What is the difference between a sweepstakes, a contest, and a lottery?
A sweepstakes is free to enter and the winner is picked by chance, typically a random drawing. A contest also skips payment to enter but the winner is picked by skill or merit, such as a judged submission, rather than by chance. A lottery has all three of prize, chance, and payment (consideration) at once, and running one without a license is generally illegal in the US. Most giveaways run by streamers and creators are sweepstakes: free to enter, winner picked at random.
What does "no purchase necessary" mean?
It is a standard disclosure meaning entrants can participate without spending money, usually through a free alternative method of entry (AMOE) offered alongside any paid option. It exists because a promotion that requires payment to enter, combined with a prize and a random draw, can be treated as an illegal lottery rather than a legal sweepstakes in the US. The free path generally needs to offer the same odds of winning as any paid path.
What does "void where prohibited" mean?
It means the promotion does not apply in any state, country, or region where offering it would violate local law. It is standard boilerplate on nearly every sweepstakes, and it signals that the sponsor is aware some jurisdictions restrict or regulate promotions and has excluded them.
Do Instagram and Facebook giveaways have their own rules?
Yes. Instagram and Facebook (Meta) require that a promotion clearly state it is not sponsored, endorsed, administered by, or associated with the platform, and that entrants release the platform from liability. This is separate from general sweepstakes law: it is a platform policy requirement on top of whatever your state or country requires.
Do I need to register or bond my giveaway with a state?
Sometimes, if the prize value is high enough. A few US states have historically required registration, and in some cases a surety bond, once a promotion's total prize value crosses a certain threshold, commonly cited examples being Florida and New York. Rhode Island has also been cited for a lower threshold, though generally limited to in-state retail promotions. Thresholds and rules can change, so verify current requirements for your state (and any state where entrants are eligible) before running a high-value promotion, or consult an attorney.
Do winners pay tax on prizes?
Generally yes, in the US a prize is treated as taxable income to the winner at its fair market value, regardless of whether it is cash, a gift card, or merchandise. Sponsors of higher-value prizes may also have their own tax reporting obligations to the winner and to tax authorities. Because thresholds and rules can change and vary by country, treat this as a general note, not tax advice, and point winners to a tax professional for specifics.
Is this legal advice?
No. This guide summarizes commonly cited, general sweepstakes concepts to help you understand the landscape. It is not a substitute for advice from a qualified attorney, especially for a promotion with a prize of meaningful value, multi-state or international reach, or specific legal questions.