Can I offer contests that involve cash prizes in Texas? What are the requirements?

Here are the requirements for offering contests that involve cash prizes in Texas:

Restrictions on Prizes

According to Tex. Occ. Section 2002.056, a prize offered or awarded at a raffle may not be money. However, a raffle prize may consist of one or more tickets in the state lottery authorized by Chapter 466, Government Code, with a face value of $75,000 or less, without regard to whether a prize in the lottery game to which the ticket or tickets relate exceeds $75,000.

Awarding Multiple Prizes

Tex. Bus. & Com. Section 622.108 states that a person conducting a sweepstakes may not award multiple prizes in the sweepstakes unless all prizes are awarded on the same date and through the same selection process.

Required Disclosures Relating to Prizes Generally

Tex. Bus. & Com. Section 621.102 requires that an offeror who notifies a person that the person has won a prize, will receive a prize, or has a chance to win or receive a prize shall, at the time of the notification, clearly and conspicuously disclose:

• that attendance at a sales presentation is required;
• the approximate duration of the sales presentation; and
• a description of the product or service being sold.

Disclosure of Major Prizes and Winners on Request

Tex. Bus. & Com. Section 621.204 requires that a person who conducts a contest shall, at the end of the contest period, provide to any person who requests the information:

• the names of all major prize winners; and
• the prizes won by each winner.

Required Records for Contests Other Than Drawings

Tex. Bus. & Com. Section 621.202 requires that for each contest other than a drawing, the offeror shall maintain until the second anniversary of the date the last prize was awarded:

• records of the identity and address of each person who is responsible for developing, creating, sponsoring, or implementing any part of the advertising plan or program;
• records that show that the winning numbers have been deposited in the mail or otherwise made available to recipients in accordance with the odds statement provided under Section 621.104(a);
• a copy of each contest solicitation;
• records adequate to determine:
• the name and address of each contestant;
• the approximate date each contestant was sent the solicitation used in the contest;
• the number of major prizes awarded;
• the date each major prize was awarded;
• the name, brand, type, model number, and manufacturer of each prize offered;
• the method of computing the retail value of each prize;
• the method of selecting major prize winners;
• the name and address of each major prize winner; and
• the facts on which each representation or disclosure made in connection with the contest was based and from which the validity of the representation or disclosure can be determined.

Requirements for Matched Contest

Tex. Bus. & Com. Section 621.103 requires that the identity and number of the major prizes to be awarded in a matched contest must be:

• determined before the contest begins; and
• disclosed on each entry form distributed.

Conditioning Prize on Purchase Prohibited

Tex. Bus. & Com. Section 621.109 prohibits an offeror from notifying a person that the person has won a prize, will receive a prize, or has a chance to win or receive a prize if the receipt of the prize is conditioned on the person purchasing a good or service unrelated to the prize.

Conditioning Prize on Payment of Consideration, Charge, or Expense Prohibited; Exceptions

Tex. Bus. & Com. Section 621.108 prohibits an offeror from notifying a person that the person has won a prize, will receive a prize, or has a chance to win or receive a prize if the receipt of the prize is conditioned on the person paying consideration of any kind, paying a charge, or incurring an expense. However, an offeror may notify a person that the person has won a prize, will receive a prize, or has a chance to receive a prize that is conditioned on the person paying:

• expenses incurred for travel to and from the sales location; or
• a refundable deposit authorized under Section 621.006.

Required Disclosures Relating to Drawings

Tex. Bus. & Com. Section 621.106 requires that a person may not use a drawing unless the offeror clearly and conspicuously discloses in writing in the offer:

• a statement of the odds of winning each prize offered, expressed as a ratio in Arabic numerals, except as provided by Subsection (c);
• the exact prizes to be awarded in the drawing;
• the beginning and ending dates of the contest period;
• the date the drawing will occur; and
• the location at which the drawing will occur.

Therefore, you can offer contests that involve cash prizes in Texas, but you must comply with the above requirements.

Jurisdiction

Texas

• Gaming