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 South Dakota, 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. A lottery typically includes three elements: consideration (entry fee or purchase), chance, and a prize. To avoid being classified as a lottery, at least one of these elements must be removed. Most businesses eliminate the consideration element by allowing free entry. It's important to clearly define the rules of the promotion, including eligibility, entry procedures, prize descriptions, and how winners will be selected and notified. While South Dakota does not have the same registration requirements for sweepstakes as states like Florida, New York, and Rhode Island, businesses must still adhere to the state's consumer protection laws and the federal Deceptive Mail Prevention and Enforcement Act. Additionally, if the sweepstakes or contest is conducted online, it must comply with the Children's Online Privacy Protection Act (COPPA) if it is open to children under 13. It is advisable for businesses to consult with an attorney to ensure that their sweepstakes or contest complies with all applicable laws and regulations.