Promotional contests of chance (promotions) are “free entry” contests that commercial businesses can use to promote
their products or services.
Commercial businesses do not have to register or get a license to have a promotion. Individuals and charitable or
non-profit organizations cannot offer promotions. An example of a promotion is when a restaurant gives free lunch to
someone who has placed his/her business card in a jar for a drawing.
The purpose of a promotion is to advertise or promote the services, goods, wares or merchandise of a commercial
business. It is not to raise money for an individual, commercial business or charity. As an alternative, charities may
be eligible to offer a raffle.
There must always be a way for anyone to enter a promotional contest of chance for free. Additional entries can be
based on a purchase of services, goods, wares or merchandise; however, contests offered through the mail must not
offer additional entries based on purchases.
Rules Must be Posted
Rules relating to promotions must be posted and clearly state the following:
- No purchase is required to enter the contest
- Name and address of promoter and sponsor of the promotion
- All eligibility requirements
- The termination date for eligibility and whether it is a postmark or receipt date
- The number, retail value and complete description of all prizes offered and whether cash may be awarded instead of
merchandise
- Approximate odds of winning (if the odds will depend on the number of entries, state this)
- Geographic area covered and areas in which the offer is void
- The date winners will be chosen and notified
- Method by which winners will be selected
- Whether or not the winner must be present for the drawing
- Publicity rights regarding use of the winner’s name
- Mailing address to allow consumers to request a list of winners of prizes great than $25 in value
- Whether or not the winner is responsible for applicable state or federal taxes (winner can be required to pay
taxes, but only if the taxes are paid directly to a government entity)
Entry Requirements
You CAN’T require a person to:
- Purchase anything of value from your business to be eligible to enter the contest or receive a scratch ticket or
game piece. There must be a way for a person to enter the contest or receive a game piece without purchasing a
product (for example, requesting one by mail).
- Call a 900 number to enter a contest or collect a prize
- Pay shipping or delivery charges or judging fees
- Give out credit card or bank account numbers
You CAN require a person to:
- Visit a business location
- Place or answer a telephone call
- Complete an entry form or customer survey
- Furnish a stamped, self-addressed envelope
- Obtain a coupon or entry blank by purchasing a bona fide newspaper or magazine, or a program sold in conjunction
with a regularly scheduled sporting event
- Listen to a sales presentation and receive an entry ticket after the presentation
Additional Rules
Banks and credit unions can have a drawing for a prize for people who deposit money in a savings account, certificate
of deposit, or any other savings program. These contests cannot be done over the Internet.
Punchboards and pull-tabs cannot be used in a promotion, unless the scratch-off game cards or game pieces are
specifically designed for a promotion.
You may offer a promotion that is similar to bingo, often referred to as “no fee bingo:” Businesses must:
- Not charge a fee to play
- Use recreational bingo cards (cards that are not used in “real” bingo games
- Not operate the game for more than a total of three hours per day, twice per week
- Award only merchandise items, such as food, hats or shirts valued at less than $25
- Not award prizes worth more than $100 per week, or $5,000 per year
- Record names of winners and prizes won
Promotions can be advertised. This includes newspapers, magazines, signs, the Internet and across state lines.