Florida Sweepstakes Law 101: Essential Insights and Compliance Guidance

Florida Sweepstakes Law Overview

Florida sweepstakes law is a complex system of regulations and rules that govern the administration of promotional contests throughout the state. These laws dictate the legal structure of these programs while also providing guidelines for corporations and other organizations to follow when putting on a contest as part of a marketing or advertising campaign.
There are three types of basic models for promotional contests in Florida, and there is a clear distinction between each. A lottery is a game of chance that has a cost to enter, such as a purchase. Because they are considered gambling, lotteries are illegal in Florida (and most states) . For the same reason, online sweepstakes are not allowed.
Contests, on the other hand, seek to reward skill rather than luck. As such, they are allowed in Florida and can include activities such as essays, one-question quizzes, art competitions and other tasks that require knowledge or expertise. There is typically a skill assessment that determines a winner.
Sweepstakes combine elements of both contests and lotteries. Sweepstakes may be free to enter (e.g., no purchase necessary) but still may require submission of information about the participant through an official form. Participants combine chance with a small level of skill in order to win prizes through random drawing.

Legal Framework for Florida-Based Sweepstakes Contests

In Florida, there are no state licensing or registration requirements (with one significant exception for lotteries as described below) and no requirement to file sweepstakes rules. However, Florida law does require the following: Sweepstakes materials must clearly identify the sponsor of the promotion. Sponsor has been defined as the entity whose name or brand appears on the prizes. While not a legal requirement per se, to not disclose the sponsor could result in a Lottery finding the promotion to be a de facto lottery. The sweepstakes materials must: (1) clearly and conspicuously state the official rules and eligibility requirements, including any limitations on participation, such as age, etc.; (2) contain the complete and accurate odds of winning a prize, or a statement that the odds of winning depend upon the number of entries received; (3) provide a description of each prize that is awarded, including the approximate retail value of each prize offered, and a statement that an entrant may obtain a list of winners or written copy of the official rules by sending a self-addressed, stamped envelope; and (4) prohibit the requirement that a person make a purchase or pay a fee in order to participate or be eligible to win (i.e. a free method of entry). These disclosure requirements apply only when an unlimited entry option is offered as part of the promotion. If the business chooses to organize a sweepstakes with a paid entry option, it must acquire a Florida raffle permit from the Florida Department of Agriculture and Consumer Services. Lotteries (i.e. receipt of consideration in exchange for an entry or a free entry via an alternative mechanism, such as email, online, etc.) in Florida are subject to different regulations than sweepstakes. Floridians simply do not like unauthorized lotteries, and Florida has very strict laws regarding lotteries as a result. Florida Government estimates there may be as many as 2,000 unlawful lotteries operating in the state at any given time. In order to be lawful (and not a lottery), a client must ensure that a sweepstakes conforms to the following rules: Florida case law requires the website Terms and Conditions of a sweepstakes to provide age qualifications for entrants and restriction of the sweepstakes to Florida residents. Florida case law also places an affirmative duty on any company sponsoring a sweepstakes to ascertain residency. While not a requirement, sweepstakes with the following additional elements offer companies protection against spurious claims and other problems: Many Florida companies utilize separate sets of official rules in order to have flexibility when it comes to marketing the sweepstakes on different media platforms, including print, television, and social media. At a minimum, the official rules should be available upon request. A notice on the reverse side of entry forms and in any advertisement for the drawing that the official rules are available upon request from the sponsor at a specific address is acceptable.

Common Compliance Pitfalls and Consequences

One of the main difficulties for companies organizing sweepstakes in Florida is ensuring that their official rules and guidelines adhere to the specific regulations and requirements set forth by state law. A common area of non-compliance is the lack of a Florida registered address for the Florida Promotion. Florida law requires that any person or entity physically located within the state may not conduct a promotion or sweepstakes unless communications about the same specify a responsible party with a registered business address in Florida. In addition to providing an address, there are certain mandatory disclosures outlined in Florida Statute § 849.16 which must be included in your rules, and which must be made to the participants at the time the winner is notified (e.g., that no donation or contribution is necessary to enter the sweepstakes; that if you fail to claim the prize or fulfill your responsibilities, you may forfeit the prize; and the name of the sponsor (if applicable)).
The requirements of Rule 2B-11.001 E.A.C. must also be strictly followed. Florida Statutes § 849.094 and Rule 2B-11.001 E.A.C. outline sanctions that may be applied to any person or corporation violating Florida’s "Commercial Bribery" law or conducting a promotion in violation of "Commercial Bribery" rules. Sanctions include that offending persons may be charged with a third degree felony. Sanctions for corporations include civil fines and potential disqualification from doing business in Florida.

Notable Cases: Closures and Enforcement Actions in Florida

The consequences of noncompliance with Florida sweepstakes law can be harsh. A pseudo randomizer litigation that led to an appellate decision in 2018 was disclosed by a business catering to direct mail and inbound telemarketing solicitations for many years. The practice included doing so as part of promotional games of chance wherein the outcome was determined by a computer, sometimes without the actual results being known until after the sweepstakes was run and prizes had been awarded. The lawsuit alleged that the provider had engaged in deceptive conduct in a series of breach of contract and tort claims. Fla. v. Dreameza, LLC, 254 So. 3d 1073 (Fla. DCA 3d Dist. 2018). The issue in this case was whether "pseudo randomization" constituted a permitted means of outcome determination. In 2014, the same defendant brought an action in federal court seeking a partial declaration that the use of pseudo randomizer was permitted under Florida law. After removal from state court, the federal District Court ultimately held that it was not. Fla. v. Dreameza, LLC, 64 F. Supp. 3d 1270 (S.D. Fla . 2014). The court of appeals affirmed in a one-line order. Fla. v. Dreameza, LLC, 798 F.3d 1269 (11th Cir. 2015). The Supreme Court of Florida, in an advisory opinion to the Legislature, opined as follows: "The Court opines that a computer program that selects a winning entry from a pool of entries based on the answers to skill-testing questions meets the requirements of Florida law." Fla. Advisory Op. to Governor 2014-02 (June 30, 2014). Arguably, the Florida Supreme Court’s opinion does not support the use of pseudo randomization. The opinion is arguably limited to computer-based selection of winners from among entrants who all had the opportunity to pass the same skill-testing questions. In 2018, the aforementioned litigation impacted a consent order in a Florida nonpublic enforcement action, resulting in a preliminary injunction and the appointment of a receiver. The Receiver’s Report of Findings filed in September 2019 detailed that revenues of up to $40 million per year had been generated. It also disclosed that 16 years of Florida state tax returns had not been filed.

Sweepstakes Best Practices

When running a sweepstakes promotion, it is important to ensure that the prize will be awarded to the winner if the winner fulfills the entry or winning conditions. A clear expression of the rules for entering the promotion can help avoid any potential ambiguities. In addition, to avoid any confusion or allegation of "bait and switch" tactics, it is a best practice to clearly state within the rules if a purchase is necessary to obtain an entry into the promotion, such as in the case of a fund raising promotion.
Careful drafting is also important to avoid allegations of deceptive or unfair conduct. Don’t try to be clever or to use catchy marketing tag lines that may have the unintended effect of leaving an impression or false impression that the purchaser or other type of participant in the promotion will be guaranteed a win. Another example of deceptive conduct might include misleading odds of winning the promotion (i.e., if a sweepstakes promotion states that there is a one in 10 chance of winning the grand prize, when there are in fact more than 10 entries for that promotion). If the prize is of a specific value, it is a best practice to ensure that the prize is available in stock, or alternatively, that there are adequate substitutes available.
Other best practices include:
Prize and Odds of Winning the Prize In your official rules, be sure to describe the prize in detail, including the retail value of the prize. With respect to odds of winning the prize, you should include the actual odds, i.e., one in every 10,000 will win, but, you should make it clear that the odds of winning depend on the number of entries received. The odds of winning should also reflect whether the promotion is an instant win game (e.g., game piece under a bottle cap) or a lottery-type promotion.
Limit the Number of Entries for an Individual To avoid promotional liability and potential claims for winning duplicate prizes, you should limit the number of entries that an individual can submit for a particular promotion. Specify these entry limits in the official rules.
Review by Legal Counsel For complex promotions, and in particular promotions where purchase is required, businesses should consult with legal counsel to review the promotion and its associated official rules and ensure compliance with all applicable local, state, and federal laws, regulations, and standards.

Preferred Resources for Legal Management & Enforcement

Businesses can turn to a variety of resources for legal guidance and ensuring compliance with the Florida sweepstakes law. Consulting with a legal professional familiar with the intricacies of Florida’s sweepstakes regulations is one way to ensure compliance and to receive guidance on the unique aspects of a business’ marketing initiative. The International Promotional Products Association ("IPPA") , along with other national marketing organizations, also provide members with valuable information about compliance with local and national regulations.
Because a recent Florida statute was intended to exempt certain skill-based games from the sweepstakes and contest definition under Florida law effective October 1, 2014, it is important to be wary of the status of any promotions in relation to the new law.