« Terry Stevens' Point

Is Your Business Breaking the Law?

by Terry Stevens

Terry Stevens is a professional radio advertising copywriter and radio host for Midwest Communications in Wausau, Wisconsin.  His copywriting and production work have won several awards from the Wisconsin Broadcasters Association over the years.  The following opinion does not necessarily represent that of his employer.  However, seeing as they've made plenty of dough from Terry's work, they may be inclined to agree with him.

Is Your Business Breaking the Law?

"Of course not!" is your response.  After all, you do things on the up and up.  Integrity is the cornerstone of how you do business.

With that being said, even the most honest person in the world can break the law without even knowing it, all thanks to a single, very common promotion.

Let me know if this sounds familiar.

You've managed to land a nice prize, Green Bay Packers tickets for instance.  You think, "I could drum up more business by having a contest where customers can win these tickets!"  You're right.  That's a good idea.

Then you think, "What I'll do is give everyone who spends 20 dollars or more with me a chance to win the tickets!"  That's a good idea in theory.  In practice, it's VERY ILLEGAL.

The following is copied and pasted from the Wisconsin Department of Agriculture, Trade and Consumer Protection's website:

What Is An Illegal Promotion?

A promotion is not legal in the state of Wisconsin if it involves three elements: prize, chance and consideration.

Prize is obvious, since it is the reason that consumers enter promotions.

Chance means that the winner is chosen by the "luck of the draw," with little or no skill or ability involved.

Consideration means anything that is a commercial or financial advantage to the promoter or a disadvantage to any participant. For example, if a purchase or payment must be made by the entrant in order to participate. The following methods of entry are not consideration:

  • The price of postage necessary to mail entries.
  • The price of gas used to visit participating stores.
  • Promotions where entrants must visit a store, or other location, as long as no purchase or admittance fee is required. For example, consumers may have to go to the store to pick up game tokens, match numbers or obtain entry blanks. These promotions are not illegal provided that free game pieces are available as an alternate means of participation.
  • Furnishing proof of purchase if the required proof consists of nothing more than all or part of the container of any product or a facsimile. The law requires that facsimiles be accepted in order for the promotion to be lacking consideration. This provides individuals a way to enter without spending money.

If prize and consideration are present, a contest is still illegal if the outcome is determined essentially by chance, even though it's accompanied by some skill. For example, if the skill required in a contest involves simply guessing which word from a provided list of possibilities is the correct answer, the contest would be illegal.

Basically, the second someone has to pay money to enter your contest, consideration comes into play, turning your fun sales promotion into an illegal Lottery.  Under Wisconsin State Gambling Laws, you're not allowed to run your own Lottery.

"No prob!" you say.  "I'll just let people enter for free, and then if they buy 20 dollars worth of stuff, I'll give them additional chances to win."

Again, if someone can increase their odds of winning by paying money, consideration is back in play, making your promotion into an illegal lottery again.

Not only that, but according to State Law:

"Those who enter lotteries which violate the gambling statutes could face potential criminal liability for aiding and abetting the conduct of an illegal lottery."

That's right.  Your customers could be fined, and possibly arrested just for entering a contest.

This law is why you hear and see lines like "No purchase necessary.  See store for complete details," at the end of every contest.

Hang on.  I know what you're going to say next.  "But, but, but, I see and hear other businesses do this sort of thing all the time!"

Some businesses run promotions like this without getting fined by the state.  It's true.  They didn't get caught.

With that being said, you've read the news about Wisconsin's State Budget woes.  Do you really want to risk being hit with a massive fine from a state that REALLY needs the money?

Play it safe.  Don't run "pay to play" contests, and everything will work out fine.

If you have any questions about the legality of your promotion, feel free to contact me at 715-842-1672, or via e-mail at terry.stevens@mwcradio.com.  Our converstation will be kept completely confidential.

Be Cool,