A Chinese proverb states that “The man who asks a question is a fool for a minute; the man who does not ask is a fool for life.” So take more than a minute to brush up on some common frequently asked questions concerning sweepstakes administration.
Can a Sponsor terminate a sweepstakes that has already begun?
Perhaps. This practice is not encouraged, but a Sponsor may be able to terminate, provided there is an explicit termination or cancellation provision in the Official Rules and termination is made in good faith.
As we all know, the Official Rules form a binding contract with entrants (as long as they can see and agree to them). While a good termination clause may be enforceable, contracts also have the implied obligation of good faith. Therefore, arbitrary or capricious termination may not be acceptable.
You need to also consider (especially for skill contests or when purchases provide entries) that Official Rules are really unilateral contracts—that is, contracts where one party makes a promise in exchange for another’s performance. So, if entrants have already performed (i.e., submitted a contest entry or paid for a product), they may have a strong argument that the Sponsor cannot unilaterally—and especially, arbitrarily—terminate the promotion. A good discussion of this is in Personavera, LLC v. College of Healthcare Information Management Executives, 2021 WL 1313108 (E.D. Pa. April 8, 2021), where the Sponsor terminated a skill contest midway through and refused to award the $1M grand prize, prompting complaints from entrants who had already entered.
It’s also worth noting that the Florida sweepstakes statute states that is unlawful for a Sponsor “to fail to award prizes offered.” It could be argued that this broad pronouncement is not applicable where the “offer” includes explicit termination rights, but you may not want to mess with Florida.
Will an Arbitration Clause, Class Action Waiver and Damages Limitation in Official Rules be upheld?
Generally, yes. Courts will typically look at whether these provisions were adequately disclosed and whether they are unconscionable.
Disclosure: The purpose of adequate disclosure is to ensure that the entrant has consented to the Official Rules (and these operative provisions). An entrant must have “reasonably conspicuous notice” of the contract terms. It is good practice to: (i) provide an “I agree” to the Official Rules affirmative click-on button prior to online entry/purchase; (ii) highlight the fact that these waivers exist in capital letters and bold at the outset of the Official Rules; and (iii) have these provisions clearly and separately delineated in the Official Rules. For example, in Meyer v. Kalanick, 185 F.Supp.3d 448 (S.D.N.Y. 2016) (applying CA law), the Court held that a class action waiver was unenforceable when it was not independent of an arbitration clause, but instead contained within the arbitration mandate.
Unconscionability: Courts will generally consider the clause’s fairness and the costs to the entrant of vindicating his/her claim. It’s worth noting a recent decision upholding this type of clause in Pettitt v. Procter & Gamble Distributing LLC, 2025 WL 1591969 (N.D. Ill. June 5, 2025). The Court held that the class action waiver in the “Governing Law” provision of the Official Rules, which stated: “You agree that: (a) any and all disputes, claims and causes of action arising out of, or connected with the Sweepstakes or any prizes awarded shall be resolved individually, without resort to any form of class action …”, was not unconscionable. It helped that the waiver was not economically unfeasible to the consumer because the Illinois Prizes and Gift Act provided that a consumer would be entitled to up to twice his/her damages, plus attorneys’ fees and court costs, if successful.
It would be good practice to include in these waiver clauses the following: (i) that small claims actions can be brought in court; (ii) that Sponsor will pay arbitration fees; and (iii) that either winning side is entitled to its attorneys’ fees and court costs. Also, especially in the context of arbitration clauses, make sure your Terms of Service/Use and Official Rules do not conflict or at least provide that your Official Rules control in the event of a conflict.
How many mail-in entries must a Sponsor provide with one postcard?
This question arises in the context of trying to provide “equal dignity” to non-purchasers. We know that free entry methods must have the same limitations (or lack of limitations), odds of winning, prizes, and availability as purchasing methods.
Providing equal numerical ratios is likely the clearest defense to claims of illegal lottery operations or unfair business practices. This means that if a Sponsor is selling online waffle irons priced at $100 and giving 1 entry per $1 spent, it may not be “equal dignity” to give a mail-in postcard entrant 1 entry per postcard—since they would have to mail in 100 postcards to get the same number of entries as 1 typical purchaser. In this example, a mail-in entrant should get 100 entries per postcard.
But what if the products being sold range from $1 to $100? When giving purchasing entries per dollar spent, it may be fair to provide mail-in entrants with the same number of entries as a typical purchaser or as the most commonly-priced product. This would likely provide “equal dignity” especially when a limit on all entries is set that can reasonably be attained by a mail-in entrant.
There is caselaw support for this type of proposition. For example, in Black North Assocs. v. Kelly, 281 A.D.2d 974 (NY 4th Dep’t 2001) the Court suggested that relative treatment between entry methods matters more than absolute quantities; in Glick v. MTV Networks, 796 F.Supp. 743 (S.D.N.Y. 1992), the Court held that an AMOE must provide substantially comparable opportunities for participation; and the decision in Haskell v. Time, Inc., 965 F. Supp. 1298 (E.D. Cal. 1997) demonstrates judicial acceptance of flexible approaches that provide meaningful free entry opportunities without requiring mathematical parity.
Can a Sponsor give tickets only as a prize (without providing transportation and accommodation costs)?
Yes, as long as this condition is clearly and conspicuously disclosed in both the Official Rules and in all advertising.
While “post-consideration” obligations could violate the “NO PURCHASE NECESSARY” requirement, the disclosed prize (i.e., the tickets) is a legitimate prize and is being provided without any purchase necessary. There is no statute requiring that transportation and accommodations be included with a ticket prize. Statutes generally require disclosure of the prize and any conditions or limitations.
On at least a practical, consumer-friendly level, a Sponsor may want to consider providing transportation or accommodations with the ticket prize or may want to limit entrants to those within a reasonable distance from the venue.
But if a Sponsor is set on a tickets-only prize, these additional suggestions should be considered: (i) clearly disclose (like in all caps and/or bold) at the top of the Official Rules something like: “THE PRIZE IS FOR TICKETS ONLY; WINNER MUST PROVIDE HIS/HER OWN TRANSPORATION AND ACCOMMODATIONS”; (ii) clearly make this same disclosure in all advertising; (iii) do not call it a “trip prize”; and (iv) consider changing your standard Official Rules in order to allow an entrant to either substitute the prize for one of equal value or give the tickets to someone else.
Now you can tell your friends who didn’t ask these questions that they are the fools.
