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 Massachusetts, businesses that want to run sweepstakes or contests must comply with both state and federal regulations to ensure their promotions are not considered illegal lotteries. An illegal lottery typically includes three elements: consideration (entry fee or purchase), chance, and a prize. 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 based on chance) and contests (which are based on skill). Massachusetts does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, but businesses must still follow the state's consumer protection laws and deceptive practices statutes. Official rules should be published and readily accessible, addressing eligibility, entry procedures, prize descriptions, 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), regarding advertising and fair practices.