You’ve probably heard the word “sweepstakes” without knowing what it means. Of course, many people know sweepstakes involve prize giveaways, but there’s much more to them than that. And when you understand what sweepstakes are, you can use them to benefit your brand.

So here, we’ll answer the question “what are sweepstakes?” by examining their specific rules, regulations, and benefits.

Defining Sweepstakes

Sweepstakes are chance-based giveaways where hosts offer prices for those who choose to enter. That definition might be similar to how you think about contests, but two distinct tenants set sweepstakes apart.

First, sweepstakes hosts always choose winners at random, unlike a contest, which judges entries based on specific criteria. Sweepstakes hosts can either reach into a basket of tickets and draw at random or use non-biased computer software to sort through all the entrants. But as soon as it’s no longer a game of luck, it no longer qualifies as legitimate sweepstakes.

Second, sweepstakes hosts can’t force their entrants to apply. Many managers use sweepstakes to attract new customers and build strong client relationships. However, you can’t require those customers to sign up for a promotional drawing to access your goods or services.

Official Sweepstakes Rules and Regulations

Now that we’ve answered the question, “what are sweepstakes?” we can pivot our attention toward how you can run one for your business. Several federal agencies, including the FCC, FTC, and even the United States Postal Service, strictly regulate how sweepstakes operate, so you have to know several federal rules before starting one.

Entry Regulations

Official sweepstakes rules say that you can’t put a price on entry. The second you charge for sweepstakes tickets or require entrants to purchase a product or service to enter, your giveaway without an AMOE, it becomes a lottery which is not legal unless instituted at the state level. 

Some exceptions let people join your sweepstakes after making a purchase, for example, beverage companies putting entry codes on the bottom of bottle caps. But for that strategy to pass, you need to include a cost-free alternate means of entry (AMOE). Common AMOEs include:

  • Online registration forms
  • Social media posts
  • Mail in entries

Unchanging Rules and Eligibility Requirements

Sweepstakes laws require you to establish material terms and disclose them in the official rules and legal disclaimers, keep it visible for all entrants, and keep those rules intact until the giveaway finishes to maintain fairness.

You’ll have to determine the following criteria and display them for entrants before opening your sweepstakes:

  • Sweepstakes start and end dates
  • Age and residency requirements
  • How people can enter
  • How many people can enter per household
  • How long you’ll wait for the winner to claim their prize

Many sweepstakes hosts also include detailed information about the prize, its monetary value, and how they’ll notify the winners that they were selected.

Issuing The Prize to The Winner

You must contact your giveaway’s winner at your drawing’s designated ending date through the channels listed in your sweepstakes rules.

But not every sweepstakes winner claims their prize or even responds to the host’s messages. Therefore, you have to issue a disqualification date in your notification. And if the original winner doesn’t contact you or claim their winnings before that cutoff, you can redraw and give the prize to another entrant.

These rules fall under “consideration law,” a legal term describing how sweepstakes hosts respond to their promised actions. Monetary responses are the most critical element of consideration, and if you deliver your promised prize-draw winnings on time, you will fall within these laws.

Running a Sweepstakes in New York, Rhode Island, or Florida

Florida and New York require sweepstakes hosts to register their giveaways if the total prize pool is greater than $5,000. And in Rhode Island, if you’re running sweepstakes out of a retail store, you’ll have to register if the prize value is greater than $500.

Benefits of Running a Sweepstakes

Once learning the lengthy list of laws that go into running a sweepstakes that vary from state to state, many business managers quickly go from asking, “what are sweepstakes?” to, “why should I bother with the headache at all?”

But while sweepstakes can look and feel daunting at first, their benefits can far outweigh the paperwork troubles. 

Increased Customer Engagement

If all things are equal between your business and a competitor, do you think customers are more likely to shop where they could win an eye-catching prize or where they won’t win anything?

Sweepstakes can be great for long-term profits, even with a high-priced giveaway and no-purchase-necessary entry. The prize can drive hundreds of new clients through your doors if you select the right one, and once they’re in, you can showcase your brand’s highlights and get them returning even without the sweepstakes.

Building Strong Relationships

Two benefits sweepstakes have over contests are that they won’t annoy the customers and require minimal entry barriers.

For example, something like an artwork contest won’t appeal to the average person who struggles at drawing.

Sweepstakes are easy to sign up for, and all it takes to win is a little luck. Those might sound like insignificant factors, but giving people a hassle-free way to win valuable prizes where winners are drawn at random and on even footing with their community will get them thinking favorably about your brand.

Generating Leads

Sweepstakes applications often require entering your name, address, and contact information. And if your sweepstakes have hundreds of entrants, that’s a wave of clients you now know more about and can contact for future giveaways and promotions.

Run a Successful Sweepstakes with The National Sweepstakes Company

So, what are sweepstakes, and how can you use them?

Sweepstakes are giveaways where winners are chosen at random that businesses use to improve existing client relationships and bring new clients to their company. And if you want to create a sweepstakes that produces those results without the hassle of learning every rule and regulation, there’s no better place to start than the National Sweepstakes Company.

Our team runs sweepstakes for businesses so that they can experience the benefits as easily as possible. So contact us today at (888) 744-3217 to learn more about our services.

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