Session 810

Advanced Sweepstakes and Contests

Lauri Prather David Morales Julisa Edwards

Daniel Cole

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• Brief Overview Sweepstakes, Raffles and Charities • Selecting a Vendor• Crafting Rules and Disclosures • Sweepstakes and Contests: International Aspects • Sweepstakes and Contests Online• Sweepstakes, Contests and Privacy

http://mpolls.us/P/ca54280

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Brief Overview Sweepstakes, Raffles and Charities

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• Sweepstakes, Contests and Raffles– The Basic Law:• Chance - Any part of the winner selection process that

is beyond the control of the participant• Prize - Anything of Value offered as inducement to

participate ; and• Consideration - Something of value that participants

must pay, stake, or risk in order to participate. May be monetary or non-monetary

Raffles - Prize + Chance + Consideration- Prohibited in all 50 states, unless allowed for

charitable organizations- E.g., illegal lotteries, pay-to-play giveaways

SweepstakesEliminating the Element of Consideration

- Prize + Chance – Consideration- The Consideration Question:

- Purchase Requirement - Does the Entrant Give Something of Value (Bottle Caps)- Effort to Participate - how many questions are too much (Seattle Times Co v. Tielsch)- Tell a friend for an entry and data sharing

- Giveaway w/out buy-in- Negating Consideration

- Equal Dignity (Glick v. MTV Networks)- Free Alternate Method of Entry

ContestsEliminating the Element of Chance

- Prize + Skill + Consideration- E.g., Longest Drive Contest- Difference Between a Contest and Casting Call

- Truly and Completely skill or merit based- Subjective vs. Objective- Set Criteria for Judging

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Selecting a Vendor

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Selecting Vendor • What is Your Objective

– Create "Buzz" about Products/Services– Website Traffic– Build Email List– Advertising Content at a Reasonable Cost– Valuable Market Research– Strengthen the Relationship Between You and Customer

• How Complex is the Promotion– Surveys, Educational Tools, Content Acquisition, Fulfilment

• Budget and Policy

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Crafting Rules and Disclosures

Crafting Rules and DisclosuresRaffles

Basic Disclosures/Rules1. Limits on Eligibility (age, employment with

host organization)2. Taxes – Payment for a raffle ticket is not a

“donation” and therefore not tax-deductible3. No Warranty4. Limitation of Liability

Crafting Rules and DisclosuresRaffles – Regulations and Potential Concerns

1. Geographic Area Limitations – Tex. Occ. Code 2002.054(a)(3): “The organization may not . . . sell or offer to sell tickets for a raffle statewide.”

2. Prohibition of Online Ticket Sales – Cal. Pen. Code 320.5(f)(2): “A raffle may not be operated or conducted in any manner over the Internet, nor may raffle tickets be sold, traded, or redeemed over the Internet.”

3. Revenue Must Remain in State – Nev. Rev. Stat. Ann. 462.200(1): “A qualified organization shall expend the net proceeds of a charitable lottery only for the benefit of charitable or nonprofit activities in this state.”

4. Prize Caps – N.C. Gen. Stat. 14-309.15(d): “[T]he maximum cash prize that may be offered or paid for any one raffle is one hundred twenty-five thousand dollars ($ 125,000) and if merchandise is used as a prize . . . the maximum fair market value of that prize may be one hundred twenty-five thousand dollars ($ 125,000).”

5. Licensing By County – 230 ILCS 15/2(a): “The governing body of any county or municipality within this State may establish a system for the licensing of organizations to operate raffles.”

6. License Number Printed on Materials (see Case Scenario)

Crafting Rules and DisclosuresSweepstakes

Basic Disclosures/Rules1. Eligibility 2. No Purchase Necessary3. Void Where Prohibited4. Free Alternate Method of Entry5. Purchase/Donation Will Not Improve Chances6. Equality of chance 7. Privacy Policy

Crafting Rules and DisclosuresSweepstakes – Regulations and Potential Concerns

1. Ensuring Disclosures are “Clear and Conspicuous” - Fl. Stat. 849.0935(3): “All brochures, advertisements, notices, tickets, or entry blanks used in connection with a drawing by chance shall conspicuously disclose . . . [t]hat no purchase or contribution is necessary.”

2. Non-Monetary Consideration – States may deem certain requirements (e.g., requirement to be present; required store visit) to be consideration.

3. Unlawful Conditions - Fl. Stat. 849.0935(4)(c): “It is unlawful for any organization . . . to condition the drawing on a minimum number of tickets having been disbursed to contributors or on a minimum amount of contributions having been received.”

4. Geographic Limitations – If redemption of prize of is contingent on a certain area (50 mile radius of prize provider) it must be disclosed.

Crafting Rules and DisclosuresContests

Basic Disclosures/Rules1. In general, no particular disclosures

necessary. 2. Gameplay rules, however, must be crafted

to eliminate, to the greatest degree possible, the element of chance.

3. Objective standards clearly communicated.

Crafting Rules and DisclosuresContests

Grey Areas1. Poker – TN 2005 AG Advisory Opinion: “The

fundamental nature of such games . . . is chance—a player’s skill, no matter how good or bad, does not and cannot control the randomness inherent in the ‘deal’ of the cards.”

2. Hole-in-One Contest – FL 1990 AG Advisory Opinion: “I am of the opinion that a contest of skill, such as a hole-in-one golf contest, where the contestant pays an entry fee, which does not make up the prize, for the opportunity to win a valuable prize by the exercise of skill, does not violate the gambling laws of this state.

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• Advertising Your Promotion– Disclosures [No Purchase necessary, Who’s eligible, How to enter

(including free method), Prizes, Values, Deadlines, Availability of Rules, Identity of Sponsor]

– Don’t misrepresent with images– Deceptive Mail Act (39 U.S.C. §3001)– “What the large type giveth, the small type may

not taketh away”– FTC – deceptive trade practices– Beware of 3rd party IP

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Case Scenario: Your company holds a golf tournament to benefit a charity whereby the players pay to play and the lowest score wins a monetary prize. Problem, there is a tie and the players (and the tournament director) want to get to happy hour. They put the winning players’ names in a hat for a drawing to determine the winner. This tournament is a:

a. Sweepstakesb. Contestc. Raffle

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• http://mpolls.us/P/ca54280

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Case Scenario: Your company holds a golf tournament to benefit a charity whereby the players pay to play and the lowest score wins. Problem, there is a tie and the players (and the tournament director) want to get to happy hour. They put the winning players’ names in a hat for a drawing to determine the winner. This tournament is a:

http://mpolls.us/P/ca54280

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Sweepstakes and Contests International Aspects

Canadian Contests- Criminal Code

- Skill-Testing Question- No Purchase Necessary

- Even for ‘skill’ contests- Competition Act

- Disclosure Requirements- Quebec

- Language Considerations- Duty and Filing Requirements

International Contests- Typical Challenges

- Marketing’s ‘global’ contest idea- Time/Cost of international review- Language Considerations

- Practical Realities and Tips

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Sweepstakes and Contests Online

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• You are an attorney at an environmental charity, a program manager approaches you with a great idea to raise awareness of your charity’s cause: a Facebook contest.

• The premise of the contest is school kids posting pictures on why endangered fish conservation is important to them and tagging their friends.

• He understands that he needs to be wary of the lottery provision and has reviewed your template rules? Are there any other issues that need to be considered?

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• Sweepstakes and Contest online– Bear in mind that Charleston Principles may

attach if you are deemed to be fundraising through your promotion.

– Different service providers may have their own restrictions on what promotions may be run on their platforms. Do review the Terms of Use!

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InstagramPromotion Guidelines

• Promotions• If you use Instagram to communicate or administer a promotion

(ex: a contest or sweepstakes), you are responsible for the lawful operation of that promotion, including:

– The official rules;– Offer terms and eligibility requirements (ex: age and residency

restrictions); and– Compliance with applicable rules and regulations governing the promotion

and all prizes offered (ex: registration and obtaining necessary regulatory approvals)

• You must not inaccurately tag content or encourage users to inaccurately tag content (ex: don’t encourage people to tag themselves in photos if they aren’t in the photo).

• Promotions on Instagram must include the following:– A complete release of Instagram by each entrant or participant.– Acknowledgement that the promotion is in no way sponsored,

endorsed or administered by, or associated with, Instagram.

• We will not assist you in the administration of your promotion and cannot advise you on whether consent is required for use of user content or on how to obtain any necessary consent.

• You agree that if you use our service to administer your promotion, you do so at your own risk.

Facebook Promotions• 1. If you use Facebook to communicate or administer a promotion

(ex: a contest or sweepstakes), you are responsible for the lawful operation of that promotion, including:

• a. The official rules;• b. Offer terms and eligibility requirements (ex: age and residency

restrictions); and• c. Compliance with applicable rules and regulations governing the

promotion and all prizes offered (ex: registration and obtaining necessary regulatory approvals)

• 2. Promotions on Facebook must include the following:• a. A complete release of Facebook by each entrant or participant.• b. Acknowledgement that the promotion is in no way sponsored,

endorsed or administered by, or associated with, Facebook.• 3. Promotions may be administered on Pages or within apps on

Facebook. Personal Timelines and friend connections must not be used to administer promotions (ex: “share on your Timeline to enter” or “share on your friend's Timeline to get additional entries”, and "tag your friends in this post to enter" are not permitted).

• 4. We will not assist you in the administration of your promotion, and you agree that if you use our service to administer your promotion, you do so at your own risk.

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• Ensure that you are following proper sweepstakes procedure. – Additional pitfall: Unlawful Internet

Gambling Enforcement Act (2006) 31 USC §§5361-5367

• Make sure that your terms include provisions relating to intellectual property.

• Watch out for children’s participation. – Parental consent to gather information

for those under 13. ( Children’s Online Privacy Protection Act)

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• Advertising via Social Media– Disclosures• Is #sweeps enough• Access to rules• Include a statement releasing the platform (e.g., FB,

Twitter) by each entrant• Include an acknowledgment that the promotion is in no

way sponsored, endorsed or administered by, or associated with the platform

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• Going back to our scenario, the Program Manager is willing to move forward with the promotion targeting college students and asking them to post their entries on the charity’s Facebook page. A year later, the Program Manager decides to aggregate the submitted photos to create an artwork to support its campaign. What issue will Program Manager encounter?

• A) Violates Facebook Terms of Use as requires tagging. • B) Doesn’t meet COPPA criteria of parental consent.• C) Copyright infringement .• D) Determine internet gambling.

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• http://mpolls.us/P/ca54280

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Going back to our scenario, the Program Manager is willing to move forward with the promotion targeting college students and asking them to post their entries on the charity’s Facebook page. A year later, the Program Manager decides to aggregate the submitted photos to create an artwork to support its campaign. What issue will Program Manager encounter?A) Violates Facebook Terms of Use as requires tagging. B) Doesn’t meet COPPA criteria of parental consent.C) Copyright infringement .D) Determine interne

http://mpolls.us/P/ca54280

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Sweepstakes, Contests and Privacy

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No Federal Definition of Personal Information – Definitions are established at the State level.– Name plus Social Security Number, Bank Account,

Credit Card, Username, Passwords or Pin. – Higher Protection Required

– Notification of any Breaches to State AGs

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– Provide Privacy Policy• Allow for

corrections/deletions– Limit the amount of

information you collect– Store information

securely and dispose correctly

– Make sure to address changes in technology • Online Behavioral

Advertising

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• Our Program Manager from the prior scenario, now wants to collect the emails of all the contest participants for future campaigns and to share with partners. Can he do this?

• A) Yes, of course, they freely participated in the contest.

• B) Only if the privacy policy terms accepted by contestants included express mention that emails would be shared with third parties .

• C) Only if private information is sent.

• http://mpolls.us/P/ca54280

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Our Program Manager from the prior scenario, now wants to collect the emails of all the contest participants for future campaigns and to share with partners. Can he do this?A) Yes, of course, they freely participated in the contest. B) Only if the privacy policy terms accepted by contestants included express mention that emails would be shared with third parties .C) Only if any emails sent can be unsubscribed from.

http://mpolls.us/P/ca54280

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Thank you!