree misdemeanor with penalties of another $500 fine and up to 60 days of imprisonment. Beyond these sanctions, the sweepstakes may also be deemed an unfair trade practice under Florida law, which can come with further legal consequences for the business that originally ran the promotion.
Common Mistakes Companies Make
In light of these serious penalties, it is important for companies to be clear on what the law requires. There are many common mistakes that companies planning a sweepstakes make. One of the most common is rigging or manipulating the sweepstakes in some way. This can be as severe as choosing specific winners, but even limiting winners to certain times or locations can run afoul of the law. Another common issue that some companies have is requiring payment or an entry fee into the contest. Such measures are forbidden by Florida law. Finally, there are certain advertising issues that can bring some businesses in violation of the law, such as providing misleading rules for the contest or rejecting entries for arbitrary or unclear reasons.
Companies looking to hold larger contests should also be aware of special bonding requirements. If a company is seeking to hold a contest with a prize of over $5,000, the company must give the Florida Department of Agriculture and Consumer Services notice of the contest, which includes a $100 filing fee and a concrete, finalized list of rules. They must also establish a trust account containing enough money to fund the prizes in their entirety.
Sweepstakes in Florida are subject to complex regulations. If you recently held a sweepstakes and are being accused of violating these regulations, contact a West Palm Beach business litigation attorney at Pike & Lustig, LLP today.
