Cash prizes are sometimes awarded to contest or sweepstakes winners.
It's fairly easy to stumble across contests and sweepstakes. Restaurants, stores and the Internet seem to constantly advertise their existence. Often, the prizes are lucrative, such as vacations, gift certificates, cash, electronics and other expensive items. Yet, before entering, it's wise to determine whether or not a contest or sweepstakes is legitimate and what the difference is between these two types of promotions.
Definition
A sweepstakes is a promotion where a prizewinner is chosen at random. Sweepstakes are offered by mail, online and at places such as malls and stores. To enter a sweepstakes, you simply fill out a form with requested information, such as your name, address phone number and e-mail address. On a specified date, names are drawn and the winners are contacted to collect their prizes. By contrast, a contest is a promotion based on skill, and prizes are awarded for the best entry. Hence, contests require that applicants submit material to win. Examples of contests are writing contests, short film and video contests and drawing contests.
Legal Considerations
For a promotion to be considered a sweepstakes or contest, certain rules apply. Legally, neither type of contest can meet the same criteria of a lottery or it is considered an illegal lottery. The criteria for a lottery is threefold: that a prize be awarded to the winner, that the winner be selected by luck or chance and that a fee is required for entry. Sweepstakes are not considered lotteries because there is no payment involved. Contests are not considered lotteries because they are based on skill instead of chance or luck. Each state has additional laws that govern sweepstakes and lotteries. Businesses who fail to abide by these laws can be legally penalized. Additionally, federal laws exist regarding contests and sweepstakes. They are designed to protect consumers and prohibit tactics such as spamming and false advertising.
Odds
Companies often use sweepstakes and contests as marketing tools. The goal is to draw as many entrants as possible to bring awareness to a product or organization. The odds of winning a sweepstakes are often astronomical as you are competing against thousands, if not millions, of other people for the prize. Thus, it is a good idea to only enter sweepstakes in person or online; otherwise you're paying for postage. On the other hand, contests usually have much better odds. The odds of most contests are about one-in-four, according to About Gambling. However, the time and effort involved in entering a contest is much more significant than when entering a sweepstakes.
Cost and Availability
Sweepstakes cannot charge entry fees, and prizes cannot be awarded based on a purchase or the dollar amount of a purchase. Any sweepstakes that requires an entry fee is invalid and you shouldn't enter it. On the other hand, contests can charge submission fees for entries. Often these fees are assessed for each entry, if more than one entry per person is allowed. However, winning a skill-based contest often gives the winner recognition for his skill, in addition to the prize. Available contests are often listed in trade publications that cater to a particular craft. For example, writing magazines often advertise writing contests.
