Andrew Lustigman, Chair of Olshan’s Advertising, Marketing & Promotion’s Group and Co-Chair of the firm’s Brand Management & Protection Group, was quoted recently in a US legal publication on the legality of the sweepstakes launched by Elon Musk’s super political action committee, America PAC, which awarded a daily prize of $1 million to a swing state voter. The winner, a randomly selected signatory of a petition to help re-elect Donald Trump to the presidency, had to be a registered voter, though the contest did not specify for which candidate voters should cast their ballots.
On October 17, Musk also announced on X, a five-day window in which registered Pennsylvania voters, as well as whoever referred them to register, would receive $100 each for signing the petition (an increase from his earlier offer of $47 per referral). Citizens of the other swing states were still eligible for the $47 payment. Federal law prohibits paying people to register to vote, but it is unclear whether paying $100 to people who sign a petition—but only if they are registered voters—qualifies as a violation of election law. The $1 million daily prize to randomly selected signatories of the petition carried the same issue.
Andy said that the promotions do not obviously appear to violate state or federal regulations around sweepstakes or contests because Musk’s participants do not have to buy anything or pay for a chance to win a prize. Only government-sponsored sweepstakes and contests such as state lotteries are permitted to require payment for a chance to win, but companies that ask customers to purchase a product for a chance to win can get around the provision with fine print explaining how participants can join the contest for free.
Companies and individuals who run contests for prizes can still violate the law if they require so-called non-monetary consideration for a chance to win a prize, like requiring participants to do something that amounts to an undue burden on their time or handing over something significant, such as highly personal information. Requiring participants to register to vote or even refer other voters to register could possibly be considered a non-monetary consideration, but that “doesn’t strike me as being a significant burden,” Andy said.
Andrew Lustigman offers comprehensive counsel to domestic and international clients on advertising, marketing and promotions matters and represents them in regulatory investigations, enforcement actions, and litigation.
Author:
Andrew B. Lustigman
Olshan Frome Wolosky LLP
New York, USA
alustigman@olshanlaw.com
