Sweepstakes, Lotteries, Contests, and Raffles

November 23, 2020


What's the difference between sweepstakes, lotteries, and raffles? We've done a lot of work on this at Lucky Card. If you plan on running some game of chance - you'll want to read this.

There are 3 things that make a lottery:

  1. Prize
  2. Chance
  3. Consideration
A prize is some reward of value that the winner recieves. Chance means the winner is chosen randomly. And consideration refers to the requirement that participants pay (or do something of value) to enter.

If you have all three of these things, you have a lottery. Individuals and businesses in the US are not allowed to run lotteries, only the government can. A raffle also has all three of these things, but in a raffle there must be a winner, where in a lottery there may not be a winner.

You'll need to remove at least one of these things. If you remove the prize, no one will want to join. If you remove the chance, you have a contest. A contest is where participants pay to enter, and the winner wins by doing something involving skill (i.e. the winner isn't randomly chosen).

If you remove the consideration, you have a sweepstakes. If it is free to enter - you are allowed to give something of value to a random participant. This is very commonly done by businesses. (That's what we do at Lucky Card). However, there are additional complexities invovled in running a sweepstakes.

States have different rules on sweepstakes. Many states require that a winners list be publicly available. Some states (Florida and New York) require sweepstakes to be registered (and prizes be bonded) if the total value of prizes is above some amount. If you're giving away sweepstakes entries with a purchase, you need to accept entries through some free alternate entry method. It's a good idea to consult with a lawyer before running a sweepstakes.