Sweepstakes Laws and Requirements
This is a brief overview and is not intended to be a full disclosure of sweepstakes laws. Sweepstakes can also be subject to federal and state laws, which can vary greatly.
There are many Sweepstakes Rules that govern how sweepstakes operate. If you click on a sweeptakes rules link, you will see how extensive the wording can be. It is in the sponsor’s interest to spell out what is expected of entrants. The sponsors are also held to certain rules.
Why isn’t this sweepstakes available in my state?
There are many possible answers to this question. The sponsor could choose to limit a sweepstakes to a certain region. They need to explain in their rules who is and isn’t eligible to participate. They are not obligated to open a sweepstakes to all states or regions.
In addition, some states have more restrictive laws than others. You will notice that sometimes FL, NY and RI are excluded from participating. These states require the sponsor to register with the state if the total value of the prizes is over $5,000. The sponsor may simply decide to exclude those states rather than dealing with the obligation of dealing with the state's sweepstakes law requirements.
Other states have restrictive laws when the sponsor sells alcohol or includes anything alcohol related in the prize. The states most affected by alcohol rules are CA, TN and UT, though other states may also have restrictions.
Tobacco sponsor and products limit participation in other states. MA, MI and VA do not allow tobacco-related sweeps.
Shipping costs may also make it impractical for a sponsor to offer a sweepstakes in certain regions, particularly AK and HI.
What’s a Winner's Affidavit?
An affidavit (an “affy” to an experienced sweeper) is a legal form that the sponsor issues to you. You must return a signed and notarized affidavit to the sponsor by the time indicated in order to claim the prize. The winner's affidavit will sometimes state Eligibility & Publicity/Liability release or Prize Value. Please consult a legal professional if you do not understand the Affidavit.
Do I need to pay taxes on prizes I win?
Yes. For prizes with values under $600, the sponsor will generally send you the prize and let you assume the responsibility for reporting it to the IRS. For prizes over $600 in value, a sponsor will send you an affidavit. In January, you will be sent a 1099 form with the prize value stated so that you can include the prize as taxable income when you file your taxes.