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In horse racing lingo, those who place bets are actually investing a stake in the outcome. The fortunate winner(s) collect or "sweep up" all of the collected stakes as a reward. Thus the term sweepstakes came into popular usage as any contest in which the winners are selected at random from a pool of qualified entrants. The sponsors of a sweepstakes are generally responsible for determining how a qualified entry is defined and other rules of eligibility.
Many sweepstakes are offered as a lottery to participants who either purchase tickets, fill out information cards or complete an online submission form. Some sweepstakes require participants to qualify by accumulating points in a skill contest or trivia game, but technically speaking most sweepstakes do not require that contestants have specific skills other than the ability to fill out a form and follow written directions.
The purpose of a sweepstakes contest is often to promote a product or attract potential new customers through a prominent association between the prizes and the sponsor. A travel agency, for example, may hold a sweepstakes contest in which the grand prize is a week-long trip to a luxury resort already represented by the travel agency. Other smaller prizes in a company-sponsored sweepstakes could be a generous supply of a product or a gradation of cash prizes.
The odds of winning a prize in a typical sweepstakes depends on the total number of entrants, but a national sweepstakes sponsored by a major company could receive millions of qualified entries, especially if multiple entries from each entrant are permitted. Although the odds of winning the single grand prize may be infinitesimal, many people still enter a sweepstakes in order to win numerous smaller prizes with seemingly better odds.
Sponsors of legitimate sweepstakes must abide by the same rules of fairness which govern lotteries and other contests involving random winner selection. Employees, family members and others directly associated with the sponsor or executor of a sweepstakes are often disqualified to avoid the appearance of bias, for example. There may also be age restrictions, and entrants could be disqualified for unauthorized alterations of their entry forms or other forms of fraud.
Some contests may appear to be sweepstakes in form, but the sponsors can consider them contests of skill if the participants have to provide a creative answer to a question or draw a picture or perform some other skill in order to qualify. These types of contests are supposed to be judged by qualified experts before a winner can be selected. A true sweepstakes contest, on the other hand, can be legally conducted by reaching into a drum filled with entries or using a randomizing program to select a winner from electronic entries contained on a hard drive or computer server.
@Soulfox -- a lot of that has to do with money changing hands. That gas company down the road selling tickets for a sweepstakes might be doing something illegal, but a sweepstakes is usually fine if no money changes hands. If the tickets are free, then it's not gambling, right?
And those national sweepstakes usually offer free entries. That makes a huge difference.
Yes, I still remember when it wasn't an honest-to-goodness sweepstakes until Ed McMahon showed up at your house with a big check from a famed publishing company. Those were the days.
Seriously, though, one thing that always puzzled me about those national sweepstakes things was the legality of them. In my state, there are laws against such contests because they are considered a form of gambling.
Why can't the company down the street sell sweepstakes tickets but a national group can get away with it? That makes no sense.