Why is the statement "no purchase necessary" seemingly ubiquitous in the beloved fine print of contests and sweepstakes, despite the fact that a chance of winning is seemingly tied to a purchase?Who doesn't love to flip over a Coke bottle top to reveal the glorious prize of – another bottle of Coke? I sure do. Remember the guy who sued Pepsi for a breach of contract for not delivering a Harrier jet for 7 million Pepsi Points? The "no purchase necessary" clause allows even mere non-purchasers a means of entering the contest even without a purchase, most often by sending in a self-addressed self stamped envelope or ponying up a nominal fee of a few cent per entry. Indeed, Mr. I-Want-A-Harrier-Jet himself did not participate the old-fashioned honest way by drinking a million Pepsis, but merely sent a check for the bulk of his points. Also, for those that missed out, there was a chance for arbitrage in the recent McDonald's Monopoly game, which guaranteed a $1 Best Buy coupon yet allowed one to obtain a game token by mailing in a self-addressed stamped envelope at a total cost of 79 cents.
But why would companies want to allow non-purchasers the right to win in their contests? Obviously, they wouldn't if they didn't have to. Indeed, the law of most states (such as Article 255 of the N.Y. Penal Law) prohibits unauthorized lotteries, and in turn, the FCC prohibits the advertising of such lotteries under 18 USC §1304. What constitutes a lottery? Generally, three elements are required: (1) the element of chance, instead of skill (2) a prize and (3) consideration (legalese for "something of value") furnished by the participant. The way to comply with such a prohibition is to merely eliminate on of the elements of a lottery. By providing an alternate means of participating in a contest other than by a purchase, a company removes the element of consideration from their contest - voila - it is not a lottery. And everybody wins. Especially if you're the employee of a promotion company running McDonald's Monopoly game and have been claiming the prizes yourself.
