If you are starting a promotional marketing campaign in the state of North Carolina, it’s important to know the state laws regarding sweepstakes and promotions. In the United States, law enforcement around promotion and North Carolina sweepstakes law can be quite complex, and not all legal provisions will apply to your marketing campaign.
If you’re planning to run a sweepstakes, contest, or lottery, each promotion has its own rules and regulations that we at National Sweepstakes Company know inside out.
Understanding North Carolina Sweepstakes Law
Whether you’re running a sweepstakes or contest it’s crucial to understand the type of promotional campaign you are publishing and the regulations that come with it. Here is how each type of promotion is defined:
Contest: The winner of the prize is chosen by skill, whereby consideration is present
Sweepstakes: A sweepstakes winner is chosen by chance, whereby consideration may only be present if a free method of entry is also included
Lotteries are also “chance promotions” however the United States has strict laws which allows only state entities to run them. As an individual or private company, you cannot hold a lottery (a promotion that requires a purchase or other consideration, for the chance to win a prize whereby no free method is required).
Being classified as an illegal lottery under North Carolina sweepstakes law is a terrible idea for an otherwise successful marketing campaign. One tip to ensure that this doesn’t happen is to check that your promotion does not require consideration as the only entry method. We’ll walk you through what could be viewed as monetary or non-monetary consideration and help you structure the promotion to ensure compliance.
Federal Sweepstakes Law
Considering the federal sweepstakes and promotions law is also crucial in North Carolina. Marketers must adhere to both federal and state guidelines for above-board promotional campaigns. That includes following the two main federal stipulations for sweepstakes law that state:
- No purchase is necessary for someone to enter the sweepstakes or win the prize
- The chosen winner must pay taxes on the prize they receive if it is in excess of $600
The following organizations regulate federal sweepstakes laws in North Carolina and the United States:
- Federal Trade Commission
- United States Postal Service
- Federal Communications Commission
- United States Department of Justice
These departments work together to design the legal provisions of promotional campaigns. There are other specific federal rules, such as if the prize is a firearm, its transfer must be done by a licensed firearm dealer of the United States. Also, if the prize value exceeds the threshold of $600, then the marketer or sponsor must issue a 1099 form to the winner.
North Carolina’s Promotions Law
The state of North Carolina has its own specific provisions regarding promotions and sweepstakes in addition to the federal law. For example, North Carolina does not allow the use of any electronic devices to enter sweepstakes, like a slot machine. North Carolina also requires that a marketer fully discloses the type of promotion they are offering via the Official Rules and other marketing materials.
A contest is permitted if the winner is chosen because of some skill. A sweepstakes is permitted if the winner is chosen by chance. Other promotion laws involve the North Carolina Consumer Protection and Prize Promotion Laws.
Did you know that a sponsor cannot tell every participant they are a winner, and a sponsor working with another company in its promotion must disclose the campaign as a sales promotion (with certain exceptions)? Call the National Sweepstakes Company team today at 888-744-3217 for more information on North Carolina sweepstakes law and other promotional regulations.