Contests, sweepstakes, and lotteries, all give people chances to win awesome prizes. Despite having that in common, they are quite different from one another in terms of how they choose winners, how they're held, and whether they're legal to run at all. Here's a quick breakdown of everything you need to know about contests, sweepstakes, and lotteries.
The Difference Between Sweepstakes and Lotteries:
The United States has very strict laws for private lotteries, so in order to be legal, sweepstakes have to differentiate themselves from lotteries. As defined by law, a lottery is a promotion that has all three of the following elements:
- The promotion offers prizes that have value
- Winners of said promotion are chosen at random
- There is an element of consideration
A sweepstake must ensure that at least one of these three elements is missing to avoid being classified as an illegal lottery. Since prizes and luck are central to sweepstakes, legal sweepstakes eliminate the element of consideration most of the time. Consideration is defined as something of monetary value to the company that is offering the promotion. This could be straight-up cash or something of indirect value (needing to dine at a sponsor's restaurant to get an entry form). What this means is that you’ll never have to pay to enter a legitimate sweepstake and purchasing a product will not improve your odds one bit. It’s crucial to remember that any sweepstake that asks you to pay to play is a scam. If a legal giveaway requires you to buy a product to enter, it must also offer a non-purchase entry method that can allow people to enter without spending any money.
The Difference Between Sweepstakes and Contests
Whereas sweepstakes are essentially a game of chance, contests are a type of giveaway that has an element of skill to them. For example, entrants may need to write an essay, answer a trivia question, share a photograph, or create a recipe to participate. In this way, contests rule out the second element of an illegal lottery, where the winners are chosen by chance. This also means that it’s perfectly legal to charge a fee to enter contests or to have an element of consideration that is beneficial to the sponsor.
