Online Sweepstakes, Games, & Contests: Navigating Legal Issues and Pitfalls

Online sweepstakes, games, and contests have become increasingly popular thanks to the widespread use of social media and iOS applications. Companies, however, often overlook the need to include proper documentation and guidelines required by state or federal laws and regulations. Moreover, today’s new technology often allows for web/app users to submit cloned entries or otherwise circumvent online rules. Likewise, the collection of personal information for sweepstakes, online games, and contests may trigger a variety of entirely different legal issues, often unbeknownst to the host company. Care should be taken before launching new sweepstakes, games, or online contests.

One of the biggest challenges with online sweepstakes and games is the state-by-state differences in rules and regulations. Before launching a new sweepstake, online contest, or game, the host should verify that it complies with the laws in every state where it is made available. This often requires an analysis of the laws of each state since many sweepstakes, games, and contests are made available to residents of all 50 states given the nature of the Internet and iOS/Android applications. Some states require registration for certain kinds of contests.

In addition to state laws, hosts of online games need to verify compliance with federal regulations and laws such as the Children Online Privacy Protection Act (“COPPA”), and similar privacy laws. Given the global nature of the Internet, attention should be given to whether compliance with foreign laws is needed or whether access to the Internet sweepstake, game, or contest is limited to US participants. The laws of European countries, for example, provide for more stringent privacy restrictions than US ecommerce law.

While companies may be able to achieve compliance with state and federal regulations on their own, retaining an ecommerce attorney is advisable due to the complexity of the legal landscape. The first step is to evaluate the associated promotional material and online rules to ensure no violations of federal and state laws, including online privacy laws. Next, the ecommerce attorney will likely analyze the entire framework of the contest, game, or sweepstake to ensure overall compliance with both state and federal law as it applies to the client. As mentioned, this may require registration in certain states and posting bonds. Lastly, the attorney will draft overall guidelines as a reference for use with any future promotions. These guidelines can be used to reduce costs for future online sweepstakes, contests, and games.

Disclaimer – As with any discussion of legal topics, this article is intended to be educational only, and is not a substitute for legal advice, nor does it provide legal advice or form an attorney-client relationship with the reader. Please seek legal counsel before making any decisions. Also, please note that this article will likely not be updated, so the law and circumstances may have changed by the time you have read this article.