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Can I offer contests that involve merchandise prizes in Louisiana? What are the requirements?

Yes, you can offer contests that involve merchandise prizes in Louisiana. However, there are certain requirements that must be met.

Requirements for Offering Contests with Merchandise Prizes in Louisiana

  1. Value of Prizes - The value of the merchandise prize must be determined by its fair market value, which will be the amount reported to the state and the IRS for tax purposes [2.1].
  2. Taxation - Proceeds of any lottery prize of $500 or more shall be subject to Louisiana state income tax. Any attachments, garnishments, or executions authorized and issued pursuant to law shall also be withheld if timely served upon the process agent of the corporation. This Section shall not apply to a retailer except for the payment of state or local tax [4.1].
  3. Raffle Licensing - If the contest involves a raffle, the organization conducting the raffle must first obtain a gaming license as required by R.S. 33:4861.1 [3.1].
  4. Record Keeping - The organization conducting the raffle must maintain records for a period of three years that accurately show the number of tickets or chances sold, the number of tickets or chances printed or available, the name of the person drawing winning ticket(s) or determining winner(s), prizes given and their value, and the name, address, and date of birth of winner(s) [3.1].
  5. Random Selection - The sponsoring organization must take such steps as are necessary under the circumstances to ensure that each ticket purchaser has a chance to be selected as the prize winner and that the prize winner is selected in an entirely random manner [3.1].
  6. Retailer Certificate - If the contest involves the sale of lottery tickets, the applicant must be accepted by the corporation and issued a lottery retailer certificate, which must be conspicuously displayed at the place where the retailer is authorized to sell lottery tickets [2.3].
  7. Payment of Prizes - Retailers shall pay any lottery prize of $50 or less. A retailer may pay prizes greater than $50, up to $600, after proper verification of such winning tickets as prescribed by the corporation. Prizes of more than $600 shall be paid by the corporation by mail or at a designated corporation office. The corporation shall adopt rules to establish a system of verifying the validity of tickets claimed to win prizes and to effect payment of such prizes. No prize, nor any portion of a prize, nor any right of any person to a prize awarded shall be assignable. Any prize, or portion thereof, remaining unpaid at the death of a prizewinner shall be paid to the estate of the deceased prizewinner or to the trustee of a trust established by the deceased prizewinner as settlor, if a copy of the trust document or instrument has been filed with the corporation, along with a notarized letter of direction from the settlor, and no written notice of revocation has been received by the corporation prior to the settlor’s death [2.2][4.1].

Conclusion

In conclusion, you can offer contests that involve merchandise prizes in Louisiana, but you must comply with certain requirements. These include determining the fair market value of the prize, complying with taxation rules, obtaining a gaming license if the contest involves a raffle, maintaining records, ensuring random selection, obtaining a retailer certificate if the contest involves the sale of lottery tickets, and complying with rules for payment of prizes.

Source(s):
Jurisdiction

Louisiana