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What is the difference between a sweepstakes, lottery, and a contest?

April 26, 2017contest difference lottery sweepstakes

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What is the difference between a sweepstakes, lottery, and a contest?

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Before a company decides if its promotion is a sweepstakes or contest, it must make sure the promotion is not an illegal lottery. A lottery consists of three elements: (1) a prize, (2) consideration (payment), and (3) chance. In other words, a participant pays for the chance to win a prize, like purchasing a ticket in the hopes of winning millions of dollars in a legal, state-run lottery. A company must eliminate one of those three elements to be sure the promotion is not a lottery. A contest, on the other hand, awards prizes based on skill, including art contests, cook-offs, or trivia contests. Because the element of chance is eliminated, companies can require consideration for entry into the contest. Talk to your lawyer to determine whether your advertising campaign constitutes a sweepstakes, lottery, or a contest.