Lawyers for sweepstakes: how to comply with current legislation

Lawyers for sweepstakes: how to comply with current legislation

Online sweepstakes and contests on websites and social media are one of the main pillars of brand marketing strategies. These actions help increase brand visibility, improve engagement with the community, and generally encourage greater public participation.

However, although they may seem simple activities, it is important to remember that specific rules apply to them.

Legal terms for a sweepstakes

The starting point for organizing a sweepstake is drafting the legal terms. This document acts as a contract between the organizer and the participant, clearly outlining all participation conditions: prizes, duration, method for selecting the winner, and so on.

These terms must be accessible to anyone who wishes to participate, for example, through a link in the sweepstake post. This practice builds trust and avoids misunderstandings.

Some of the clauses that should be included in the legal terms are:

• Identification of the organizer.
• Whether participation is free or subject to an additional fee.
• Start and end dates of the contest or promotional sweepstake, as well as the date and form of the draw (before a notary, jury, etc.).
• Rules and conditions for participation.
• Value and nature of the prize offered.
• Protection of personal data.
• Penalties for fraudulent use.
• Assignment of image and/or intellectual property rights of the winner(s) and/or participants.
• Possibility of extending or suspending the sweepstake (e.g., in cases of force majeure).
• Possibility of disqualifying users who breach the rules and exemption of liability for the organizer in case of participant misconduct.

Although not mandatory, the firm always recommends registering the legal terms before a notary, as this provides transparency and legal certainty.

Legislation on online contests and sweepstakes

Since the entry into force of Law 13/2011, of May 27, on Gambling Regulation, when organizing a contest or sweepstake in which participation is entirely free and involves no additional cost for users, no special license is required.

However, if participation requires payment or any additional charge, the organizer must comply with certain legal requirements and obtain the corresponding licenses before launching the activity, as these sweepstakes are considered games of chance and are subject to supervision by the General Directorate for the Regulation of Gambling (DGOJ).

It is also important to consider the taxation of these promotional actions. According to the Gambling Law, only sweepstakes involving chance are taxable, while contests in which the winner is chosen by a jury or evaluation criteria are not subject to this tax. That is, promotional sweepstakes based on random combinations for advertising or commercial purposes are subject to a 10% levy on the value of the prize awarded.

Additionally, if the prize exceeds 300 euros, the organizer must withhold 19% of the winner’s personal income tax (IRPF).

Likewise, compliance with current personal data protection regulations is mandatory, as established in the General Data Protection Regulation (GDPR) and Organic Law 3/2018 on Personal Data Protection and Guarantee of Digital Rights (LOPDGDD), regarding the duty to inform participants about data use and obtain their explicit consent.

Digital platforms where the sweepstake is promoted, such as Instagram, TikTok, Facebook, or similar, also have their own promotion rules, notably the requirement to expressly state that these platforms do not sponsor or manage the sweepstake.

Finally, the activity must comply with the LSSI, the General Advertising Law, and the Unfair Competition Law, regarding the transparency of commercial promotions and the prohibition of misleading practices.

Responsibility of sweepstakes organizers

Beyond regulatory compliance, the organizer must act responsibly and transparently throughout the entire process, which means respecting what has been advertised, communicating the results clearly, verifiably, and transparently, and delivering the prize as promised.

Proper management not only prevents claims but also helps preserve the brand’s reputation and credibility.