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 Iowa, 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 includes three elements: prize, chance, and consideration (entry fee or purchase requirement). To avoid being classified as a lottery, most sweepstakes remove the consideration element, allowing free entry. Iowa does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, where businesses must register their promotion if the total prize amount exceeds a certain threshold. However, businesses must still be cautious about the official rules they publish for their sweepstakes or contest. These rules should clearly outline eligibility, entry procedures, prize descriptions, odds of winning, and how winners will be selected and notified. Additionally, businesses should be aware of the federal Deceptive Mail Prevention and Enforcement Act, which governs sweepstakes through the mail, and the Children's Online Privacy Protection Act (COPPA), if the sweepstakes or contest is directed towards children under 13.