In today’s article, we will carefully review the sweepstakes casino regulations and answer the question – are sweepstakes games legal in Texas? The short answer is yes, they are, and we will go into details why. We will talk about the different ways to win money for free and whether and how they cover the Texas regulations.
Texas (TX) Law Regarding Sweepstakes Casinos
Besides federal laws, every State has specific rules regarding different contests and sweepstakes online gaming, so players need to carefully check those about their place of residence. For all Texas residents, we have taken the time to check those for you. That way, you can focus on the fun rather than the research.
Sweepstakes casinos are allowed in Texas only if the sponsor awards the prize based on chance, not skill or paid bet.
There are a few prize promotion laws that the casino must comply with:
- If the prize is valued at 50,000 USD or more, the sweepstakes sponsor may accept entries via email, but the sponsor is not allowed to use the collecting emails for any other purpose besides documenting the draw entry.
- Sweepstakes gaming platforms are restricted to doing only one promotion via email every 30 days.
- If a gift prize is offered in exchange for attending a sales presentation or an online event, the company must clearly write down what the gift is and what the event is about.
- All winners, recipients, and prize records must be available to anyone publicly, including the Texas Attorney General.
IMPORTANT: Automatic entries based on purchases valued at 50,000 USD or more are illegal in Texas. If a casino makes such an offer, residents of Texas should not participate.
Sweepstakes Games in Texas – Legal or Not
What Makes Sweepstakes in Texas Legal? What’s the Formula?
Here we will simplify it for you so you can easily understand how different sweepstakes casinos cover the requirements.
In order to avoid being classified as illegal, companies must follow only two out of three elements in the given criteria:
- GOOD: Prize and Consideration
- GOOD: Prize and Chance
- BAD: Prize, Consideration, and Chance
As long as they don’t follow all three criteria, there’s a good chance they’re completely legal!
Other regulations that US sweepstakes gaming websites must meet are the following:
- The sweepstakes service must be free to enter without any purchase coming into place. It should be available to play for free and not push mandatory purchases on the player.
- Winners must still pay taxes, regardless of the prize that they win.
NOTE: Sweeps casinos are regulated nationally by FTC, FCC, USPS, and DOJ.
Difference Between Sweepstakes, Contests, and Lotteries
Let’s establish the difference between Sweepstakes, Contests, and Lotteries, so we can understand how each one is determined as legal and allowed in the US.
- Sweepstakes casino – typically in a sweepstakes casino, your wins are based on the RTP of the given game.
- Contest – in a contest, winners are based on their personal skills or criteria that they covered.
- Lottery – the difference between lotteries and sweepstakes gaming, is that in a lottery, a participant must pay to enter – while sweepstakes casinos are exclusively free-to-play (players spend money for virtual currency only if they wish to do so. Also, that currency stays non-convertible, meaning it can’t be turned back into cash, making it completely legal).
Sweepstakes casinos are legal in Texas as long as they follow the previously mentioned criteria. As a Texas citizen, you should feel safe to play most social sweepstakes casinos out there; just make sure to avoid ones that seem sketchy or follow the prohibited practices mentioned above. We hope that with this article, you are now more informed regarding the online gaming legality and liability in Texas. Have fun, and remember to play safely!
Elina Blagoeva is a member of the Mr. Sweepstakes editorial team. She studied Multimedia and Creative Technologies at the KdG University of Applied Science and Arts in Antwerpen, Belgium.