Unless you’re the government, running lotteries is illegal in the U.S.
If you run a sweepstakes or giveaway as part of your NFT project (or anywhere else), you don’t want to risk having your promotion look like a lottery.
What’s the difference?
In a sweepstakes, entrants can win a prize for free based on chance alone.
No purchase, payment, or other consideration is needed, and the winner is picked at random.
In a lottery, the entrant has to give something of value (like buying a ticket or an NFT), called consideration.
So to avoid having your promotion be called a lottery, you need a free method of entry that counts the same as any paid methods.
It is a crime in every state to run a lottery.
And in California, you need to let people know, “clearly and conspicuously,” that no payment is necessary to enter.
As NFTs continue to grow in popularity, you can bet they will attract attention from regulators and plaintiffs’ lawyers.
It’s worth the effort to understand the risks you are taking with how you promote your NFT project, so that you can avoid a surprise lawsuit down the road.