As we mentioned last month in our kickoff post on this topic, we are excited to dive deeper into the world of sweepstakes and promotions law.  This post explores several key elements to keep in mind when formulating the official rules and abbreviated rules for a promotion.

The main goal of the official rules in any promotion is two-fold: (a) to inform participants and the public regarding the details of the promotion, and (b) to comply with a series of federal and state laws and regulations.  Both of these goals are critical – no company wants to face either disgruntled participants or angry regulators.

The rules must be in place and finalized before the promotion begins.  If you are running a U.S.-based sweepstakes with a total prize value of over $5,000, you may also be required to register and bond the promotion with various state agencies up to thirty days before the promotion begins. Registration will require you to submit a copy of the promotion rules, so keep in mind that in those cases, the rules must be finalized at least thirty days before the beginning of the promotion.  That means the clock is ticking!  Depending on the type of promotion, other state laws and regulations may also be implicated, so be sure to check well before the beginning of the promotion.

What’s in Your Official Rules?

So where do you start?  Regardless of the type of promotion you are running, there are several key elements that will need to be included in the official rules.  Keeping these elements in mind when crafting how your promotion runs can be helpful to smoothly implementing and drafting the official rules.

To start, gather the following information:

• What are the start and end dates of the promotion?

• Who is eligible? Are there any age or residency requirements?

• Is anyone not eligible? For instance, will your employees be eligible?

• How will someone enter the promotion?

• How will the winner be selected?

• Is this promotion being run on a social media platform? Are there special rules for a promotion run on that platform?

• Is this a random draw?

• Is this a skills contest? If so, how will the entries be judged?

• Is any content generated by the entrant? If so, what are you doing with it?

• What is the prize? How much is the prize worth?

• Do players have to purchase anything in order to participate?

While some of these questions are straightforward, others are a bit more complicated.  For instance, if there is content being generated by the entrant – such as a photo or an essay – you need to consider who will own that content once it is submitted. You will need to determine if you want or need a license to use the submitted content, which may be the case even if you just need to reproduce the content in another medium.  If the content is being posted to a message board or other public facing space, consider whether you want the ability to remove content that is inappropriate for the space.  Needless to say, these questions can go on and on – and are highly dependent on the type of promotion you are running.

Legal Considerations of Official Rules

Generally, it is important to remember that the goal is to make the official rules as unambiguous as possible so as to help avoid any customer confusion or legal disputes.  In addition to the terms above, the official rules also typically include:

• That there is no purchase necessary to enter or win.  (This helps avoid your promotion from becoming an illegal lottery – which we explained in our first post here).

• Odds of winning.  (In most promotions, this will vary depending on the number of eligible entries received).

• Prize description – including number of prizes and approximate retail value. (Be very specific about what is and what is not included in the prize, especially if the prize is high value like travel, vehicles, or lodging).

• Who the sponsor is of the promotion.  (Most state laws require that the sponsor be named in the rules, and should be the party or parties legally responsible for the promotion).

• Choice of law provisions. (Most times naming the Sponsor’s home state).

• All necessary releases from the entrant – including publicity, liability, and travel (if the prize includes travel).  (In addition to the release included in the Official Rules, for larger prizes you may want to draft a separate release for potential winners to execute before their  prize is awarded).

• A link to the sponsor’s privacy policy so that the entrant is informed how their information will be managed.

You may also need to prepare what are commonly called the “Abbreviated Rules” for marketing purposes.  These are the short form rules that should appear in any email, flier or other material advertising the promotion. The Abbreviated Rules need to offer the consumer the key highlights and importantly provide a link or explain how an entrant can find the full official rules.  These highlights include:

• That there is no purchase necessary.

• The eligibility requirements.

• The promotion start and end date.

• How to enter the promotion.

• The prize and approximate retail value.

• The odds of winning.

• The name and address of the sponsor.

In sum, the type of promotion you are running drives the content and structure of your rules.  This means that while there is rarely a one size fits all approach, keeping these questions in mind when you start formulating your promotion will assist you in  finalizing your official rules, no matter what type of promotion you intend to run.