Running a lottery on Facebook may seem like an easy way to raise funds or generate engagement, but there are some important legal considerations. In most countries, operating a lottery requires a license or permit from the government. Running an unlicensed lottery online or through social media can result in steep fines or even criminal charges.
What constitutes an illegal online lottery?
Many different types of contests and giveaways could potentially be considered an illegal lottery. In general, a contest is likely to be considered a lottery if it has all of these elements:
- Consideration – Participants pay or provide something of value to enter
- Prize – A prize is awarded to the winner(s)
- Chance – Winning is determined primarily by chance rather than skill
For example, a Facebook competition where users are asked to “Like” a page and comment to win a prize would likely be considered an illegal lottery in most jurisdictions. The “Like” provides consideration, there is a prize, and winning is completely random chance.
Are Facebook contests always illegal?
Not necessarily. Contests that do not require consideration (an entry fee or purchase) and rely more on skill than pure chance are typically permissible. For instance, an art contest where the winners are selected based on talent would likely be considered a legal contest.
Here are some other types of Facebook promotions that can generally be run legally:
- Giveaways – Users do not have to pay or purchase anything to enter. Winners are picked at random.
- Skill-based contests – Winners are selected based on talent, experience, or effort rather than random drawing.
- No purchase necessary – Users have a free alternative method of entry.
What are the risks of running an illegal Facebook lottery?
The potential penalties for running an unlicensed lottery online can be severe:
- Fines up to hundreds of thousands of dollars in some countries
- Criminal charges for organizers
- Facebook bans or permanent account deletion
- Lawsuits from participants or regulatory bodies
In short, it is not worth the legal risk. Always consult an attorney before running any contest on Facebook that could be considered a lottery. Never require participants to pay or purchase anything to enter.
Could Facebook be liable as well?
Possibly. Facebook has cracked down on promotions considered illegal lotteries and gambling. Their Community Standards prohibit these types of contests.
Facebook can and does shut down Pages used to run unauthorized lotteries. And in some cases, Facebook has been forced to hand over names of promotion organizers to authorities.
To limit their own liability, Facebook recommends always obtaining proper permits and licenses before running any contest involving prizes on their platform.
When is a permit or license required?
Laws vary considerably worldwide, but most countries require a gambling license or permit to run a lottery. This includes online lotteries and lotteries advertised on sites like Facebook.
In the United States, contests meeting the definition of a lottery must comply with regulations in each state where participants reside. Certain exceptions apply to non-profit organizations in some states.
Be sure to research lottery laws for any location where your contest will be open to entrants. When in doubt, consult an attorney to review the rules and premises of your promotion.
What are examples of legal Facebook lotteries?
Assuming proper permits and licenses are obtained, some examples of potentially legal Facebook lotteries include:
- Raffle fundraisers run by registered charities
- Lotteries run by a school’s parent-teacher organization
- State-approved lottery associations posting promotional giveaways
- Government bodies running permitted contests to promote census participation or voting
However, obtain legal advice to confirm the lottery laws in your specific jurisdiction before proceeding. Rules for non-profits and charitable lotteries also vary by state.
What steps are needed to run a legal lottery?
At minimum, running a lawful lottery on Facebook requires:
- Applying for and receiving a permit or license from the proper government authority for any location where your contest is open to entries.
- Paying any required licensing fees, which can range from a few hundred to several thousand dollars depending on jurisdiction.
- Complying with any other regulations governing aspects of the lottery like promotion, consideration, prizes, taxes, etc.
- Ensuring the random drawing and winner selection process meets lottery regulations.
- Providing clear and legally compliant Official Rules containing any required lottery disclosures.
- Retaining records of entrants and winners to provide to regulators if requested.
Abiding by Facebook’s own promotion guidelines and terms. Even with proper licenses, Facebook may decline contests they deem unacceptable.
Can non-profit groups run licensed lotteries?
In some U.S. states, certain non-profit organizations and charities can run licensed lotteries to raise funds. Groups like schools, churches, veterans organizations, fraternal societies, and volunteer fire departments may qualify for exemptions or special lottery permits.
However, the specific rules and eligibility requirements vary considerably by state. Non-profits must research and comply with their own state’s licensing processes for charitable lotteries.
Conclusion
Running any type of lottery, raffle, or sweepstakes promotion on Facebook without proper licensing is risky and inadvisable. Obtain legal advice to ensure full compliance with all applicable regulations for the jurisdictions where your contest will take place.
With the right permits and following all required procedures, it is possible for certain organizations and causes to legally conduct lotteries for fundraising purposes. But this should only be undertaken with guidance from attorneys well versed in online gambling laws.
For most individuals and businesses, it is simply not worth the hassle and legal liability to attempt running a lottery promotion on Facebook without licenses. Instead, focus on giveaways and skill-based contests that are fun for participants but unambiguously legal.