How To Do GIVEAWAYS, Part 3: Can’t Give That Prize! (YouTuber Law #53)

Today we’re going to discuss whether the prize you plan to giveaway on your YouTube channel is legally permitted. As always, lets start with what YouTube says … and surprise, surprise, YouTube says nothing except that you must adhere to all laws.

GUNS: Some states strictly forbid using firearms and ammunitions as prizes. Some restrict specific types of firearms or high capacity magazines. All have age and background restrictions. The difficulty of using firearms as prizes is that you can’t deliver the prize directly to winner but have to go through a federally licensed Federal Firearms License (FFL) dealer.

ALCOHOL: Some states strictly regulate sweepstakes involving alcohol. Obviously there are age limitations on using alcohol as prizes. Some states restrict behavior such as requiring participants to visit alcohol retail locations or allowing alcohol to be used as part of the entry (like drinking as part of the entry). There are also restrictions that prevent alcoholic beverages from being the sole prizes awarded; rather they must be an "incidental part of a prize package."


TOBACCO. Some states prohibit tobacco-related promotions and giveaways. Federal law also restricts usage of tobacco as a prize. Exceptions exist when the prize is a discount on the tobacco (like a coupon) as opposed to tobacco as a stand alone prize. Again your giveaway will be subject to minimum age and ID requirements.

MINORS. There are restrictions you need to consider when including minors as participants in the giveaway. For example, if the prize is a trip you need to consider whether or not you need adult approval and companion.

DANGEROUS: This brings out to issues related to giving away prizes that may be dangerous. What if the prize is an item that can cause injury such as skateboard, what liabilities will you face?

VALUES OVER $600. When you give a prize or series of prizes during any single year in excess of $600 (in retail value), you would need to collect social security numbers so that you can issue 1099 tax form. You don’t need to pay taxes on the prizes, but you need to properly report such prizes.

VALUES OVER $5,000. If the value of all prizes given out during a specific period of time (and that can change depending on the specifics) will exceed $5,000 you may be prohibited from extending the giveaway to residents of Florida and New York without first registering with the States and purchasing insurance bonds to cover the value of the prizes.

WEIRD RESTRICTIONS. There are some restrictions on using dairy products and gasoline in giveaways. Why? These involve unrelated restrictions in providing these products at discount rates. As a result, you may not be able to use them as prizes.

So think about the prizes your giving away. They might be prohibited, restricted or simply subject to registration and tax reporting.

And don’t forget to review the other posts and videos as I walk you thorough different aspects required to bring your giveaway into legal (and YouTube) compliance.

See you next time. 

Lior Leser, Esq.
Technology, Internet and Software Law

CALL ME 888.700.2993