Every time I log on to Facebook I’m inundated with chances to win home makeovers, trips to exotic islands and big-screen TVs. These promotion titles all end with a buzzword like sweepstakes, contest or giveaway. Each of them is bold, in my face and often incorrectly categorized. I thought I’d set the record straight and explain the differences behind these promotions, and why it’s legally important to get them right.
Sweepstakes are promotions where the prizewinners are randomly selected. These prizes can range from a shirt from an awesome brewery to a brand new snowplow. At EPIC Creative® we find sweepstakes to be very effective in generating leads, building buzz for our clients and creating brand evangelists. Our sweepstakes often center on an event, product launch, or prime buying season.
Contests are promotions that are judged or voted on based on predetermined criteria and require skill for entry. This could be a short essay, photo caption, or even a photo or video submission. You can get pretty creative with your entry requirements, but don’t overdo it. Many contests become convoluted and the participant may lose interest. Here at EPIC, we choose to keep our contests simple, and because of it, we see a lot of participation.
Giveaways are much like the swag you’d receive at a convention or festival. Brands will offer large quantities of a particular item on a first-come-first-served basis. These promotions can be a great way to get information from your audience. Recently, EPIC offered to send out stickers on behalf of one of our clients. After two posts on Facebook we had to shut down the giveaway because of the overwhelming response.
Laws To Know
- Our neighbors to the north are often left in the cold when it comes to sweepstakes and giveaways. Laws in Canada prevent its citizens from entering promotions that do not require skill. These skills can be as simple as a quick algebra problem or trivia question; however, Canadians are often excluded from sweepstakes and giveaways.
- The prizewinner must pay taxes on prizes valued at $600 or more. This often comes as a surprise. “You mean, I have to pay $470 on my free trip to Ireland?” Absurd, right? Luckily, you only have to pay taxes on the Fair Market Value of the prize. If you’ve found the same prize for half the cost, you can adjust it on your taxes. But we’ll let the experts help you get your billion back.
There are many laws that come into play when governing a promotion. That’s why we work with American Sweepstakes, a company that specializes in developing and implementing promotions. This gives us and our clients peace of mind knowing they’re covered from a legal perspective.
Now you know the difference between a contest and a sweepstakes and a few of the legal aspects that go with them. No need to thank me. All I ask is that the next time you see a sweepstakes for a chance to win a trip for two to Maui, consider me for your plus one.
Do you have something you’d like to add? Comment below.