Posts Tagged: Rules

U.S.A! U.S.A.! – House Votes to Eliminate the “Victory Tax” on Olympic Prizes

Olympic prize awards are generally taxed like other prizes. Some lawmakers have seen this practice of taxing our Olympians as a “victory tax.” On Thursday (Sept. 22, 2016), the House of Representatives overwhelmingly passed a bill exempting U.S. medal winners from paying taxes on the money they receive from the U.S. Olympic Committee when they earn a medal. U.S. Olympians are paid $25,000 for gold, $15,000 for silver and $10,000 for bronze. A similar bill passed the Senate in July, and President Obama is expected to sign the bill into law. (Just so the bill doesn’t sound too favorable to big-time athletes, winners who earn more than $1 million per year can’t take advantage of the tax break.)

Where does this leave the average Joe or Jane prize winner? “Win a New Car” and you could end up paying a hefty tax before you get behind the wheel. (And no, it’s not a “gift” exempt from taxes.) There are plenty of instances where prize winners simply decline a valuable prize or donate it to charity to avoid paying taxes. “Taxes are responsibility of winners” is rightly in Official Rules, but who really thinks of that when they enter a sweepstakes for a trip of a lifetime? (more…)

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Why is That in the Official Rules? What to Know When You Copy and Paste

According to Wikipedia, the term “copy-and-paste” refers to the popular, simple method of reproducing text from a source to a destination. We all do it. You may even do it to draft your Official Rules for a sweepstakes or contest. No need to re-create the wheel, right? But, to continue this metaphor, if you are creating a wheel and want it to hold up your new car, you don’t want to just take someone else’s word that the wheel works without knowing how or why it works.

Here are some commonly copied Official Rules provisions, along with an explanation of why they’re in there:

  • “NO PURCHASE NECESSARY.” Required by many states, including that it must be clearly and conspicuously disclosed. Hence, it is typically at the beginning of the Rules and in capital letters.
  • “PURCHASE WILL NOT INCREASE YOUR CHANCE OF WINNING.” This phrase is required under Federal Deceptive Mailing and Enforcement Act for direct mail promotions.
  • “Open only to legal residents of the 50 United States and D.C.” Saying just “residents of the United States” could conceivably be interpreted as including residents of Puerto Rico, the Virgin Islands, American Samoa, and Guam. Nothing wrong with opening the sweeps to these residents, but at least do it intentionally.
  • “You must be physically present in the 50 United States or D.C. when entering.” This is often used in combination with the requirement that the entrant be a US resident to try to ensure that U.S. law will apply to any disputes.
  • “Entrants must be 13 or older.” This is used for online promotions to avoid having to comply with the Children’s Online Privacy Protection Act which applies to online promotions directed to children under 13.
  • “Entrants must be 18 or older.” – Many court decisions have held that the Official Rules form a binding contract between the sponsor and the entrant. The age of consent to enter into a binding contract is 18 in most states, except Mississippi – 21 and Alabama and Nebraska – 19.
  • “Employees of Sponsor and anyone associated with this promotion, as well as their family and householder members are not eligible.” This is included to try to ensure that there is no appearance of, or actual, impropriety in the administration of the promotion and selection of winners.
  • “Approximate retail value (ARV) of prize is …” This is required under the laws of many states.
  • “By participating, you grant Sponsor permission to use your name, photograph, voice, any other likeness, or comments for publicity purposes, in any and all media, now known or hereafter devised, without further compensation, unless prohibited by law.” The phrase “unless prohibited by law” is added because you cannot require a person from Tennessee to provide a publicity release.
  • “Winner will be required to sign a prize release.” While the Official Rules form a binding contract, the laws of some states such as MA, NY, RI, VT, VA and WI require releases to be in writing and signed by the releasor.
  • “An IRS Form 1099 will be issued to winner.” Under IRS regulations, the sponsor must send an IRS Form 1099 to winners of prizes of $600 or more.
  • “If due to a printing, production or other error, more prizes are claimed than are intended to be awarded for any prize level, the intended prizes will be awarded in a random drawing from among all verified and validated prize claims received for that prize level. In no event will more than the stated number of prizes be awarded.” The Kraft clause. In 1989 lawsuits were brought against Kraft in its “Ready to Roll” promotion where due to printing errors at least 10,000 entrants had valid claims to the one grand prize and as a result Kraft end up paying millions of dollars to settle these claims. Subsequently, companies inserted this “Kraft clause” in the rules for seeded games and it has been upheld a number of times, most notably in lawsuits involving the NY Daily News where seeding mistakes occurred. See, Sargent v. NY Daily News, 42 A.D.3d 491 (NY 2d Dep’t 2007).
  • “To obtain a list of the winners, send a SASE to …” The availability of a winners’ list is required under the laws of FL, MD, MA, NY, RI, TN (and MI and WI for in pack games).

There are, of course, many other provisions that should be included in the Official Rules, but at least now after you’re finished copying and pasting, and you are asked, “why is that in the Rules”, you will have a spiffy answer.

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Enter to Win a Scholarship: Paying for College Through Games of Chance

For many young adults, college classes will be starting soon. For many anxious parents, college costs will be accumulating soon. Thank goodness you can try to bankroll tuition by entering the many available sweepstakes awarding “scholarship” money. For a student, college scholarship sweepstakes offer a simple alternative to actually hitting the books.  For sponsors, college scholarships offer a popular form of promotion to a captive audience and engender goodwill with the community.

While not as difficult as quantum physics, running an effective scholarship sweepstakes does require some pencil sharpening. Here are a few tips: (more…)

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The Cow Chip Raffle OR How to Turn Poop Into Loot: An Analysis of a Raffle Law

Imagine a football field roped off and sectioned into 500 marked squares. Imagine further a cow roaming free on this football field trying to find the perfect spot to leave a cow pie (that’s farmer for poop). Imagine even further a lucky contestant who placed her money on the exact square where old Bessy decided to messy. That’s a Cow Chip Raffle.

The marketing fun is endless. News outlets love this stuff. Kids can’t believe it. And adults ponder over guessing exactly how far a bovine can go before the bovine has to go. So, what are you waiting for?

Oddly enough, to be filed under “You gotta be kidding me,” Connecticut has a specific statute dedicated to the Cow Chip Raffle. (Conn. Reg. §7-185-11b – look it up!) According to the law, you must be a non-profit and obtain a permit. You also have to file a plot plan. Your land area must be “suitably enclosed” to make sure the cow doesn’t get out (and a winner can be determined). You have to sell tickets with removal stubs entitling the holder to “temporary possession of a plot of land.” You have to “conspicuously post on an information board” the numbered plots. And no cheating, “No person may feed, lead or handle any animal utilized in a cow-chip raffle once the animal has entered into the enclosed area.” And off you (or at least the cow) go! (more…)

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And the Winner Is…

It’s now viral. Even if you had no interest in watching women get judged based upon how they look in swimwear (athletically speaking, of course), you know that on Sunday Steve Harvey announced Miss Colombia (the country, not Columbia the university, Steve) the winner of the Miss Universe Pageant and then minutes later, apologized and named Miss Philippines the winner. Was this the right thing to do? Donald Trump doesn’t think so; he wants both contestants to be named Miss Universe.

Let’s not forget that underneath it all the Miss Universe Pageant is a contest – with judges, judging criteria and rules. Like all contests, the rules control as a legal matter, but as a practical matter keeping positive public opinion is important. (more…)

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