I get this question surprisingly often, so it’s high time I blogged about it
A word of advice if you plan to enter the names of people who buy your product in a drawing: Don’t. To do so is to run an illegal gambling or lottery scheme. The fines can be stiff and the publicity embarrassing.
If you want to hold a contest, see an attorney (which, most emphatically, I am not). Chances are you’ll be advised to say “no purchase necessary” and allow people to enter without having to spend, usually by sending a postcard or registering online. You’ll also want to publish official contest rules.
If you do those things right, the good news is that you’ll remove your promotion from the gambling arena. The bad news is that you’ll place it in the sweepstakes arena instead. Sweepstakes law comes with its own labyrinth of rules, so you should still consult an attorney. Look for one with sweepstakes experience. Otherwise you’ll end up paying someone to research the topic, and the advice you receive may be more theoretical than practical.
If you choose to proceed without an attorney (not recommended), at the very least study and adapt the practices of companies with enough of a track record that you can reasonably infer they know what they’re doing. Companies that run sweeps all the time like, say, McDonald’s may well have the legal ins and outs down to a science by now.
—Steve Cuno