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Although you do not require a licence from the Gambling Commission to hold this type of lottery you must still make sure your tickets adhere to the rules set by the Gambling Commission: You will need a person registered as the promoter and they are responsible for the lottery and what must be printed on all tickets.
Other important U.S. laws and regulations require you to: Provide free alternate means of entry if you allow users to enter sweepstakes with a purchase. Announce the opening and closing dates for entries. Disclose when and how winners will be selected. Announce when prizes will be awarded. Contact all winning entrants.
Unlike lotteries, "sweepstakes" promotions do not require the participants to pay anything for the chance to win. Thus, a promotion that conditions the chance to win on subscribing for a service, purchasing a product or, in some states, visiting a physical store, may be deemed an illegal lottery.
A sweepstakes is a promotion that includes prize and chance, but eliminates consideration by offering a free method of entry. A contest is a promotion that includes a prize, but eliminates the chance by determining winners based on skill.
Equal Treatment. All eligible participants in the sweepstakes must be treated equally. This prohibits discrimination illegal under federal law, but it also means that an entry from any method should be valued equally. No matter how a person enters, they should have the same chance to win.
While offline sweepstakes are offered at specific business locations, online sweepstakes are offered on a particular website; this website will have a page that announces the sweepstakes, the rules and the attractive prizes.
They define a sweepstake as an arrangement where: You have to pay to enter; and. There's a minimum of at least one prize on offer (and yes, a wooden spoon counts as a prize); and. Prizes are allocated by chance.
Raffles where you must pay money to enter are legal only if they are conducted by a charitable organization registered with the Attorney General's Office to conduct raffles, and only if at least 90% of the gross receipts from the raffle are used for charitable purposes.
Win notifications usually arrive by email, postal mail, registered mail, telephone, or social media. It's important to make sure that you check the contact methods you use on your sweepstakes entry forms regularly; it's devastating to miss out on a big prize because you waited too long to check your email!
When you hear no purchase necessary, this is why. If your customers pay a fee for a chance to win a prize and the free method of entry is too difficult to redeem, you are running an illegal lottery.