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 Colorado, businesses that want to run a sweepstakes or contest must comply with both state and federal regulations to ensure their promotion is not considered an illegal lottery. A 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 by allowing free entry. It's important to clearly distinguish between 'sweepstakes', which are random drawings, and 'contests', which are based on skill or merit. Colorado does not have specific registration requirements for sweepstakes or contests based on the total amount of prizes, unlike states such as Florida, New York, and Rhode Island. However, businesses must still adhere to the Colorado Consumer Protection Act, which prohibits deceptive trade practices. Official rules should be published and accessible, addressing eligibility, entry procedures, prize descriptions, odds of winning, and how winners will be selected and notified. Additionally, businesses must ensure compliance with federal regulations, such as those enforced by the Federal Trade Commission (FTC), which focus on advertising and marketing practices related to sweepstakes and contests.