If you want your business to run a sweepstakes or contest you must be careful to structure the promotion so it is not characterized as a lottery under state and federal law, as lotteries are illegal unless sponsored by government entities. Some states, such as Florida, New York, and Rhode Island have registration requirements if the total amount of prizes exceeds a certain amount. And there are a number of issues you should address in the official rules you publish with the sweepstakes or contest.

In Arkansas, businesses that want to run a sweepstakes or contest must comply with both state and federal regulations to ensure that their promotion is not considered an illegal lottery. An illegal lottery typically includes three elements: prize, chance, and consideration (entry fee or purchase). To avoid being classified as a lottery, most sweepstakes remove the consideration element, allowing free entry. Arkansas does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, where businesses must register their sweepstakes if the total prize amount exceeds a certain threshold. However, businesses must still adhere to the Arkansas Code, which prohibits fraud in sweepstakes and contests. It is crucial for businesses to establish clear official rules for their sweepstakes or contests, addressing eligibility, prize descriptions, entry procedures, odds of winning, and how winners will be selected and notified. Additionally, businesses should be aware of federal regulations, such as those enforced by the Federal Trade Commission (FTC), which require promotions to be marketed honestly and prizes to be awarded as promised.