If you are starting a promotional marketing campaign in the state of Texas, it’s important to know the state laws regarding sweepstakes and promotions. In the United States, law enforcement around promotion and Texas 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.
Types of Promotions
There are three general types of promotions, and each has specific rules and regulations. Federal rules apply to all of these promotions, but state rules can be unique to the geographic location.
Federal and Texas sweepstakes and contest laws stipulate that winners are required to pay taxes on their winnings. In addition, any winner receiving a prize valued over $600 must receive a 1099 tax form from the sponsor and file that value as misc. income when tax time arrives. Firearm prizes must be transferred through a federally licensed firearms dealer. While not illegal to award, we recommend Sponsors consider the high risk in awarding prizing like firearms before planning to give them away.
Sweepstakes
A sweepstakes is a promotion in which the winner will be selected at random from all the entrants. There is no purchase required for participation (and, if a purchase or too much effort is involved, a free alternate method of entry must also be present). A key characteristic for sweepstakes success is diligent planning and detailed documentation, which can minimize troublesome consequences and negative PR.
Contests
A contest differs from a sweepstakes in that the entries are evaluated and judged by criteria for winning. In many states (including Texas), an entry fee or product purchase can be involved in entry submission without the requirement for an alternate free method.
Lotteries
The legal lottery is a promotion with an element of consideration (a purchase required for entry), winners chosen at random, and prizes that have a monetary value. Lotteries must be initiated at the state level – it is not legal for a private company to run a lottery.
Legal Expertise | National Sweepstakes Company
Looking for ways to engage with your customers is a proven tool for growing your online presence and brand, but it can come with some legal concerns you must address carefully. As you plan an online sweepstakes promoting your brand or product, enlist the training and knowledge of the online promotion specialists and legal counsel at NSC.
They can assist with adhering to rules, drafting terms and conditions, and handling release forms. Their professional guidance can help you structure a promotion correctly to minimize or avert potential litigation and the resulting consequences. They’ve helped many online brands succeed in the world of digital marketing and are ready to help you too.
Expanding your digital base can take your business to the next level, but it’s wise to make sure you understand the Texas sweepstakes law. The legal professionals at NSC have experience with games of skill, online sweepstakes and mobile/SMS. With competent legal counsel, you can proceed with confidence when expanding your digital reach without any worries of legal repercussions.