A Win for Text-to-Win June 09, 2008 Georgia Supreme Court Delivers Victory to Sweepstakes
By Alex Palmer
Sponsors of consumer sweepstakes got good news in late April. The Georgia Supreme Court ruled that a text-to-win sweepstakes offered in conjunction with NBC's Deal or No Deal television show did not violate state gambling laws.
Text-to-win contests involve participants text messaging an answer or a vote to the sponsor's number and from there a prize winner is chosen. Text-to-win is a fairly recent type of consumer incentive.
The Deal or No Deal contest offered a cash prize to randomly selected entrants. The controversy was due to the $0.99 fee participants paid to text in, with the plaintiffs arguing that such an entry fee breached the legal requirements of a sweepstakes. It was contended that this sweepstakes violated Georgia's gambling laws, which prohibit sponsors from requiring consumers to make a purchase or pay money to enter a sweepstakes.
The court determined this contest did not violate the gambling laws because, unlike in gambling, the contest sponsors offered a free alternate method of entry in addition to the way that includes a payment. Entrants to the Deal or No Deal contest could enter the sweepstakes through the show's Web site without paying the $0.99 premium charge.
"This is a big victory for anyone who wants to do a mobile promotion," says Gonzalo Mon, an attorney at Kelley Drye & Warren LLP's advertising and promotions law practice.
This lawsuit, as well as the ones brought to California's courts, is the first to put such scrutiny on mobile sweepstakes. With these consumer promotions becoming more popular with sponsors, not only on Deal or No Deal, but other television shows including American Idol, The Apprentice and 1 vs. 100, the courts' verdicts are of no small interest to sponsors.
The lawsuits pending in California allege that the text-to-win contests are in violation of the state's lottery laws, as opposed to gambling laws. Since state governments are the only organizations allowed to run lotteries, these sweepstakes would be considered in violation of lottery laws if they offer the chance at a cash prize for the purchase of entry.
"Sweepstakes laws vary from state to state, and the plaintiffs may be bringing these cases to California to test its strength," says Mon. "I think the plaintiffs are sort of testing this there, and if they win you might see similar cases in other states."
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