Federal Lottery Laws Explained

According to Federal Lottery Laws, it is illegal to operate a lottery through the mail or over the telephone. Let’s begin by explaining what a lottery is…A lottery is generally defined as a promotion in which all three of the following elements are present: prize, chance and consideration (otherwise known as, the “Standard Lottery Rule”).

Most states follow this Standard Lottery Rule; and all 50 states and the District of Columbia have statutes that prohibit lotteries, except those that are state-run. To avoid being classified as an illegal lottery in any State, at least one of the elements noted above must be removed.

Who enforces Lottery Laws?

Federal level
- United States Postal Service
- Federal Trade Commission (“FTC”)
- Federal Communications Commission (“FCC”)
- United States Department of Justice

State level
- State Attorneys General
- Local District Attorneys

Federal Lottery Regulations:

18 U.S. Code § 1301. Prohibits the transportation or carrying of lottery tickets in interstate commerce.
8 U.S. Code § 1302. Prohibits the mailing of gambling material (lottery tickets or actual gambling paraphernalia). The statute does not prohibit mailings that contain advertisements for gambling activity that is lawful where conducted (e.g. ads for licensed casinos).
18 U.S. Code § 1304. Prohibits the broadcasting of lottery information. (18 U.S. Code § 1307 exempts from this prohibition advertisement for state-run lotteries in states where the lotteries are conducted.) Note that the law only prohibits the broadcast of “unlawful” gambling advertisements.
18 U.S. Code § 1306. Prohibits financial institutions from offering lotteries.
47 C.F.R. § 73.1211. Prohibits television or radio stations from broadcasting advertisements or transmitting information on illegal/unlawful lotteries.
47 C.F.R. § 76.213. Prohibits cable television system operators from broadcasting advertisements or transmitting information on illegal/unlawful lotteries.
39 U.S. Code § 3001 et seq. Declares materials containing false representations and lotteries to be non-mailable and strictly regulates Sweepstakes offered through the mail (see Deceptive Mail Prevention and Enforcement Act).
39 U.S. Code § 3005. Permits mailing of state-run lottery materials within the state.
26 U.S. Code § 5723(c) and 27 C.F.R. § 275.71. Prohibits certificate coupons or other lottery devices from being placed on tobacco product packaging.

To ensure that you are running a compliant promotion that does not violate federal lottery laws, please contact us prior to starting your next promotion.

To read more posts by Marden-Kane, please visit our main blog page or subscribe to our email list.

This post was contributed by Fae Savignano, EVP.

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