Under U.S. law, gambling is defined by the presence of three core elements: consideration (where a participant pays or provides something of value to play), chance (a random outcome determines the winner), and a prize (something of value awarded). To stay within legal bounds, sweepstakes typically eliminate one of these components—most often the requirement to pay in order to enter. This legal workaround is what distinguishes many sweepstakes from traditional forms of gambling.

Businesses generally rely on three different legal models to stay compliant. One common model is the no-purchase-necessary sweepstakes, where participants can enter for free, often via a mail-in option or other alternate entry methods. For example, Publishers Clearing House has long used this approach. Because there’s no requirement to pay, the element of consideration is removed, and the promotion is not considered gambling.

Another model involves skill-based contests, which depend on a participant’s ability to complete a task or answer a question correctly. In these cases, the element of chance is replaced with measurable skill, as seen in Coca-Cola’s “Guess the Calories” campaigns. While the legality hinges on the absence of chance, enforcement can vary depending on how states interpret “skill.”

The third and murkiest category is where contests advertise free entry but provide substantial benefits to paying participants. In many mobile game tournaments, for instance, users can technically enter for free, but those who pay gain significantly more entries or advantages. While these systems may appear legal at first glance, some states consider the paid advantages as a form of consideration, which could tip the scales back into illegal gambling territory.