Sweepstakes are increasing in popularity with credit unions as key marketing tools. But, sweepstakes are highly regulated and can raise significant compliance issues.
A sweepstakes is a promotional device where chance determines who wins prizes. Conversely, in a contest, skill determines who receives prizes. Unlike either a sweepstakes or contest, in a lottery, players must contribute something, usually a small sum of money, to receive a chance to win something of greater value.
These distinctions matter. Different rules apply to each type of promotion. To avoid transforming a perceived sweepstakes into a contest, credit unions should not include elements of skill in a sweepstakes.
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