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 New Jersey, 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 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. New Jersey does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, where registration is mandatory if the prize amount exceeds a certain threshold. However, businesses must still follow the New Jersey Consumer Fraud Act, which requires clear and precise terms for any promotional game. Official rules should address eligibility, entry procedures, prize descriptions, odds of winning, and how winners will be selected and notified. Additionally, businesses must ensure that their promotions do not violate federal regulations, such as those enforced by the Federal Trade Commission (FTC), which mandate clear disclosure of the terms and prohibit deceptive practices.