Although often used interchangeably, the terms sweepstakes, contest and raffle are separate
and distinct types of promotions. The legal definitions of these promotions may differ from
state to state. However, the promoter must ensure that the operation of the promotion is
not an illegal lottery. Lotteries, which can only be run by the states (e.g., Powerball), contain three elements: ( 1) prize; ( 2) chance; and ( 3) consideration. In most circumstances, in
order to operate a legal promotion, at least one of these three elements must be eliminated.
The prize element, whether it is a new car, an all-expenses paid vacation, or tickets
to a baseball game, is something of value that is awarded to the promotion’s winner.
Because the prize is usually the motivating factor for an entrant’s participation in the
promotion, eliminating this element is not ideal. Without a prize, no one would enter
to win the promotion.