Is it legal to charge the minumum amount of money to enter a contest?

Hey I'm trying to start a website that hosts contests, or a monthly local magazine which would host contests as well, but I had a few concerns I would appreciate if any of you can help me. Thank You.


1. How many times can I make contests in a website, or on a magazine? (the magazine is free to the public)

2. Is it legal to charge from $1.00 - $10.00 dollars for the people to enter a contest? (the winners of the contests would receive a valuable prize)

3. If in case it is legal, how would the taxes be worked?

Post a reply ASAP, Thank You.

contact me here or contact me on my email.
delmargraphics@yahoo.com

 

In the US once you charge a fee I believe the game or contest is defined as gambling and that is not legal.

 

In the US laws vary by state, so what is legal in one state might not be legal in another.

In California you can run sweepstakes, but you can't require a purchase to enter. Only nonprofit organizations are allowed to run raffles, and they are required to register with the state first. There are a lot of legalities involved in setting up a gambling business, so it would be a good idea to hire an attorney with expertise in gambling law for solid advice about the laws your jurisdiction.

California gambling and sweepstakes laws:
http://ag.ca.gov/register.php
http://www.dca.ca.gov/publications/legal_guides/u-3.shtml
http://www.wildman.com/bulletin/10082008/2/

 

depends what contest you run. I know about a few song remix contests where the actual parts of the song that had to be remixed were placed on beatport. This way entrants had to by the parts before they could enter. Depending on the kind of contest you do you might consider doing something similar.

 

Nonny is right. What is defined as gambling varies state to state, so unless you are limiting your entrants to a certain location, you're going to run into some potential trouble if you charge an entry fee. you might be able to avoid the gambling laws if your contest is "100% skill-based", since most of the gambling laws require a "chance" element for something to be considered gambling. My best advice is to stay away from the entry fee and try to figure out some other way to make your money... like get sponsors for the contest.

 

nah, just make sure you have a copyright on whatever material that is subject of your contest.

If you for example make them play a game, and let the winner win something, you could charge them for playing the game. You can charge them because the game is subject to your copyright. You then make them pay for the game, not for the contest, get it?

 

Well I was planning to start it on Texas...?
but I guess I would rather charge for sponsors.
Thanks, to all my replies.

 

Actually in Calif. you can't require a purchase of anything for people to enter the contest and still have it be considered a legal sweepstakes. You can't even imply that a purchase might improve your chance of winning. And you have to let non-customers or non-purchasers enter. It may be different for games purely of skill, rather than chance, though.

delmargraphics: And if your plan is to sell tickets (or chances) and then have a drawing, you want to be searching for information about state lottery laws, since I believe that type of game is usually considered a lottery.

Here's an overview of Texas gambling law. It may not be up to date:
http://www.gambling-law-us.com/State-Laws/Texas/

 

And warez user, you may want to stick to European laws if you going to give advice.

 

check out the beatport remix contests. As far as i know beatport is an american company, and they sell the parts of remix contests on their sites.

Also some remix contests are hosted on itunes, again not for free.

As far as i know the US laws also apply to US companies, correct me if i'm wrong here?

 

http://www.365mag.com/index.php?pg=...ontest+on+365Mag+International+Music+Magazine

for example read this, as far as i see the entrants of the contest need to purchase parts before they can enter.
When they win they can get 5000 dollar in prizes, if this is gambling we might have a case against the biggest online mp3 shops in the world....

 

That's a contest based on skill, not on chance, since the winner is based on the best remix, rather than in a drawing. There are different laws covering skill competitions than there are for games of chance like sweepstakes and lotteries.

 

..and those contests are sponsored by the creators of the content. There is also no fee for participating.

 

Nonny is right, and it is not just forbidden in SOME states, it is illegal in practically every state and U.S. territory, with some variations.

 

What if the requirement to enter a contest was to buy a product of the minimum amount of money?, and well the contest would be free of course. Would that be legal?



Where can I find information regarding this topic?



Thanks again for your help.

 

That'd be exactly what I was about to suggest. Don't know about the legality on It though...

 

ehm he didn't mention the contest was based on skill...

 

check my post above, many sites do it this way, they ask you to buy something in order to enter the contest. Since many big sites do it i guess it should be perfectly legal^^