What Is the Main Difference Between a Contest, Sweepstakes, and Lottery?
Understanding the difference is critical for staying compliant. A contest awards prizes based on skill, such as judging entries or evaluating performance. A sweepstakes is a random draw, and must offer free entry to avoid being considered a lottery.
A lottery, on the other hand, includes the three elements of prize, chance, and consideration (i.e., payment). Lotteries are often illegal for private businesses and require government approval or licensing.
Read our full breakdown of contests, sweepstakes, and lotteries
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Are Lotteries Legal for Private Businesses?
Generally, no. Lotteries are highly regulated and typically restricted to government agencies or licensed charitable organizations. Click to see what types of giveaways your business can legally run instead.