Question about running prize draws in the US

[Bill Roy]

Hi all,

I am developing a portfolio of US sites and including within them a free prize draw for members as an element. My understanding and advice received is that as long as the draw is totally free then no Federal law will be broken. So my question is does anyone either 'know of' or 'suspect' that there is any individual State laws I may be comming up against?

The prize/s could end up being very substantial (building up to a monthly 6 dollar figure draw and possibly including a once a year 7 dollar figure sum), will be for the most part be solely money although occassionally movable goods such as a car, boat, etc., may be a constituent part of the prize, but the prizes will not include such things as real estate or other non-transportable goods.

Any input again would be much appreciated, and although obviously will not be taken as legal advice and is more just a case of double checking I have not missed some legal hurdle somewhere.

 

[south]

A quick search turns up quite a bit:

http://www.howstuffworks.com/question541.htm

http://www.sheehan.com/publications...ly-Done-Lead-to-Penalities-Bad-Publicity.aspx

The search: http://www.google.com/search?hl=en&source=hp&q=states+where+contests+are+illegal&aq=f&aqi=&aql=&oq=

In addition, I would also be concerned about taxes. You may have to provide 1099's to winners, or state forms in specific states.

 

[Bill Roy]

Hi South, thanks for the response and links. I was aware of the problem of Rhode Island (there is always one isn't there), the legal advice I had received already pointed that out and the detail which had to be gone into. The fact is that it would seem that everything is OK as long as things are filed with the relevent States before hand, even in RI.

I really do appreciate your time and effort, and this demonstrates perhaps the best of the value of being on DNF, something that I think many do not realise.

If anybody else have any more observations they too would be much appreciated.

 

[Gerry]

Seems every time there is a contest involving prizes, there are always disclaimers saying not allowed or void for states like CA, NY, etc. Each state has its own laws.

 

[Bill Roy]

Hi Doc, as 'South' linked to it is a 'disclaimer syndrome' that State legislatures have produced - why is perhaps a pertinent question that perhaps voters should be asking of their representatives in State governments across the US. I will do my damdest to avoid such.

Without going into too fine a detail I have been made aware of many of the problems already, and that has already cost me good money - and that advice came with its own disclaimer! :upset:

I am lucky in that the portfolio consists of geo-sites and therefore I will be able to resolve many problems directly as they appertain to individual States on a site by site basis, it will be a fair amount of work but not an amount that would be too onnerus.