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| January 25, 2017

Keeping it Legal: Running Promotions in Florida, New York and Rhode Island

It’s only a week in and your company’s first internet promotion is a huge success. The entries are double what you expected. Then, you receive a letter from the State of Florida. Your game of chance promotion is in violation of Florida Statute 849.094. Florida fines you $5,000 for non-compliance. Not only have you never heard of the statute, you didn’t even know you were running a game of chance promotion. Suddenly this “great promotion” is losing money. How do you avoid this mistake? Learn the rules in the three states that have registration requirements for game of chance promotions, and make sure you’re compliant.

1.

What is a game of chance (GOC) promotion?

A promotion in which winning the prize is primarily determined by chance, not skill. A few exceptions include:

 

a.

If the promotion is NOT open to the general public, it is not a GOC (employee incentive contests, industry-only trade show promotions, and exclusive client only promotions)

 

b.

If the promotion requires the consumer to use their own skill to win the prize, it is not a GOC (basketball shot to win a car, golf hole-in-one to win $10,000)

2.

What is GOC bonding and state registration and what triggers the requirement?

A bonding company (think insurance, not bail) issues a GOC bond which guarantees the sponsor’s financial ability to award the prizes.

State registration is just that, you must register your promotion in writing with the state.

Each state has its own requirements. Fortunately they are easy to understand:

 

a.

Florida and New York – A GOC bond must be issued and the promotion must be registered if the promotion meets both of the following criteria:

   

i.

The total ARV of all prizes exceeds $5,000

   

ii.

The promotion is a GOC
Paperwork is due to the state of Florida 7 days prior to the start date.
Paperwork is due to the state of New York 30 days prior to the start date.

 

b.

Rhode Island – The promotion must be registered if it meets the following criteria:

   

i.

The promotion has a retail component. Internet-only promotions are not required to register.

   

ii.

There is no bond requirement for Rhode Island.

   

iii.

The total ARV of all prizes exceeds $500
Paperwork is due to the state prior to start of promotion

   

Wondering whether or not you should file with a state? Go ahead and file the required documents by the applicable deadline. Believe it or not, if your promotion does NOT fall within the state filing requirements, they will send everything back to you along with your filing fee.

3.

What if I’m running a promotion in a state bordering one of these three states?

It’s better to be safe than sorry. If you’re located in a state that borders one of these three states and you’re running a local promotion, you have one of two options:

 

a.

If you are allowing residents from the bordering state to participate in your promotion AND your promotion meets the criteria for registration or GOC bonding, then comply with the bordering state’s requirements.

 

b.

In the promotion rules, you may exclude the residents of the bordering state from participating in your promotion. Example: Georgia sponsors may exclude Florida residents from participating in their promotions if they do not want to comply with Florida’s state regulations.

4.

Are there ways to avoid the GOC bond and registration requirements?

Yes.

 

a.

Florida and New York – You may exclude the state’s residents from participating in the promotion, but that usually defeats the purpose of the promotion. Keep the total ARV of all prizes at $5,000 or less. Design the promotion so the dominant factor for winning is skill-based instead of chance-based.

 

b.

Rhode Island – If the promotion does not have a retail component (internet only), you are not required to register with the state.

5.

Where do I purchase a GOC bond and how do I register with the state?

There are several reputable companies that can provide GOC bonds. State registration forms are available on each state’s website if you wish to file the paperwork yourself. Some of these companies also offer turnkey services which include execution of the bond and state registration. They can guide you through the steps, complete all necessary paperwork, and process the state filing. Automated bonding websites make the process quick and painless for promotion sponsors.

Julie Davis is the Research & Development/Sr. Accounts Manager for SCA Promotions. Her focus is on developing and implementing results driven B2C and B2B promotions. With 30 years of experience in advertising and promotions, she is a business consultant and speaker working with clients seeking local, regional and national reach.


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