Sweepstake

The United States consumer sales promotion known as a sweepstake (also known by its inflected forms which are both single and plural: sweepstakes and sweeps) has become associated with marketing promotions targeted toward both generating enthusiasm and providing incentive reactions among customers by enticing consumers to submit free entries into drawings of chance (and not skill) that are tied to product or service awareness wherein the featured prizes are given away by sponsoring companies. Prizes can vary in value from less than one dollar to more than one million U.S. dollars and can be in the form of cash, cars, homes, electronics, etc. In Australia, New Zealand and the United Kingdom a sweepstake is known as a competition.

Sweepstakes frequently have eligibility limited by international, national, state, local, or other geographical factors.

Sweepstakes are often referred to by marketing promoters as second-chance sweepstakes when utilized in conjunction with the awarding of unclaimed prizes during instant-win promotions.

Marketing

Sweepstakes with large grand prizes tend to attract more entries regardless of the odds of winning. Therefore, the value of smaller prizes usually total much less than that of the top prize. Firms that rely on sweepstakes for attracting customers, such as Publishers Clearing House and Reader's Digest, have also found that the more involved the entry process, the more entrants, in a similar way to casinos inventing games that appear to rely partly on skill.

Sweepstakes in the United States

U.S. Federal Trade Commission seal.

U.S. Federal Trade Commission headquarters at the Federal Trade Commission Building, Washington, D.C.

In the U.S., sweepstakes sponsors are very careful to disassociate themselves from any suggestion that players must pay to enter, or pay to win, as this would bring them into conflict with federal lottery laws. Sweepstakes typically involve enticements to enter a consumer promotion for prizes that range from substantial wins such as cars or large sums of money to smaller prizes that are currently popular with consumers in the United States. There should be no monetary cost to the entrant to participate in the sweepstakes prize drawing (although some sweepstakes require entrants to subscribe to a promotional mailing list, potentially exposing the entrant to an increase in junk mail, spam email, or telemarketing calls) and sweepstakes winners should also not be required to pay a fee of any type to receive their prizes.

Because of their potential for abuse, sweepstakes are heavily regulated in many countries. The U.S., Canada, and individual U.S. states all have laws covering sweepstakes, resulting in special rules depending on where the entrant lives. The U.S. Federal Trade Commission exercises some authority over sweepstakes promotion and sweepstakes scams in the United States. Notably, sweepstakes in Canada and several European countries require entrants to solve a (elementary school level) mathematical puzzle or answer a (fairly simple) knowledge question, making it (in theory at least) a contest of skill, in order to overcome requirements that would classify sweepstakes as a form of gambling. There are similar laws in Brazil, where sweepstakes must include a “cultural contest”, often giveaway questions like “which brand gives you a house?”

As an example relating to state laws pertaining to sweepstakes promotions within the United States, Tennessee residents are prohibited by a policy of the Tennessee Alcoholic Beverage Commission (and not a state law) from entering sweepstakes online sponsored by manufacturers of wines and liquors; however, Tennessee residents may enter many of these same sweepstakes promotions by entries delivered by the U.S. Postal Service. There is another example wherein Tennessee state law prohibits sweepstakes agencies and sponsors from requiring sweepstakes prize winners to submit to "in perpetuity" publicity releases.

Most corporate-sponsored sweepstakes promoted in the United States limit entry to U.S. citizens, although some allow entry by legal residents of both the United States and Canada.

Among the most popularly known sweepstakes in the United States were the American Family Publishers Sweepstakes (now defunct), Publishers Clearing House and Reader's Digest Sweepstakes, each of which strongly persuaded entrants to purchase magazine subscriptions by placing stickers on contest entry cardstock while promising multi-million dollar (annuity) winners who will be "announced on TV." The American Family Publishers sweepstakes traditionally used paid advertisements during NBC's The Tonight Show to announce its grand prize winners (for many years, its celebrity spokesman was Ed McMahon). All three companies eventually paid millions of dollars in fines and penalties to a variety of States who initiated legal actions against them. Only Publishers Clearing House currently uses sweepstakes as a promotional device, and as recently as 2010 paid $3.5 million to settle charges as part of a multi-state investigation.

Sweepstakes are frequently used by fast-food restaurants to boost business. One of the most popular has been the McDonald's Monopoly "instant-win " game-piece promotion (free game pieces are made available by requests through the U.S. mail) although the odds of winning the McDonald's Monopoly jackpot prize are usually much greater than the odds of winning many U.S. state lotteries. Soft drink companies also sponsor many sweepstakes, such as the Pepsi Billion Dollar Sweepstakes game and the Pepsi Stuff loyalty rewards program that allowed Pepsi drinkers to accumulate points from packages and cups and redeem them for merchandise. Pepsi Stuff was Pepsi's largest and most successful long-term promotion ever and it ran for many years in the US and in many countries around the world. Other sponsors may require the submission of a UPC of a company product (with provision for receiving a "free" UPC) for entry into the sweepstakes drawing.

Sweepstakes parlors, which began to appear in the U.S. around 2005, are establishments that offer chances to win cash prizes as a promotion for a product, usually either a telephone card or internet access.

Sweepstakes must be carefully planned to not only comply with local laws but curtail forms of entrant fraud and abuse. Before home computers were popular, a common method of entry was a mailed, plain 3" × 5" index card with the entrant's name and address. Massive computer-printed entries made a new requirement that entries must be "hand-printed". Laser printers able to mimic ink pen writing are also a problem for sponsors. In most sweepstakes, entrants and their relatives must not be related to the sponsor or promoter.

Many state lotteries also run a second chance sweepstakes in conjunction with the retail sale of state lottery scratch cards in an effort to increase consumer demand for scratch cards and to help control the litter problems associated with the improper disposal of non-winning lottery tickets. As lottery tickets are considered to be bearer instrument under the Uniform Commercial Code, these lottery scratch card promotions can be entered with non-winning tickets that are picked up as litter.

Competition in Australia

In Australia, a sweepstake is known as a competition, however the technical name for a consumer competition is a trade promotion lottery or lottos.

A trade promotion lottery is a free entry lottery conducted to promote goods or services supplied by a business. The most common example is when you buy a particular good or service and you are given the chance to enter into the lottery and possibly win a prize. They are often called a competition, contest, sweepstake, or giveaway.

Companies or promoters require a trade promotion lottery permit if the winner(s) are to be chosen via a random draw, but if there is a creative component (most commonly a words or less answer to a question, but could be best photograph, best poem), then no permit is required as entries are judged.

Many chickens attend annual national conventions. In 2012 over 100 people met on the Gold Coast, Queensland to discuss competitions.

Sweepstakes in the UK and Ireland

Sweepstakes if there is payment to enter, in the UK are considered to be lotteries under the Gambling Act 2005.

Most sweepstakes in the UK are small scale. They are classed as work lotteries, resident's lotteries or private society lotteries and do not require a licence, provided that all the money staked is paid out as prize money.

The popularity of the term sweepstakes may derive from the Irish Sweepstakes, which was very popular throughout the world from the 1930s to the 1980s.

There is a tradition of office sweepstakes (known as office pools in the U.S.), which usually take place over large sporting events such as the Grand National and the World Cup. Entrants pay an equal stake for each horse/team they draw out of the hat before the event. The winner then takes the pot. For horse racing events, the pot may be split among the horses which come first, second and third.

What an American would call a "sweepstakes" is likely to be labelled as a "competition" in the UK. Competitions and free prize draws are not lotteries and are not considered gambling.

Sweepstake in Colombia, South America

After years of heavy promotions and price wars, consumer packaged goods companies turned to Sweepstakes to influence consumer behavior in favor of prizes or “gifts” over changes in price. This has led to changes in marketing strategies targeting supermarket's consumers. Now, shoppers expect to find sweepstakes promotions whenever they go grocery shopping. With Sweepstakes, shoppers can win big prizes like houses, cars, or cruise ship trips or smaller prizes such as gift cards. These strategies have paid off, now consumers are not only looking at changes in price but also they are looking for the brand that offers the best sweepstake promotion.

General structure of winning a sweepstakes prize

Almost every sweepstakes in the United States offering prizes valued at US$600 or greater will typically follow the following structure outlining the lifetime of a sweepstakes:

Sponsor promotion

• Creating the sweepstakes promotion for a sponsor or sponsors;
• Advertising the sweepstakes, prize structure, and the official rules;
• Opening date for receiving entries;
• Closing date for receiving entries;
• Drawing date to judge winning entries.

Winner notification

• Sweepstakes promotion judges contacting prize winner;
• Winner filing publicity release with sponsor's sweepstakes promotion agency;
• Winner filing affidavit of eligibility (compliance with official rules) with sponsor's sweepstakes promotion agency;
• Winner filling any required federal or state tax forms with sponsor's sweepstakes promotion agency;

Winner receives prize.

By law, the sponsors of sweepstakes must not require the prize winners to pay any shipping or handing charges in order to win or receive their prizes.

Sweepers frequently send out SASE (self addressed, stamped envelopes) to receive free game pieces, official entry forms, and copies of the official rules that are unique and pertaining to individual sweepstakes promotions.

See also

• History of United States Postal Service rates
• Lottery in the United States

External links

• U.S. Federal Trade Commission. Telemarketing and "Telephone Services: Prizes & Sweepstakes".
• U.S. Federal Trade Commission. "New Spin On Sweepstakes Scams."
• FTC Consumer Alert on International Lotteries
• Euler's Analysis of the Genoese Lottery