Happy family

Find a legal form in minutes

Browse US Legal Forms’ largest database of 85k state and industry-specific legal forms.

Sweepstakes in Georgia and Maryland

Author: LegalEase Solutions

QUESTIONS PRESENTED

  1. What are the legal or regulatory requirements to hold raffles and drawings in the state of Maryland? 
  1. Define sweepstakes under Georgia Law and conclude if an exhibitor who attends a conference sponsored by a third party and offers a free drawing to registrants who visit exhibitors booth is engaging in a sweepstakes, and if so if such action requires any type of license requirement? 

 

SHORT ANSWERS

  1. Maryland law allows business to employ a promotional scheme giveaway if they meet the requirements of the Consumer Protection Act 13-305 and Criminal Law Article 13 of the Maryland Code.
  1. Georgia laws allow a business to employ a promotional scheme giveaway, if they meet the requirements of Fair Business Practices Act set out in § 10-1-393 and Gambling laws set out in § 16-12-20.

 

RESEARCH FINDINGS

  1. Legal requirements to hold raffles in Maryland

The law relating to raffles and drawings in Maryland is compiled in Article 13 of the Consumer Protection Act, and Article 13 of the Criminal Laws of Maryland.

Under the Consumer Protection Act § 13-305, a company may not notify a person as part of an advertising scheme or plan that the person has won a prize or received an award or has been selected to receive anything of value if the person is required to purchase a good or service unless the prize offered does not exceed $40 or the lesser of 20% of the purchase price of the good/service to be purchased or $400.   § 13-305(b) and (c).

Article 13 does not prohibit a company from giving away an item of value if the person is not required to purchase a good or service.

Furthermore, § 13-305(g) states that if a person offers a contest, sweepstakes or other promotion not otherwise prohibited by Article 13 and involves the award of prizes by chance, then the following must be disclosed to each offeree in writing:

(1)   The exact number of each prize offered in each category to be made available during the contest, sweepstakes, or sales promotion;

(2)   The manufacturer’s suggested retail price, or comparable retail price, of each prize offered;

(3)   If calculable in advance, the odds against winning each prize and if not calculable in advance, a statement that the odds of winning will be determined by the number of entries;

(4)   Whether all prizes offered will be awarded and when a determination of winners will be made;

(5)   What, if any, conditions must be met in order to receive a prize;

(6)   If prizes with retail prices or monetary values in excess of $100 are offered, where and when a list of winners of those prizes can be obtained; and

(7)   That in order to receive the prize offered in the sales promotion you may not be required to:

(i)   Purchase goods or services;

(ii)   Pay any money; or

(iii)   Where applicable, submit to a sales promotion effort.

  • 13-305(g).

Under Article 13 of the Criminal Laws of Maryland, a “raffle” is a ‘gaming event’ per § 13-201 of the Code. The organizations qualified to engage in gaming events are listed in § 13-201. This include a bona fide (i) fraternal organization; (ii) civic organization; (iii) war veterans’ organization; or (iv) charitable organization.

A qualified organization can conduct raffle, which is a gaming event, “if an individual or group of individuals does not: (1) benefit financially from the gaming event under this subtitle; or (2) receive any of the proceeds from the gaming event under this subtitle for personal use or benefit.” § 13-203.

A qualified organization that conducts a gaming event under this subtitle shall manage the gaming event personally through its members. § 13-205.

  1. Sweepstakes in Georgia

Sweepstakes are usually employed by a business to promote sales. Georgia laws allow a business to employ a promotional scheme giveaway, if they meet the requirements of Fair Business Practices Act set out in § 10-1-393 and Gambling laws set out in § 16-12-20.

O.C.G.A. § 16-12-20 (B) permits a business to employ a scheme whereby persons selected by lot can be given prizes on the following conditions:

(i) Such prizes are conducted as advertising and promotional undertakings in good faith solely for the purpose of advertising the goods, wares, and merchandise of such business;

(ii) No person to be eligible to receive such prize shall be required to:

  • Pay any tangible consideration to the operator of such business in the form of money or other property or thing of value;
  • Purchase any goods, wares, merchandise, or anything of value from such business; or
  • Be present or be asked to participate in a seminar, sales presentation, or any other presentation, by whatever name denominated, in order to win such prizes; and

(iii) The prizes awarded shall be noncash prizes and cannot be awarded based upon the playing of a game on a computer, mechanical device, or electronic device at a place of business in this state Further, O.C.G.A. § 16-12-20 (A) permits “[p]romotional giveaway or contest which conforms with the qualifications of a lawful promotion.” The requirements of a lawful promotion are set out in paragraph (16) of subsection (b) of Code Section 10-1-393. They are:

  • Notice

Persons who are offered an opportunity to participate in a promotion must be given a notice as required by this paragraph. The written notice must be given to the participant and may be delivered by hand, by mail, by newspaper, by periodical, or by electronic mail or any other form of electronic, digital, or Internet based communication. The notice must give full, clear, and meaningful disclosure to the participant in a manner such that the participant can fully study and understand the disclosure prior to deciding to participate in the promotion. § 10-1-393 (b) (16) (A.I).

  • Advertising in good faith 

The promotion must be an advertising and promotional undertaking, in good faith, solely for the purpose of advertising the goods, services, or property, real or personal, of the sponsor. § 10-1-393 (16) (B).

  • No payment

The participants shall not be required to pay any money including, but not limited to, payments for service fees, mailing fees, or handling fees payable to the sponsor or seller or furnish any consideration for the prize. § 10-1-393 (16) (C).

  • Odds and verifiable retail value

Each notice must state the verifiable retail value of each prize which the participant has a chance of receiving. Each notice must state the odds of the participant’s receiving each prize if there is an element of chance involved. The odds must be clearly identified as “odds.” § 10-1-393 (16) (D). Further, “[o]dds and verifiable retail values may not be listed in any manner which requires the participant to refer from one place in the written notice to another place in the written notice to determine the odds and verifiable retail value of the particular prize. Verifiable retail values shall be stated in Arabic numerals. Id.

  • No compulsion to attend sales presentation

No participant shall be required or invited to view, hear, or attend any sales presentation, by whatever name denominated, unless such requirement or invitation has been conspicuously disclosed to the participant in the written notice in at least ten-point boldface type. § 10-1-393 (16) (F).

  • No requirement to purchase additional goods and services including shipping and handling fees, unless clearly disclosed in the written notice. 10-1-393 (16) (G).
  • Limitations on eligibility to participate to be disclosed

Any limitation on eligibility of participants must be clearly disclosed in the notice. § 10-1-393 (16) (H).

  • No substitutes for price 

Substitutes of prizes shall not be made. In the event the represented prize is unavailable, the participant shall be presented with a certificate which the sponsor shall honor within 30 days by shipping the prize … In the event a certificate cannot be honored within 30 days, the sponsor shall mail to the participant a valid check or money order for the verifiable retail value which was represented in the notice. § 10-1-393 (16) (I).

  • Honor the voucher; certificate. § 10-1-393 (16) (J).
  • The geographic area covered by the notice must be clearly stated. § 10-1-393 (16) (K).
  • Upon request of the Attorney General, the sponsor or promoter must within ten days furnish to the Attorney General the names, addresses, and telephone numbers of persons who have received any prize; § 10-1-393 (16) (L).
  • List of all winners to be prominently placed

A list of all winning tickets, tokens, numbers, lots, or other devices used to determine winners in promotions involving an element of chance must be prominently posted at the place of business or distributed to all participants if the seminar, sales presentation, or other presentation is made at a place other than the place of business. A copy of such list shall be furnished to each participant who so requests. § 10-1-393 (16) (M).

Additionally, § 16-12-20 (D) permits “National or regional promotion, contest, or sweepstakes conducted by any corporation or wholly owned subsidiary or valid franchise of such corporation, either directly or through another entity, provided that, at the time of such promotion, contest, or sweepstakes, such corporation:(i) Is registered under the federal Securities Exchange Act of 1934; and(ii) Has total assets of not less than $100 million.”

But, “[a]ny procedure where the receipt of the prize is conditioned upon the purchase of the item which the seller is trying to promote or upon the payment of money and where the receipt of that prize involves an element of chance shall be deemed to be a lottery under Code Section 16-12-20 …” O.C.G.A. § 10-1-392 (27).

Thus, if a scheme or procedure involves consideration, chance and prize, it will be considered gambling, which is illegal. “The crime of gambling, in Georgia, consists of three elements: consideration, chance, and prize.” Monte Carlo Parties, Ltd. v. Webb, 253 Ga. 508, 509, 322 S.E.2d 246, 248 (1984) (citing Grant v. State, 75 Ga.App. 784, 787, 44 S.E.2d 513 (1947).

The expenditure, or ‘hazarding’ of consideration in pursuit of a chance to win a prize produces the ‘baneful effect’ that the law is designed to prevent.” Monte Carlo Parties, Ltd. v. Webb, 253 Ga. 508, 509, 322 S.E.2d 246, 248 (1984) (citing Boyd v. Piggly-Wiggly Southern, Inc., 115 Ga.App. 628, 641, 155 S.E.2d 630 (1967).

Legal requirements to hold promotions and schemes

Sweepstakes can come under the definition of promotional or giveaway contests if they satisfy the requirements set forth in O.C.G.A. § 10-1-393 (b) (16). Additionally, the scheme or promotion shall not require the participant to pay for any goods or services. Therefore, if the drawing by the exhibitor meets the above criteria of promotional contest or giveaway, then it will be permitted.

 

CONCLUSIONS

Both Maryland and Georgia allow contests where a person may win an item of value as long as they are not required to purchase a good or service to be eligible for entry into the contest and as long as the contest meets the other requirements of the respective laws of Maryland and Georgia.  In the instant case, the free drawing offered to the visitors to exhibitor’s booth in Georgia  may be considered a lawful sweepstakes if it satisfies the requirements of promotion or scheme set out in § 10-1-393 and Gambling laws set out in § 16-12-20. Additionally, the business employing the scheme or promotion has to comply with the regulations by Attorney General set out in O.C.G.A. § 10-1-394.