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ADVERTISING, MARKETING & PROMOTIONS >> ALERT REVISED FLORIDA LAW LIMITS PROMOTIONS AND SWEEPSTAKES Florida’s recently revised Game Promotion Law limits the ability of for-profit businesses to conduct sweepstakes for advertising and marketing purposes and prohibits non-profits and charitable organizations from operating any sweepstakes. The state’s revisions affect all sweepstakes conducted by for-profit and non-profit companies, despite the fact that these revisions were intended to simply close down Internet sweepstakes cafés. BACKGROUND The revised law went into effect on April 10, 2013 and was enacted on the heels of a massive three-year, multi- state, multi-agency investigation into electronic sweepstakes at Internet cafés, called “Reveal the Deal.” The investigation led to the arrests of at least 57 people and the closing of at least 49 Internet cafés. Charges ranged from possession of illegal slot machines, operating a lottery, and keeping a gambling house to racketeering and money laundering. Although Florida law specifically prohibits gambling, it exempts certain game promotions or sweepstakes conducted by for-profit commercial entities on a limited and occasional basis as an advertising and marketing tool. In enacting the revisions, the legislature found it necessary to “clarify” Florida law to eliminate “abuse” and to make sure that the existing law was not “interpreted in any manner as creating an exception to Florida’s general prohibitions against gambling.” REVISED LAW The revised law provides that a sweepstakes may only be conducted by a for-profit commercial entity on a limited and occasional basis as an advertising and marketing tool in connection with and incidental to the bona fide sales of consumer products or services. Unfortunately, the legislature did not clarify what it meant by a limited and occasional basis. Until the legislature makes this clarification, for-profit companies should avoid frequent and continuous sweepstakes. In addition, the revised law states that non-profit entities and charitable organizations may not operate a sweepstakes in the state. The revised law also updates the definition of “slot machine” to specifically include systems or networks of devices, which would include networked computers and Internet sites. It also provides a rebuttable presumption that machines used to simulate casino- style games in schemes involving consideration and prize are prohibited slot machines. APRIL 2013 Attorney Advertising 1227 THE BOTTOM LINE Florida is among a growing number of states now closely examining or challenging certain practices relating to Internet cafés that may have broader implications for other sweepstakes and promotions techniques including reverse auctions, penny auctions, and other forms of entertainment shopping. (For example, see our Alert, “Government Challenges Internet Sweepstakes Cafés,” available here.) Companies using these tools as their primary business model or for marketing or advertising purposes must pay close attention to the new legal framework in Florida. >> continues on next page
