As a podcaster, you want to engage your audience and keep them coming back for more. Running promotions is a great way to do this, but it’s important to know the difference between a contest, sweepstakes, and an illegal lottery. You don't want to end up getting sued, so let's dive into the world of promotions and how to run them legally.
In case you're wondering, I am not a lawyer and this is not legal advice.
First and foremost, let's get one thing straight—gambling is illegal unless you are a licensed casino. When you make someone exchange something of value for a chance to win something, that is considered a lottery or, simply put, "gambling." The rules are in place to ensure fairness and to prevent people from starting their own illegal casinos.
The Three Elements of a Promotion
The three key elements that determine whether a promotion is gambling or an illegal lottery are Prize, Chance, and Consideration.
- Prize is the thing that a person (or people) wins.
- Chance means there are odds involved in winning.
- Consideration is the requirement that something of value be given up in order to be “considered” for the promotion.
If you have all three elements, you risk legal trouble.
Playing By the Rules
To avoid holding an illegal lottery, simply eliminate one of these elements.
Prize is the hardest element to remove since you want to be incentivize your listeners to enter. You could skirt the prize by having a prize with no value. For instance, you might name one of your random paid subscribers as, "The Good Morning Podcasters listener of the week."
You can remove Chance by turning the promotion into a contest where winners are chosen based on certain criteria rather than by chance, or into a giveaway where everyone who enters wins a prize.
Consideration is the easiest to get rid of - just don't require that listeners pay to play.
The Types of Promotions
So what exactly are the different types of promotions?
- Sweepstakes: A sweepstakes is a promotion that has Prize and Chance but no Consideration.
- Contest: A contest is a promotion where there is Prize and could be Consideration but no element of Chance and winners are chosen based on certain criteria.
- Giveaway: A giveaway is similar to a contest, but with the element of Chance removed by giving everyone a prize.
Other Things to Consider
When running a promotion, it's important to have official rules detailing how a listener can win and how the prizes will be distributed. To reduce the appearance of impropriety, it's best to have a third-party draw the random drawings. Don't forget to put an end date for the contest and consider asking a lawyer for advice, as rules vary by location.
Running promotions is a great way to engage your audience and keep them coming back for more. Just make sure to know the difference between a contest, sweepstakes, and illegal lottery, and to follow the rules and regulations to avoid any legal trouble. And remember, never refer to your promotion as a raffle or lottery unless you are properly licensed to run one.
As a podcaster, you should really know the rules and regulations surrounding promotions, so you can run them legally and fairly for your listeners. Don't risk getting sued—follow these guidelines and the advice of your actual legal counsel, and you'll be able to run successful and exciting promotions for your audience.
Fuzz Martin 0:00
Good Morning. Podcasters Do you know the difference between a contest a sweepstakes and an illegal lottery? You should. I'd hate for you to get sued.
Fuzz Martin 0:13
Hello and Happy Monday. Welcome to this the 46th episode of Good Morning Podcasters. My name is Fuzz Martin. And this is a three times per week show about marketing advertising, PR, and social media for podcasters. Though the content, it'll really help you whether you're a podcaster or not. If you recognize the title of this episode, and we're like, "Hey, Fuzz, didn't you already do an episode on contests sweepstakes and lotteries?" Well, technically, the answer is no, I did not do a podcast on this topic I did. However, when I first took over Good Morning Podcasters briefly started newsletter called Good morning inbox. And while the newsletter proved to be too much for my schedule, and it's back on the back burner, for the time being, I did write a newsletter article on this topic. So if you are one of the like, dozen or so who read that, thank you. Now you get to hear the audio version of that article, it should be a good refresher, it's an important topic.
Fuzz Martin 1:16
Speaking of newsletters, if you're a MailChimp free tier subscriber, you likely received an email warning you that they're putting limits on how many emails you can send, I just want to tell you from a professional standpoint, that their email is kind of misleading. And I want to clear that up for you. I know a lot of people use MailChimp, it's a good platform. But their recent email says you can only send 1000 emails per month. That sounds like a ton of emails. However, an email counts as a user. So if you have a list of 350 people on it, and you send one email, that's 350 emails, and that counts toward your month. So that would mean if you had 350 subscribers on the free tier, you could only send out two emails per month. Also, their email says you can only send 500 emails per day. So again, if your list is 350 people, you send one email, and then you have to send a follow up or a retraction, you're gonna have to wait until the next day. That's the joy of using a free tier of technology right? At their $13 a month essentials tier, you do get bumped up to 5000 emails per month, which is much more reasonable. All in all, not bad again, MailChimp is a great platform. I just wanted to clear that up in case you got that email. And were like, oh, well, I only send you know, two emails a week. Well, that could put you over the top in one week.
Fuzz Martin 2:36
Alright, back to the topic at hand: contests, sweepstakes and lotteries. I'll begin this by stating, I am not a lawyer. What you're about to hear is not legal advice. Also, this is very us focused. So if you're outside the US, what I'm about to talk about might be different for you. When I was a radio program director, part of my job was to validate each of the promotions that the radio station ran, in order to make sure we were being fair. We weren't running any illegal lotteries, and that we weren't going to get sued by our listeners. So these guidelines aren't just for radio stations, they're important for podcasters social media influencers, bloggers, no matter who you are these rules pertain to you if you're running some sort of promotion.
Fuzz Martin 3:24
So what will get you in hot water? The short answer is gambling. Anytime you make someone exchange something for value for a chance to win something that's considered a lottery or simply put gambling. The rules that are out there are designed to make things fair for everyone and so that you aren't essentially starting your own Casino. There are three variables that are used to determine whether something is gambling or an illegal lottery. Those variables are prize, chance, and consideration. And I'll talk about each of those coming up here. But again, prize chance and consideration and if you have all three, and you're not a licensed casino, you're likely risking legal trouble. So what our prize chance and consideration prizes pretty simple. This is the thing that a person or people win. It could be as simple as a t shirt, or as hefty as you know, a million bucks. Chance is also pretty simple. That means there are odds involved in winning in that everyone who enters will win and consideration is the more difficult of the three consideration is the requirement that something of value be given up in order to be considered for the promotion. So this could be a requirement to purchase a product or to pay to enter a sweepstakes. The rules vary by state. Some states are more strict than others. So again, read up on the rules in your state. So perhaps consult a lawyer or get in contact with a clearing house.
Fuzz Martin 5:01
How do you prevent yourself from holding an illegal lottery? How do you keep yourself from getting in trouble? Since an illegal lottery occurs when all three legs of that table are presents surprise, chance and consideration, you simply have to eliminate one of those legs in order to be in compliance. Here are some of the ways to get rid of each of those prizes the hardest one to remove, because it's likely the reason that people are entering your promotion, right, so eliminating the incentive might be counterproductive.
Fuzz Martin 5:32
The only real way to remove prize from promotion is to create a situation where the price has no value. For instance, if you're running a promotion, where subscribers to your premium show have a chance to be named the XYZ podcast listener of the week, you might be able to eliminate the price rule. So again, prize is the hardest to get rid of.
Fuzz Martin 5:53
There are a few ways to get rid of chance, the first would be to turn the promotion into a contest. That's where winners are chosen by certain criteria rather than by chance. The other would be to turn the sweepstakes into a giveaway. So every person who enters wins the prize, while supplies last.
Fuzz Martin 6:13
And consideration is the easiest of the three variables to get rid of is simply don't require that listeners pay to play. This is why a lot of sweepstakes rules have a free method for people to enter, send a postcard with your name, address, phone number, etc to XYZ. Again, check your state's or country's rules or better yet, with a lawyer or sweepstakes clearing house before determining what consideration is in your area. In some places with all of the data laws going on, providing substantial information could be considered consideration. So keep that in mind.
Fuzz Martin 6:51
So we've covered the elements of what a promotion is, but what are the different types of promotions. So you've heard the term sweepstakes before what sweepstakes is, is a promotion that has prize and chance, but no consideration. So there's a signup to win, where many will enter a fuel when the winner is chosen by chance. And those winners win whatever the prize is, but there's no fee to enter that as a sweepstakes.
Fuzz Martin 7:20
A contest is considered a promotion where there is a prize. And there could be consideration. But there is no element of chance winners are selected based on meeting certain criteria rather than a random drawing.
Fuzz Martin 7:35
And then a giveaway, like a contest is a promotion that has a prize, there could be consideration. But again, there's no chance of the giveaway, chances removed by giving everyone who enters a prize, thus removing that element of chance. So you have sweepstakes, contests, and giveaways. And again, if you do one that has a prize, an element of random chance and consideration all three of those together, that's considered a lottery, which is illegal unless you're licensed.
Fuzz Martin 8:08
If you're running a promotion, there's some other things to consider. And that's that upon one official rules, it is important to have official rules for your promotions detailing how a listener can win and how the prizes will be distributed. There are a lot of things that need to go into your rules. So again, make sure you read up on that before you do that. Consider having a third party draw in order to reduce the appearance of impropriety. It's best to have a third party draw your random drawings, or make it everything public out in the open so everybody can see how you're doing that. There are sweepstakes companies that can take care of that for you though they do come at a cost. And a lot of times they're pretty pricey. Don't forget to put a contest end date with your promotions. It's very, very important. And then also again, ask a lawyer rules vary by location. If you're unsure or worried that your promotion might be a problem. contact a lawyer. It's better to pay upfront than to pay for legal defense down the road. And finally, whatever kind of promotion you're doing, never refer to it as a raffle or a lottery. Just don't even say it. Get those words out of your mouth unless you're properly licensed to run a raffle or a lottery.
Fuzz Martin 9:23
So there you go. If you're running a promotion for your show, don't mess around and accidentally turn your promotion into a casino. The government gets very testy when people make casinos without telling them less because they want to protect people and more because they want their money. That'll do it for today's episode of Good Morning Podcasters Be sure to follow Good Morning Podcasters in your podcast player that you prefer. And tune in for every new episode that come out on mondays wednesdays and now on Thursdays. And you can find all the back episodes Good Morning Podcasters at Good morning haad.com Thanks for listening and we'll chat again on Wednesday right here on Good Morning Podcasters