Introduction

Running a giveaway or contest on social media is one of the fastest ways to boost engagement, gain followers, and create excitement around your brand. But behind the fun of tagging friends and sharing posts lies a complex web of legal rules. A seemingly innocent giveaway can quickly become an illegal lottery if not structured correctly, exposing your business to significant legal risk, including fines and platform suspension.

Many businesses operate on myths and assumptions, unaware that their contests violate federal and state laws, as well as the platforms' own terms of service. Before you launch your next "Like, Share & Win!" campaign, it's crucial to understand the rules. This 5-point checklist will help you ensure your next giveaway is not only successful but also fully compliant.

1. Distinguish Between a Lottery, a Contest, and a Sweepstakes

This is the most critical legal distinction. The law defines these three promotions very differently, and calling your promotion by the wrong name won't protect you.

• Illegal Lottery: Has three elements: (1) a prize, (2) chance, and (3) consideration (meaning the entrant has to pay or give something of value to enter). Private companies are not allowed to run lotteries.

  
  

• Contest: A promotion where the winner is selected based on skill. The outcome is determined by judging entries against a set of criteria (e.g., "best photo," "most creative comment"). Because skill removes the element of "chance," you can require a purchase to enter (consideration).

  
  

• Sweepstakes (Giveaway): A promotion where the winner is selected by random chance. To avoid being an illegal lottery, you cannot require consideration. This means you cannot require a purchase for entry.

  
  

The Takeaway: If your winner is chosen at random, you must provide a free method of entry. Asking users to "tag three friends" or "share this post" is generally not considered consideration, but requiring a purchase is.

2. Draft Clear and Complete Official Rules

You must provide a set of official rules for your promotion. Hiding them or omitting them is a major violation. These rules are a legal contract between you and the entrants.

Your official rules must be easy to find (e.g., a link in your bio or post) and should include:

• Eligibility Requirements: Who can enter (e.g., age, location).

  
  

• Promotion Period: The exact start and end dates and times.

  
  

• How to Enter: A clear explanation of all entry methods.

  
  

• "No Purchase Necessary" Clause: For a sweepstakes, you must state that no purchase is required to enter or win.

  
  

• Prize Description: A detailed description of the prize and its Approximate Retail Value (ARV).

  
  

• Winner Selection: How and when the winner will be chosen and notified.