Sweepstakes vs. Lottery: What's the Difference?

A sweepstakes and a lottery both involve prizes and chance. So why is one legal for any company to run, while the other is tightly regulated and mostly reserved for governments? The answer comes down to one word: consideration. Understanding this distinction is important for anyone who runs or participates in online giveaways.

The three elements of a lottery

Under U.S. law, a lottery has three elements:

• Prize — something of value is awarded to the winner
• Chance — the winner is determined randomly, not by skill
• Consideration — participants must pay or provide something of value to enter

If all three elements are present, the promotion is a lottery. Running an illegal lottery is a crime in most U.S. states. Only state governments (and a few federally licensed entities) can legally run lotteries. This is why state lotteries exist but private companies cannot run their own.

How sweepstakes remove the "consideration" element

A sweepstakes removes the consideration element by offering a free method of entry. This is why you see "no purchase necessary to enter or win" on every legitimate sweepstakes — it is not just marketing language, it is a legal requirement.

If a company offers a chance to win a prize but requires a purchase to enter, it becomes an illegal lottery. To avoid this, sweepstakes must always offer an alternative free entry method that is equally valid as any paid method.

This is why McDonald's Monopoly, Publishers Clearing House, and countless other major brand promotions always include a "no purchase necessary" alternative entry method. It is not optional — it is the legal foundation of the entire promotion.

What counts as "consideration"?

Consideration is broader than just money. It can include:

• Purchasing a product or service
• Paying an entry fee
• Providing substantial effort (like writing a long essay)
• Watching a required advertisement (in some states)

However, consideration does NOT include:

• Creating a free account
• Providing your name and email address
• Following a social media account (in most states)
• Clicking a button or filling out a simple form

This is why Oyays can require account creation without it being considered consideration. Creating a free account is not a purchase or a payment — it is simply a way to track entries and notify winners.

What about skill-based contests?

A contest is different from both a sweepstakes and a lottery. In a contest, the winner is determined by skill (writing, photography, voting, etc.) rather than chance. Contests can require a purchase because the outcome is not random — skill determines the winner.

However, contests have their own legal requirements. The judging criteria must be clearly defined, the judging must be objective, and the promotion must be structured so that skill genuinely determines the outcome.

Oyays is a sweepstakes, not a contest. The winner is determined entirely by chance (a cryptographic random function), and entry is always free.

State-specific rules

Sweepstakes law varies by state. A few states have additional requirements:

• New York and Florida: Sweepstakes with prizes over $5,000 must register with the state and post a bond.
• Rhode Island: Has specific disclosure requirements for sweepstakes.
• Some states: Prohibit certain types of sweepstakes entirely (which is why you sometimes see "void where prohibited").

Oyays's prizes are under $5,000 (each prize is a Needoh toy worth approximately $10), so we are not subject to the New York and Florida registration requirements. However, we still include "void where prohibited" in our official rules as a standard legal precaution.

Is Oyays a lottery?

No. Oyays is a free sweepstakes. There is no purchase required, no paid entry method, and no consideration of any kind. The only way to enter is to spin for free. This makes it a pure sweepstakes under U.S. law.

The slot machine aesthetic might look like gambling, but it is not. Gambling requires you to risk something of value. On Oyays, you risk nothing — entry is completely free. The visual design is just for fun; the legal structure is a standard sweepstakes.

The bottom line

Sweepstakes = prize + chance + free entry. Lottery = prize + chance + paid entry. The difference is simple, but it is the difference between a legal promotion and a crime. Every legitimate sweepstakes — from McDonald's Monopoly to Oyays — is built on this foundation.