Is a contest that requires a purchase illegal?
Before we begin, it's important to define the difference between a legal promotion and an illegal lottery. There are three possible elements to consider when structuring a promotion: prize, chance and consideration.
"Standard Lottery Rule": Prize + Chance + Consideration = Lottery
To define these elements a bit further:
•Prize: Anything of value the sponsor awards in a promotion. For example goods/services with a monetary value or items of intrinsic value.
•Chance: A process beyond the participant's direct control determines the outcome. A few examples of chance are a random sweepstakes drawing or an instant win/collect and win game; ultimately luck is the deciding factor.
•Consideration: Anything that requires a participant to expend a monetary amount or significant effort to participate. For example the purchase of a product, multiple store or internet visits, correctly answering trivia questions, downloading a file, or attendance at sales presentations.
If all three of the above elements are present in your proposed promotional plan, then one of the elements will need to be neutralized to run a legal promotion versus an illegal lottery according to state and Federal laws.
Sorry, thought this was pertinent......
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