Sweepstakes are excellent marketing tools but can cross into tricky territory without knowledge of California sweepstakes law. It is also essential to know the differences between sweepstakes, contests, and lotteries. National Sweepstakes Company (NSC) makes it easy to run sweepstakes, helping you set everything up, run your sweepstakes, and choose a winner while making sure everything maintains legal compliance.

Sweepstakes, Contests, and Lotteries

First and foremost, let us lay out the definitions of sweepstakes, contests, and lotteries:

  • Sweepstakes – A winner is chosen at random from a list of all participants. The number of participants determines the odds of winning.
  • Contest – A judge decides a winner based on participants’ skill or other criteria.
  • Lottery – A winner chosen at random from a list of all participants. Participants are required to pay to enter the lottery. The number of participants determines the odds of winning.

The most significant difference between the three is that lotteries require consideration, or payment, to enter. States can legally hold lotteries, but private lotteries are considered illegal.

Federal Sweepstakes Law

In the United States, all sweepstakes must comply with the following regulations according to federal law:

  1. No purchase necessary. You can enter the sweepstakes without buying a product or service and enter the sweepstakes without putting forth too much effort.
  2. Winners are required to pay taxes on prizes they win, if the prizes are over $600.

The following organizations regulate all sweepstakes:

California Sweepstakes Law

California has its own set of laws that sweepstakes must adhere to other than federal law. For example, sweepstakes that require participants to pay consideration are illegal lotteries and, therefore, not allowed.

Sweepstakes cannot force entrants to buy alcoholic beverages to enter, nor can they force entrants to visit a liquor store, bar, or other licensed retailer as part of their entry or to obtain entry forms. Entrants can get their forms at these locations but must also be available elsewhere.

The sweepstakes sponsor must also follow all prize promotion laws. The laws include items such as:

  • A sweepstakes sponsor cannot ask a prize winner to pay unreasonable shipping and handling fees.
  • A sponsor cannot place conditions on the number of participants required to award a prize.
  • Cannabis, including products containing cannabis, cannot be offered as a prize.
  • Sweepstakes surrounding alcohol or cannabis may only be open to those age 21 or over.
  • Tobacco and vaping brands cannot appeal to children.
  • Sweepstakes may not place certain advertisements where children may be present.
  • Mail-in entries may not be accepted depending on the promotion structure.

Running a Successful Sweepstakes

Running legal, successful sweepstakes in California can be challenging. The National Sweepstakes Company helps you with everything from official rules to determining who won a prize. Backed by legal professionals, we offer legal advice so you do not get stuck on the wrong side of California’s penal code.

Give us a call today at (888) 744-3217 or fill out our contact form online.

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