Want to know the different between a legal sweepstakes and an illegal lottery? Ask WTC.
The World Triathlon Corporation found out the hard way the difference when the FTC hit them with a $2.7 million dollar fine for running an illegal lottery.
WTC runs the annual Hawaii-based Ironman World Championship. Over the last several years, people who did not qualify for this Ironman race could purchase a $50 ticket for a chance to win entry into the triathlon via a random selection process.
Why it’s considered a lottery
Federal Prosecutors took exception to the $50 chance to win, and concluded that the sweepstakes was actually an illegal lottery. The definition of a lottery is pretty simple: a scheme involving consideration (such as an entry fee), chance (like a random selection), and a prize (in this case, a slot in Ironman). In Ironman’s case, it was the fee that caused the problem, according to federal prosecutors.
While Ironman was only fined for the last few years, I am fairly certain that they’ve been executing the program for many more years than the fines covered. My business partner in a 3X Ironman finisher, and she herself paid the $50 to get into the Kona lottery. At the time, as a promotions agency, we discussed at length that IM’s practice was illegal. Yet, they still executed the program year after year. With quite a return, evidently.
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