Maybe it’s just me, but I think when promotion lawyers see an innovative sweepstakes, they think about the legal issues raised. I’m sure the jurisconsults debated over whether Tali, Terni Lapilli and Ludus Latrunculorum could be played without violating the extant, but not well-enforced, Roman gambling regulations. But I digress.
This Super Bowl Sunday you could have a chance to win $10 million if you sign up for a FanDuel account, are the only person who correctly picks whether Rob Gronkowski makes a field goal during the Super Bowl (not during the actual game, but broadcast live during the televised game from an “undisclosed location”), and you use all of this money to place future bets on FanDuel. (See Official Rules for the F2P FanDuel Kick of Destiny Free Pick at (this link). For a promotion lawyer, this is a feast.
I note that FanDuel has online gambling licenses in many states and the promotion itself is void in a number of states. To be clear: I’m not trying to analyze whether this particular promotion is legal in every state or anywhere, but I’m simply using this platform to address common sweepstakes questions.
Can a chance promotion be based upon the skill of a third party?
First off, the promotion is a game of chance, not skill. Sorry, but there is no “skill” involved in deciding whether a retired tight-end can make a 25-yard field goal. A game of chance typically includes an activity “where the outcome is determined depending on the occurrence of one or more future events” outside the entrant’s control. Sounds good; you should be able to pick your winners based on someone’s athletic prowess or whether Punxsutawny Phil sees his shadow.
Can an entrant be required to sign up for the Sponsor’s online account?
This is very common and, as here, involves no payment of money to sign up, so it’s typically accepted as not a form of legal consideration, which would transform a chance promotion into an illegal lottery. Some states only deem monetary payments as legal “consideration” for sweepstakes purposes, while others also consider the time and effort involved. But be mindful of states that may also consider whether an entrant is providing a “benefit” to the sponsor using the traditional contractual definition of “consideration” being either a detriment to the promissee or a benefit to the promissor. Arguably, signing up for a sponsor’s online account (or maybe even “liking” sponsor’s post) may provide some benefit to the sponsor, so careful “consideration” (ha ha) may need to be taken into “account” in these circumstances.
Can the amount of the prize be left to chance?
In the Kick of Destiny, if you correctly pick whether Gronk makes the kick, you win by sharing in some (as yet unknown) amount of a $10 million prize pool among everyone else who correctly made the pick. Is it ok if entrants don’t know the actual amount of the prize they could win? Many states have statutes requiring disclosure in official rules or ads of the prizes available, approximate retail value of the prizes, and the odds of winning the prize. Care should be taken to parse out whether these statutes allow a sponsor to disclose the total prize pool available rather than the specific dollar amount of the actual prize to be given to a specific winner. Specifically, does a sponsor adequately “disclose the prize” when saying it’s specific dollar-amount, prize pool? You say potato, I say potato.
Can you require a winner to use winnings to spend money on your website?
Don’t start looking for houses in Greenwich when awaiting verification of your Kick of Destiny prize. The Official Rules state that the winnings must be used to place future bets on the FanDuel Sportsbook. As a practical matter, you often see sponsors providing sweepstakes prizes for gift cards to be used only for their products or in their stores – so, it seems this works in pretty much the same way. I’m not aware of any “legal” requirement restricting the use of a monetary prize; instead, statutes typically focus on whether any restrictions on the use of the prize are clearly disclosed.
What if your promotion just caters to that forbidden “gambling instinct”?
If you have to sign up to a gambling site to pick whether an ex-ballplayer makes a field goal and use your winnings to place bets on this gambling site, this may look and quack like a duck.
Court decisions, predominately from the 1930s-40s, loved to question whether a particular game or device was illegal because it afforded “necessary lure to indulge the gambling instinct and appeal to the gambling propensities of man.” [That’s an actual quote from a case of that era!] But, while I did find a Maryland case on Westlaw from 1985 using the term “gambling instinct”, this so-called test may have gone the way of flappers, dance marathons and the Hays Code.
Maybe someday our legislators will be less-concerned with protecting us from the evils of gambling and lotteries – they sure don’t care about when they are state run; over the last century they’ve eased up on other classic vices like alcohol and marijuana. But for now promotion nerds still get to nit-pick over fun and harmless promotions.
