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 North Carolina, businesses that wish to run sweepstakes or contests must comply with both state and federal regulations to ensure that these promotions are not considered illegal lotteries. An illegal lottery includes three elements: prize, chance, and consideration (entry fee or purchase requirement). To avoid being classified as a lottery, at least one of these elements must be removed. Typically, businesses eliminate the consideration element by allowing free entry. North Carolina law specifically prohibits electronic machines and devices for sweepstakes (N.C. Gen. Stat. § 14-306.4), but non-electronic sweepstakes are permissible if they follow legal guidelines. Unlike Florida, New York, and Rhode Island, North Carolina does not have specific registration requirements for sweepstakes based on the total amount of prizes. However, businesses must ensure that their sweepstakes or contests have clear official rules, which should address eligibility, entry procedures, prize descriptions, odds of winning, and how winners will be selected and notified. Additionally, businesses must avoid misleading practices and comply with federal regulations, such as the Deceptive Mail Prevention and Enforcement Act, which governs the use of mail for sweepstakes.