Guide to Contests, Sweepstakes, and Lotteries

Sweepstakes, Contests, and Lotteries are Not Interchangeable Terms

Friends playing with Lottery scratch game ticket
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Sweepstakes, Contests, and Lotteries Defined

Sweepstakes, contests, and lotteries all give people chances to win prizes. But although these terms are related, they all have different definitions.

Sweepstakes are prize giveaways where the winners are drawn at random from among all of the entries. Prizes can range from stickers and t-shirts to houses, cars, and enormous cash wins. Sweepstakes sometimes offer additional entries for performing various activities like referring friends, sharing the sweepstakes on social media, or taking action like visiting a website or watching a video.

Contests select winners based on merit. The entry with the funniest pick-up line, most moving essay, most beautiful photograph, tastiest recipe, or whatever else fits the contest's theme will be chosen as the winner. Public voting can also be used to help select contest winners.

Lotteries are prize drawings where entrants must pay money to buy a chance to win. Lotteries are heavily regulated and are usually only legal if they are run by the government. Powerball and Mega Millions are two popular lotteries in the United States.

The Difference Between Legal Sweepstakes and Illegal Lotteries:

The U.S. has strict laws barring private lotteries, so in order to be legal, sweepstakes have to differentiate themselves from lotteries. A lottery is defined by law as a promotion that has all three of the following elements:

  1. The promotion is offering prizes with a value
  2. The winners of the promotion are chosen by chance
  1. There is an element of consideration

To avoid being classified as an illegal lottery, sweepstakes must ensure that at least one of these elements is missing. Because prizes and luck are central to sweepstakes, legitimate sweepstakes usually eliminate the element of consideration.

Consideration is loosely defined as monetary value to the company offering the promotion.

That means you will never have to pay to enter legitimate sweepstakes and purchasing a product will not improve your odds. Any sweepstake that asks you to pay to play is a scam.

Some states have their own sweepstakes laws and ​regulations in addition to federal laws. For example, sweepstakes sponsors in New York must bond prizes valued above $5,000.

The Difference Between Sweepstakes and Contests:

Many people use terms "contests" and "sweepstakes" interchangeably, but there is a difference. Contests are giveaways that have some element of skill to them. For example, entrants need to answer a trivia question, write an essay, or create a recipe to participate.

This rules out the second element of an illegal lottery: winners chosen by chance. This means that it is legal to charge a fee to enter contests or to have an element of consideration that is beneficial to the sponsor (i.e., a recipe that will be used in advertisements for a product).

Examples of Skill Contests:

Contests take a number of different forms. Anything where you can display a skill or a special attribute, from cooking and essay contests to cutest kid and bikini contests, is fair game. One example of a contest is the Million-Dollar Pillsbury Bake-Off Contest, which challenges cooks to come up with unique recipes using Pillsbury products.

Visit the Current Contests List for creative contests that you can enter today.

Examples of Sweepstakes:

Some examples of famous randomly-drawn sweepstakes include the HGTV Dream Home Sweepstakes, which gives away a home, cash, and more worth over a million dollars, and the My Coke Rewards sweepstakes, which give away cash, trips, and more each month.

If you want to try your hand at winning sweepstakes, check out the 10 best sweepstakes to enter right now.

Why Do Sponsors Hold Prize Giveaways?:

Contests and sweepstakes come out of the marketing budget of companies who are looking for innovative ways to promote their products, so it is important to support sponsors whenever possible. When sweepstakes are very successful, sponsors are more likely to continue to offer prizes. For more information, read 6 Reasons Why Companies Offer Sweepstakes.

Remember to try sponsors' products whenever possible, to be polite and gracious when asking questions about sweepstakes, and to thank them in writing for your wins. Read more about sweepstakes etiquette to learn how you can encourage sponsors to hold more giveaways.