This post was contributed by John Feldman, edited by Joseph I. Rosenbaum.
Puerto Rico Sweepstakes Regulation Revised
Earlier this week, Luis G. Rivera Marín, Secretary of the Department of Consumer Affairs (DACO) of the Commonwealth of Puerto Rico, announced the enactment of the country’s revised Sweepstakes and Games of Chance Regulation, effective Nov. 27, 2009. The new rules remove legal barriers that previously forced advertisers and other promoters to void sales promotions in Puerto Rico and to limit participation in many product and service sweepstakes to only residents of the 50 United States and the District of Columbia. When it becomes effective, the regulation will provide the 3.9 million residents of Puerto Rico with an array of opportunities to participate in the “chance to win” promotional marketplace more generally available within the U.S. market.
“I am pleased to announce that the many practical complications U.S. advertisers previously experienced conducting sweepstakes in Puerto Rico, which routinely led to excluding our residents from participation in their promotions, are now behind us,” Mr. Rivera said. “For many years our laws made it impossible for companies to conduct national sweepstakes here, and consequently we have been excluded from the opportunity to take part in these potentially valuable promotions. We enter a new chapter now whereby our law adequately protects consumers without locking ourselves out of perfectly legitimate sweepstakes.”
Changes in Puerto Rico’s Sweepstakes and Games of Chance Regulation align the Commonwealth’s rules and definitions with regulations in the United States promulgated by the U.S. Postal Service, the U.S. Federal Trade Commission and individual states. Highlights of the new regulation include:
- The definition of “consideration” contains some of the best language for SMS and other technology-based sweepstakes in the United States
- The requirement that the rules be certified by a notary is GONE
- The vague prior reference to having to deliver prizes within three months is GONE
- An express provision defining “abbreviated rules” has been added and the regulation provides for the use of abbreviated rules in advertising, so long as they point to where the full rules are published
- Although rules still need to be “published,” you can now satisfy that requirement by putting them on a website
- The requirement that rules be published, disseminated and spread in Spanish is GONE. The new regulations allow you to publish them in the language of the advertisement.
- Complicated “odds of winning” statements have been simplified
- Complicated publication dates for different types of promotions are GONE
- The requirement that the drawing procedures be certified by a notary is GONE
- Notarized certification of game piece security codes is GONE
- Tax liability, which was previously placed on the promoter, is now on the entrant
- A requirement that full rules appear in print ad covering more than two-thirds of the page is GONE
- Regulations concerning unavailability of prizes based on “foreseeability” of circumstances is GONE
- Penalty for not awarding prizes if the circumstances were foreseeable is GONE
- Although changes to rules still need to be approved by the Secretary, if no action is taken after 10 business days, the default is approval
- The complex prize awarding regulations (e.g., within three months; quality advertised) has been simplified—now requiring that prizes be awarded as advertised
- The requirement that alternate winners be chosen is tempered by the caveat that some prizes, because of their nature, cannot be awarded to an alternate winner
- Any distinction between games originating inside or outside of Puerto Rico is GONE
“DACO is grateful for the assistance of John Feldman, a partner in the Washington, D.C. office of Rimon LLP, an international law firm, and Gabe Karp, Executive Vice President and General Counsel of ePrize LLC, the worldwide leader in interactive promotions, who both provided the Department with a great deal of information and significant input and suggestions in redrafting the sweepstakes regulations,” Mr. Rivera said. “Without Mr. Feldman’s and Mr. Karp’s able consultation and guidance over the past several months, the opening of a vibrant Puerto Rican sweepstakes market for U.S. advertisers and our people would not have been possible.
“Both Rimon and ePrize are cutting edge in the area of promotions, particularly in the cross border aspects of this advertising specialty,” Mr. Rivera continued. “They provide aggressive and creative thinking, as John and Gabe did in helping us solve our longstanding issue with sweepstakes barriers.”
Legal Bytes congratulates John Feldman in our D.C. office, who is not only an authority in sweepstakes, contests and a wide variety of promotions, but is also well-regarded by peers and by regulators who, as in this case, call upon John for his insight and who respect his reasoned and experienced views. Nice work. You can download the text of the revised Sweepstakes and Games of Chance Regulation right here.
If you are a client, you can get the benefit of his experience by contacting John Feldman directly; or me or Douglas J. Wood any of our Advertising Technology & Media law team; or the Rimon attorney with whom you regularly work. If you aren’t a client and you advertise, engage in promotions or marketing – why aren’t you?
