When and to whom does the law apply?
Posted: Sat Jul 12, 2025 5:47 am
If you live within the US, the No Purchase Necessary law applies to you, whether you’re running a giveaway for a tiny mom and pop shop or a major national brand. When awarding a prize by chance, different laws apply to different types of organizations. Here’s a breakdown of the differences of each:
Lotteries: If you’ve been paying attention so far, you’ll know that, unless you’re a government entity, hosting a lottery is a big no-no. A giveaway is considered a lottery when:
the giveaway offers one or more prizes of value,
the winners of the giveaway are chosen at random, and
the entry requires a payment of money or other consideration.
The word “consideration” is used loosely to cover anything that is directly or indirectly of value to the company, monetary or otherwise. For example, you can’t require a purchase be made with a sister company or phone number lead sponsor in exchange for an entry. What some states deem “consideration” differs from others, so make sure you check with local laws to stay in compliance. We’ve listed a few individual state laws here.
Sweepstakes: What makes a sweepstakes different from a lottery is the exchange of purchase or consideration. A sweepstakes must be free to enter. You may be thinking “but don’t I have to buy french fries to play McDonald’s Monopoly game?” And the surprising answer is, you don’t! We’ll talk more about that later on.
Lotteries: If you’ve been paying attention so far, you’ll know that, unless you’re a government entity, hosting a lottery is a big no-no. A giveaway is considered a lottery when:
the giveaway offers one or more prizes of value,
the winners of the giveaway are chosen at random, and
the entry requires a payment of money or other consideration.
The word “consideration” is used loosely to cover anything that is directly or indirectly of value to the company, monetary or otherwise. For example, you can’t require a purchase be made with a sister company or phone number lead sponsor in exchange for an entry. What some states deem “consideration” differs from others, so make sure you check with local laws to stay in compliance. We’ve listed a few individual state laws here.
Sweepstakes: What makes a sweepstakes different from a lottery is the exchange of purchase or consideration. A sweepstakes must be free to enter. You may be thinking “but don’t I have to buy french fries to play McDonald’s Monopoly game?” And the surprising answer is, you don’t! We’ll talk more about that later on.