I want to run a Giveaway.

[JaredLane]

What is the name of your state (only U.S. law)? Arkansas

Hello all,

I'm wanting to operate a Giveaway Site where I will give away a product each day and hopefully offset the cost of the product with Ad Impressions on the Website and potentially profit if the user base grows. I am trying to avoid becoming an "Illegal Lottery" because I've done a lot of independent research to find out rules and laws on the subject. I have the following things to take into consideration:

1. When Users login to the site for the first time each day they will be given a "Ticket" to enter a product giveaway with out of a list of products.
2. Aside from their Free ticket that is earned by simply logging into the site, users will be given the option to view Video Ads and will earn a "Ticket" for each Ad Viewed that can be used to enter their name once more into the Daily Giveaway of either the same or a different product.
3. At the end of the Month, for every 14 days that users have logged in during that month they will automatically be entered into a Monthly Giveaway.

A lottery by definition has 3 things from what I have read and gathered on my own:
1. A Prize
2. Chance
3. A Consideration

My arguments against this Giveaway Model being a lottery are as follows:
1. A Prize - We undeniably have a price, there is no getting around this since we are a giveaway.
2. Chance - Users will be entered into a pool of other users who are participating in the giveaway, them winning the product being given away is chance based, but a random winner will ALWAYS be chosen daily. 100% chance for SOMEONE joining the giveaway to win unlike a lottery where no one winning is a possibility.
3. A Consideration - The definition I found for a "Consideration" online was as follows: "Something of value. Often itÂ’s money, but it doesnÂ’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have their own particular definition making it very difficult to manage". Ads do not have a direct monetary cost to the Users but they are tied to a monetary value that I would earn in the form of Ad Impressions.

My worry with the last bullet point is the fact that I'm allowing users to watch Ads in order for them to be given extra entries into the giveaway each day. The argument I could see being used against me on this point is that the User's "Time" would be the "Consideration" therefore validating the argument that I am an "Illegal Lottery".

Could the argument that my Giveaway Model is an "Illegal Lottery" hold up in court if someone were to BRING me to court?

 

[Zigner]

What is the name of your state (only U.S. law)? Arkansas

Hello all,

I'm wanting to operate a Giveaway Site where I will give away a product each day and hopefully offset the cost of the product with Ad Impressions on the Website and potentially profit if the user base grows. I am trying to avoid becoming an "Illegal Lottery" because I've done a lot of independent research to find out rules and laws on the subject. I have the following things to take into consideration:

1. When Users login to the site for the first time each day they will be given a "Ticket" to enter a product giveaway with out of a list of products.
2. Aside from their Free ticket that is earned by simply logging into the site, users will be given the option to view Video Ads and will earn a "Ticket" for each Ad Viewed that can be used to enter their name once more into the Daily Giveaway of either the same or a different product.
3. At the end of the Month, for every 14 days that users have logged in during that month they will automatically be entered into a Monthly Giveaway.

A lottery by definition has 3 things from what I have read and gathered on my own:
1. A Prize
2. Chance
3. A Consideration

My arguments against this Giveaway Model being a lottery are as follows:
1. A Prize - We undeniably have a price, there is no getting around this since we are a giveaway.
2. Chance - Users will be entered into a pool of other users who are participating in the giveaway, them winning the product being given away is chance based, but a random winner will ALWAYS be chosen daily. 100% chance for SOMEONE joining the giveaway to win unlike a lottery where no one winning is a possibility.
3. A Consideration - The definition I found for a "Consideration" online was as follows: "Something of value. Often it’s money, but it doesn’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have their own particular definition making it very difficult to manage". Ads do not have a direct monetary cost to the Users but they are tied to a monetary value that I would earn in the form of Ad Impressions.

My worry with the last bullet point is the fact that I'm allowing users to watch Ads in order for them to be given extra entries into the giveaway each day. The argument I could see being used against me on this point is that the User's "Time" would be the "Consideration" therefore validating the argument that I am an "Illegal Lottery".

Could the argument that my Giveaway Model is an "Illegal Lottery" hold up in court if someone were to BRING me to court?

Are you offering a way for people to get an entry and/or extra entries without having to watch the ads?

Your scheme, to me, sounds illegal.

 

[Taxing Matters]

What is the name of your state (only U.S. law)? Arkansas

My arguments against this Giveaway Model being a lottery are as follows:
1. A Prize - We undeniably have a price, there is no getting around this since we are a giveaway.
2. Chance - Users will be entered into a pool of other users who are participating in the giveaway, them winning the product being given away is chance based, but a random winner will ALWAYS be chosen daily. 100% chance for SOMEONE joining the giveaway to win unlike a lottery where no one winning is a possibility.
3. A Consideration - The definition I found for a "Consideration" online was as follows: "Something of value. Often it’s money, but it doesn’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have their own particular definition making it very difficult to manage". Ads do not have a direct monetary cost to the Users but they are tied to a monetary value that I would earn in the form of Ad Impressions.

In general gambling, which includes a lot more than just lotteries, is defined by state laws as provides something of value (e..g money or property) for the opportunity to win something in which the outcome is determined by a significant element of chance. As you say, you have the prize. Your plan also has the element of chance. Note that you do not avoid the element of chance by someone always being guaranteed to win. What matters is that for each participant his/her opportunity to get the prize is determined by a significant element of chance. As not everyone visiting your site will get the prize and the determination of who gets the prize is not based on skill but rather simply on chance, this key element of gambling is clearly there.

My worry with the last bullet point is the fact that I'm allowing users to watch Ads in order for them to be given extra entries into the giveaway each day. The argument I could see being used against me on this point is that the User's "Time" would be the "Consideration" therefore validating the argument that I am an "Illegal Lottery".

As you already meet the the first two elements you identified you are right to be concerned about whether you meet the third. In general requiring a person to do something that takes a little time but costs nothing like submitting an entry ticket won’t cross the line into consideration. Beyond that, however, you really need to review the law of each state in which you want to offer this prize giveaway scheme. The exact details of what you want entrants to do to qualify for a chance at the prize will matter. I suggest you see an attorney who practices in the area of gaming law in your state to determine the risks you run for each state you plan to offer this. This is important because beyond any possible lawsuit a disgruntled user of your site might file, running a site that engages in illegal gambling can result in criminal charges.

As an aside, I rather think that you will find it hard to make significant revenue off this model. Unless the prizes are really good I cannot see most people taking the time to view a bunch of ads. The pay rate you would get per ad viewed is likely to be very small, if advertisers are interested in participating in the first place.