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 Arizona, businesses that wish to run sweepstakes or contests must comply with both state and federal regulations to ensure their promotions are not classified as illegal lotteries. An illegal lottery includes three elements: prize, chance, and consideration (entry fee or purchase requirement). To avoid being considered a lottery, at least one of these elements must be eliminated. Typically, businesses remove the consideration element by allowing free entry. It's important to clearly outline the terms in the official rules, including eligibility, entry procedures, prize descriptions, and how winners will be selected and notified. While Arizona does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, businesses must still adhere to the Arizona Consumer Fraud Act and the Arizona Attorney General's advertising guidelines to prevent deceptive practices. Additionally, federal laws, such as the Federal Trade Commission (FTC) regulations, require transparency in the promotion and prohibit unfair or deceptive acts in commerce. It is advisable for businesses to consult with an attorney to ensure compliance with all applicable laws when structuring a sweepstakes or contest.