Understanding compliance for SMS sweepstakes and contests

You will learn 

Learn about the requirements to run an SMS sweepstakes program in the US and Canada, as well as free draws and prize competitions in the UK. 

Sweepstakes, contests, and free draws can be a great tool to grow your list quickly. However, they are subject to state and federal laws as well as mobile carrier requirements. Klaviyo only supports sweepstakes and contests run via approved short code in the United States and Canada. Free draw and prize competitions that meet governmental standards are allowed in the UK without Klaviyo or carrier review.

Before you begin

While Klaviyo performs a general review of program terms and opt-in workflows as part of the short code application process, upstream providers and mobile carriers ultimately approve or reject terms and disclosures at their discretion. 

Please note:

• Carriers limit sweepstakes to short codes in the US, Canada.
  
  • You cannot run an SMS sweepstakes program with a toll-free number, long code, or branded sender ID in the US and Canada.
• Sweepstakes are not permitted in the UK on any number type.
• It’s recommended to submit sweepstakes requests at least 2 months in advance.
  
  • It takes around 4 to 8 weeks for the review process.
  • Once your brand is approved for sweepstakes you do not need to re-apply each time you launch a new sweepstakes or contest.

Types of contests 

Sweepstakes 

Sweepstakes are a form of contest characterized by an element of chance and the awarding of a prize. No consideration is allowed (i.e., winner drawn at random).

Sweepstakes are subject to state and federal laws, as well as mobile carrier requirements. Mobile carriers review sweepstakes programs individually, and reserve the right to approve or reject them at their discretion. 

An example of a sweepstakes is an SMS signup form or sign up page that collects contest entries, and awards a gift at random to one or more subscribers.The entry must be free with the sweepstakes rules page and mobile terms clearly displayed on the sign up form and website.

Free draws 

A free draw is a type of contest where participants are entered into a drawing for a chance to win a prize. Free draws are a UK designation similar to Sweepstakes in the US and CA. In the UK a “sweepstakes” supports paid entry methods only and are considered a lottery regulated by the UK Gambling Commission. Free draws are supported on all UK sending numbers where Sweepstakes in the UK are prohibited.

Notable examples of free draws include text-to-win campaigns with no element of skill to enter. 

Prize competitions and games of skill

A prize competition is where the outcome is determined by the participant’s skill, judgment, or knowledge.  An example of this type of contest includes a pay-to-enter quiz competition with multiple rounds of questions, where entrants are eliminated for wrong answers and the sole winner takes the prize for answering all questions correctly. 

SMS compliance for sweepstakes

Before submitting a sweepstakes or contest for approval, you must be meet the following criteria: 

• Have an active short code or are currently applying for one.
• Make your sweepstake or contest rules available online. 
• Ensure that your mobile terms include program information about sweepstakes. 
• You should confirm that your mobile terms meet the necessary requirements with your legal team. 
• Ensure call to actions (CTAs) like sign-up forms, emails, and website banners include information about sweepstakes where applicable.
• Location of the rules must be listed near the CTA (e.g., a link to the sweepstakes/contest rules page).
• Mobile terms include sweepstakes/contest (e.g., promotional messages, cart reminders, sweepstakes and/or contest promotions).

Note that meeting these minimum requirements does not guarantee carrier approval. 

Regional contest requirements

United States

The details of the official rules can vary depending on the nature of the promotion, but most states generally require that both contest and sweepstakes are available via the company website and clearly state:

• Free method of entry
• Effective dates of the sweepstakes 
• Eligibility requirements (e.g., age) and exclusions (e.g., family members of sponsor employees).
• The start and end dates (and times and time zone if applicable) of the entry period
• A list of all states where participation in the sweepstake is available
• A complete description of the nature and number of prizes that are to be awarded and their approximate retail value (ARV) of the prizes
• The details regarding prizing offered to contest winners, draw dates, defined contest period, number of prizes, any regional allocation of prizes and chances of winning must be included in the application form for all programs with a contest element. 

For other contests, most states also require:

• The criteria by which the winner is to be selected.
• The method for determining prize winners if a tie occurs. Otherwise, some states require that both winners receive the same value of prize.

Canada 

Sweepstakes are referred to as contests in Canada, and requirements for approval by Canadian carriers slightly vary.

The minimum requirements are: 

• All contests must offer a “no purchase necessary” method for participating.
• Contest rules and regulations must abide by all applicable local, provincial, territorial, and federal laws, and they must be available on request to any wireless carrier before the program launch.
• The application form for all programs with a contest element must include the following:

• • Details on prizes being offered, including number and any regional allocation.
  • Chances of winning.
  • Defined contest period.
  • Draw dates.
• No prices specific to an individual wireless carrier may be offered (e.g., “win a Acme TV bundle for a year”).
• Contest winners are to be selected and prizes distributed on the basis of skill or on a random basis.

Organizations running contests are also encouraged to refer to the following Canadian government resources:

• Competition Bureau enforcement guidelines for promotional contests
• Québec Régie des alcools, des courses et des jeux

United Kingdom

The United Kingdom also has legislation around the types of contests that can be run and their requirements.

Under the Gambling Act of 2005, you cannot organize sweepstakes without a license from the Gambling Commission in England, Wales, and Scotland. For this reason, Klaviyo does not support sweepstakes in the UK. 

However, there are other types of contests that can be run in the UK. 

Free draws

Not all games of chance are subject to the Gambling Commission regulation. Free draw campaigns that make all entries free, or have both a paid and a free route of entry are allowed. While free draws are not subject to Gambling Commission review, they may raise any concerns and request contest rules and additional information.

If you run a free draw with a paid entry route, you should treat free and paid entrants equally. Make sure that:

• People can choose to take part without paying.
• Free entry submissions must be as convenient as paid entries.
• Free entry routes must be promoted and displayed at the same level as a paid for route.
• The system that determines prizes should not recognise the paid and free entry routes as different.
• Sufficient terms of service covering eligibility must be publicly accessible.

Prize competitions and games of skill

The organizers of a prize competition must be able to show that the skill, knowledge, or judgment required will:

• Discourage people wishing to enter from doing so because it is too difficult.
• Prevent a portion of those who enter from winning a prize. 

For example, multiple choice questions, or questions that allow a second chance if your first answer is wrong, rarely meet this criteria.

The rules on what constitutes sufficient level of skill for a service to be determined as a prize competition are not clearly defined therefore prize competitions are much less common.

Additional resources

Short code application reference 

Basics: SMS compliance

How to target contest entrants with flows