What is a sweepstake?

A sweepstakes is technically a lottery in which the prize is financed through the tickets sold. In the United States the word has become associated with promotions where prizes are given away for free. In other words, they specifically do not require a purchase to enter (these are called prize draws in the United Kingdom). Sweepstakes sponsors are very careful to dis-associate themselves from any suggestion that players must pay to enter, as this would bring them into conflict with lottery laws. The popularity of the term sweepstakes may derive from the Irish Sweepstakes, which was very popular throughout the world from the 1930s to the 1980s.

Sweepstakes typically involve aggressive enticements to enter a contest for fantastically large prizes; there should be no cost to the entrant to enter for the prize, with the exception of possibly being placed on a promotional mailing list. Winners should also not be required to pay a fee of any type to receive their prize.

Among the commonly known sweepstakes in the United States are the American Family Publishers Sweepstakes, Publisher's Clearing House Sweepstakes and Reader's Digest Sweepstakes, each of which strongly persuade entrants to purchase magazine subscriptions by placing stickers on contest entry cardstock, while promising multi-million dollar winners who will be "announced on TV". The American Family Publishers sweepstakes has traditionally used paid advertisements during NBC's The Tonight Show to announce its grand prize winners (for many years, its celebrity spokesman was Ed McMahon).

Sweepstakes are also used by fast-food restaurants to boost business. One of the most popular has been the McDonald's Monopoly promotion. Soda companies also run sweepstakes, including the Pepsi Billion Dollar Sweepstakes game and the Pepsi Stuff game allowing one to accumulate points and purchase promotional items (which offered a Harrier fighter jet for a certain number of points, much lower than the cost of the plane, and which an entrant unsuccessfully sued Pepsi for when he amassed them [1]).

Because of the perceived deceptive nature of sweepstakes, they are heavily regulated. The US, Canada, and individual US states all have laws covering sweepstakes, resulting in special rules depending on where the entrant lives. Notably, Canada and several European countries require entrants to solve a mathematical puzzle, making it a contest of skill, in order to overcome requirements that would classify sweepstakes as a form of gambling.

Sweepstakes must therefore be carefully planned to not only comply with local laws but curtail forms of entrant fraud and abuse. Before home computers were popular, a common method of entry was a mailed index card with the entrant's name and address. Massive computer-printed entries made a new requirement of "hand-printed". Laser printers able to mimic ink pen writing are also a problem for sponsors. Entering sweepstakes by mail is still very popular, although many also enter online as well. From time to time, mistaken sweepstakes design leads to more winning entries than intended, and publicity fallout for the sponsoring brand can be immense.

There is also a tradition of office sweepstakes, which usually take place over large sporting events (Melbourne Cup, Grand National, World Cup etc), where you put in a stake into the pot, and get a horse/team drawn out of the hat. The winner then takes the pot.