In many cases, individuals may mistakenly refer to a contest as sweepstakes without realizing the distinction between the two. While these terms are often used synonymously, it is important to note that contests and sweepstakes are separate types of marketing promotions with clear differences
A contest is a promotional activity where participants have the opportunity to win something by either paying an entry fee or demonstrating their skills and meeting specific criteria. The selection of the winner is determined through judging or voting, making it a “game of skill”. An example of a contest would be one where entrants submit photos and the photo with the highest number of votes is declared the winner. Although contests are widely utilized as a marketing strategy, they may not always be as successful as sweepstakes due to the effort and skill required from participants.
A lottery is a type of gambling in which numbers are randomly drawn to determine a prize. Lotteries can take various forms and often use paper tickets as a means of participation. For example, the prize may be a set amount of cash or goods, with the risk of insufficient ticket sales impacting the organizer. In many cases, the prize fund is calculated as a fixed percentage of the total receipts.
What exactly are sweepstakes?
A sweepstakes is a contest where prizes may be awarded to winners or a race in which money is bet and divided among the winners. Sweepstakes are contests that do not require any financial contribution to enter or win. Additionally, legitimate sweepstakes are governed by laws and adhere to strict guidelines, such as “No purchase necessary to enter or win” and “A purchase will not increase your chances of winning”. The winner of sweepstakes is determined by chance rather than skill, making it what some consider a “game of chance”.
In contrast, gambling involves wagering actual money to participate in contests or play games with much more significant uncertainty surrounding the outcome. Unlike gambling, sweepstakes provide participants with upfront knowledge of how much they could win and when. These distinctions serve as the primary factors that set them apart.
Sweepstakes & law
Before running sweepstakes, it is essential to thoroughly research and comply with applicable state and federal laws and regulations. Multiple agencies, such as the FTC (U.S. Federal Trade Commission), USPS (U.S. Postal Service), FCC (Federal Communications Commission), and various state agencies, have jurisdiction over sweepstakes and giveaways and enforce relevant rules. It is also advisable to adhere to the guidelines set by the Better Business Bureau. Detailed information regarding these requirements can typically be found on the respective agency websites. For our purposes, we will primarily focus on sweepstakes regulations within the United States.
General law requirements
- Entrants must not be compelled to make any payments to enter. It is crucial to offer a free alternative means of entry (AMOE).
- Established the eligibility requirements for participants.
- Granted transparency by disclosing the odds of winning.
- The rules of the competition should specify the number and type/types of prizes to be awarded.
- Comprehensive information on the start and end dates of the sweepstakes should be provided by the organizer.
What are the benefits of running sweepstakes?
Contests and sweepstakes are highly effective components of many companies’ marketing strategies. What sets them apart from other tactics is their ability to generate excitement and engagement surrounding your brand. By hosting a contest or sweepstakes, you can achieve various objectives, including increasing brand recognition, gathering valuable customer data, and boosting product and service sales. These initiatives serve as powerful tools for expanding your company’s reach and driving business growth.
Increase brand awareness
Hosting a sweepstakes with attractive prizes can greatly enhance brand recognition and perception. In today’s market, consumers are not easily swayed by constant self-promotion from brands. However, a sweepstakes stands out as it offers an enticing opportunity to win something valuable. This approach grabs people’s attention without overwhelming them with excessive advertising, fostering positive engagement with your brand.