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Q: Legal Requirements for Conducting An Online Contest In Tennessee ( Answered 5 out of 5 stars,   1 Comment )
Subject: Legal Requirements for Conducting An Online Contest In Tennessee
Category: Relationships and Society > Law
Asked by: familyresource-ga
List Price: $50.00
Posted: 06 Apr 2006 19:47 PDT
Expires: 06 May 2006 19:47 PDT
Question ID: 716341
I have a new discussion forum on my website, In
order to get people to register and use the forum, I want to give away
one prize to a randomly selected user. The only catch is that they
have to register with my forum to be eligible to win the prize. On a
specified date, I'll randomly pick one registered user and award them
the prize.

I need to know if there are legal issues related to conducting a
contest like this, and if I have to register with my local government
(I live in Tennessee).

I'm specifically looking to find out if I need to fill out any forms
with my local government, provide a contest disclaimer, and anything
else in order to conduct this giveaway legally. Or can I just do the
giveaway, and not worry about it?

The answer I'm looking for will be thorough, and will point me to the
right places (names, numbers, etc...) and provide examples (if
possible) of what I need to do.
Subject: Re: Legal Requirements for Conducting An Online Contest In Tennessee
Answered By: sublime1-ga on 07 Apr 2006 00:11 PDT
Rated:5 out of 5 stars

Nice site. From what I could see, forum registration is free,
so essentially, you're good to go. What makes a drawing or 
contest illegal in most states is when it costs money to
enter, which can include the purchase of a product. It then
becomes a lottery, which is illegal in Tennessee and other
states, and very regulated in all states.

A 'sweepstakes' is any procedure for distributing anything
of value by lot or chance. A sweepstakes must not violate
any provision of law, including the law that prohibits
lotteries, which simply means there must be no cost to the

Consumers often confuse sweepstakes, lotteries and contests.
The main difference between a sweepstakes and a lottery is
that the lottery participants have paid or promised to pay
a 'consideration' for the chance to win the prize.

The Tennessee Code can be found at the LexisNexis website,
and the section discussing consumer protection is the relevant 


Also see Title 39, Chapter 17, Part 5: Gambling, and Part 6:
Lotteries, though, again, these only apply if a cost is involved.

A good summary of Tennessee's pertinent laws is on the gambling-law-us

This page on the same site provides contact info for gaming agencies:

But all of that is irrelevant to you, as long as you're not charging
for registration, and participation is free. You still need to post
Rules for the drawing, and I've found some sites with posted Rules
which, by their similarities, should give you some good ideas for 
what is required and useful. These are Tennessee sites:

A sweepstakes on

A sweepstakes on

This results page on the Johnson's Baby Products site notes what
is also covered in other pages above:

"Under Tennessee law, Tennessee residents must provide written
 consent before their names may be posted online."

General guidelines for constructing Rules can be found on the
following pages:

Enns & Archer LLP, a legal firm specializing in "the law of branded
products", who covers the essential inclusions in your Sweepstakes

- No purchase necessary.
- The alternative method of free participation.
- Complete name and address of the sponsor and promoter of the
- Number of prizes, the accurate description of each prize, the
  retail value of each prize, and the odds of winning each type
  of prize. (In many cases the odds will depend on the number of
  eligible entries received, however, if a particular number of
  entry forms, direct mail pieces, or similar items will be
  distributed, the odds should be stated according to that number.)
- Geographic area of the sweepstakes and/or who is eligible to
  participate in the sweepstakes.
- Opening date and scheduled termination date of the sweepstakes.
- Whether all prizes offered will be awarded, and how the prizes
  will be awarded.
- Manner of selection of winners, and when a determination of
  winners will be made.
- Where and when a list of winners can be obtained.

Another excellent overview on the topic, in an article titled
'How to Create Win-Win Sweepstakes on the Internet, Legally',
by Jonathan Ezor, is available on the following page on the
GigaLaw website, and covers all the bases for running a 
legitimate and successful sweepstakes. He closes the article
with suggestions that include the possibility of retaining
legal counsel if it might be warranted:

"Remember that the larger your company, the more likely a
 regulator will seek to impose liability. Have counsel
 knowledgeable in advertising and promotions laws review
 your original promotion rules and procedures, and get them
 involved early on in any dispute (since they may have dealt
 with the regulator before).

 Take a look at your business liability insurance policy to
 see what it provides for promotional liability, and put an
 appropriate insurance and indemnification requirement in
 any contract you sign with a third-party promotions manager.

 If a mistake or misunderstanding in your rules or promotion
 causes any public controversy, monitor online discussions to
 catch any dissent and remember that the Web site you used to
 run the promotion is a great forum for addressing any common
 concerns among your users."
Much more on the page:

That should get you well on your way...

Please do not rate this answer until you are satisfied that  
the answer cannot be improved upon by way of a dialog  
established through the "Request for Clarification" process. 
A user's guide on this topic is on skermit-ga's site, here: 

Additional information may be found from an exploration of
the links resulting from the Google searches outlined below.

Searches done, via Google:

"tennessee law" sweepstakes

"sweepstakes law" internet

"sweepstakes law" tennessee
familyresource-ga rated this answer:5 out of 5 stars
Thank you. You answered my question perfectly.

Subject: Re: Legal Requirements for Conducting An Online Contest In Tennessee
From: sublime1-ga on 18 Apr 2006 00:37 PDT

"Perfectly" is a wonderful thing to hear. Thanks very much for the rating!


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