In our previous blog Thinking of Running a Raffle? we talked about raffle laws and eligibility. Below we will discuss what charity sweepstakes are and why we advise taking this approach as an alternative to a raffle. 

Conceptually, raffles and charity sweepstakes have the same idea, what sets them apart is the fact that sweepstakes must include an alternate method of entry (AMOE). An AMOE gives contestants the option to partake in the promotion for free (without making a payment, or ‘purchasing’ a raffle ticket). That being said, just because this allows contestants to enter for free, the free method can be complicated and deliberately annoying. For example, you can require users to handwrite a unique, 150-word essay and mail it in via regular postage as the free method of entry. In this scenario, you are asking someone to put a lot of effort in, just to get a single entry – with this in mind, most people are deterred from entering via the free method, as it’s easier to just ‘pay to play’.

Reasons Why We Say No To Raffles  

• They’re technically considered a form of gambling by federal government regulators 
• Raffles are only permitted for charitable purposes, by charitable organizations
• Only non-profits with a raffle license are eligible to hold a raffle
• The tax requirements can be daunting, and “not knowing” the laws and regulations is not a valid excuse for the IRS
• Impossible to run nationwide or internationally

Reasons Why We Say Yes To Charity Sweepstakes 

• They’re not a form of gambling (because of the AMOE) and thus not illegal 
• For-profit organizations are able to run a charity sweepstakes or a donation campaign for a 3rd party charity
• Any person or business can host a sweepstakes 
• Can be run nationwide, or even internationally (there are certain requirements for a sweepstakes as well, but they are far less restrictive and costly than a raffle

Something To Keep In Mind 

As mentioned, there are certain requirements for running a sweepstakes as well. 

If your charity sweepstakes is open to residents of the US and has a total prize value of $5,000 or more (such as a vacation getaway, a vehicle, etc.) there are additional requirements in New York and Florida that require the sweepstakes to be registered and bonded with the state.

If your charity sweepstakes is open to residents of the province of Quebec in Canada, depending on the prize value there are registration and bonding requirements that must be met here as well.

We know this may sound a little daunting, but trust us, it’s not as scary as it seems. As part of our sweepstakes marketing services, we handle all of the administration and legal aspects. This includes registration, bonding, and liaison with these government authorities from start to finish, so you never have to worry about mishandled paperwork or missing your filing deadlines. 

Do you think you’re ready to run charity sweepstakes or just ready for more detailed information on what’s needed for a sweepstakes? Click here to learn more and get started!  

Vanessa Niragira, Oakville, Ontario, November 2020 

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