Online sweepstakes, games, and contests have become increasingly popular thanks to the widespread use of social media and iOS apps. However, companies often overlook the need to include the proper documentation and guidelines required by state or federal laws and regulations. Also, today’s new technology often allows web/app users to submit cloned entries or circumvent online rules. Similarly, the collection of personal information for sweepstakes, online games, and contests can trigger a whole host of different legal issues, often without the host company’s knowledge. Care should be taken before launching new online sweepstakes, games or contests.

One of the biggest challenges with online sweepstakes and gaming is the differences in rules and regulations from state to state. Before launching a new sweepstakes, online contest or game, the host must verify that it complies with the laws of each state where it is available. This often requires an analysis of the laws of each state, as many sweepstakes, games, and contests are available to residents of all 50 states due to the nature of Internet and iOS/Android applications. Some states require registration for certain types of contests.

In addition to state laws, hosts of online games must verify compliance with federal laws and regulations, such as the Children’s Online Privacy Protection Act (“COPPA”) and similar privacy laws. Given the global nature of the Internet, care should be taken as to whether it is necessary to comply with foreign laws or whether access to the Internet sweepstakes, game or contest is limited to US entrants. The laws of European countries, for example, have stricter privacy restrictions than US e-commerce laws.

While businesses can achieve compliance with state and federal regulations on their own, it is advisable to hire an e-commerce attorney due to the complexity of the legal landscape. The first step is to evaluate the associated promotional material and online rules to ensure that they do not violate federal and state laws, including online privacy laws. Next, the e-commerce attorney will likely review the entire framework of the contest, game, or sweepstakes to ensure overall compliance with state and federal laws that apply to the client. As mentioned, this may require registration in certain states and posting of bonuses. Finally, the attorney will draft the general guidelines as a reference for use in future promotions. These guidelines can be used to reduce the costs of future sweepstakes, contests and online games.

Disclaimer: As with any discussion of legal topics, this article is intended to be educational only and is not a substitute for legal advice, nor does it provide legal advice or form an attorney-client relationship with the reader. Please seek legal advice before making any decision. Also, please note that this article may not be updated, so the law and circumstances may have changed by the time you read this article.

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