Legal Definitions - gift enterprise

A gift enterprise is a promotional scheme where individuals must make a purchase or pay to participate for a chance to win a prize. These arrangements are often subject to state regulations because they share key characteristics with a lottery: requiring a payment or purchase (consideration), an element of unpredictability (chance), and the potential to receive something of value (prize).

Here are some examples illustrating how a gift enterprise might operate:

• Imagine a local electronics store running a "Tech Upgrade Giveaway." Customers who spend $200 or more on any merchandise receive a unique code to enter an online drawing for a chance to win a high-definition television or a gaming console. The store promotes this heavily to boost sales during a slow period.

  This illustrates a gift enterprise because customers are required to make a specific purchase ($200 or more) to gain an entry into a drawing, which is a game of chance, for the opportunity to win a valuable prize (TV or gaming console). The store uses this scheme to increase its sales.

• Consider an online streaming service that offers a "Premium Subscriber Sweepstakes." New subscribers who sign up for an annual premium membership are automatically entered into a monthly drawing to win exclusive merchandise, concert tickets, or a meet-and-greet with a popular artist. This promotion aims to attract more long-term subscribers.

  This demonstrates a gift enterprise because individuals must pay for an annual premium subscription (the required purchase) to gain a chance to win various prizes through a drawing. The element of chance determines who receives the prize, and the scheme is designed to boost subscriptions for the service.

• A community organization hosts an annual "Harvest Festival Raffle." Attendees purchase tickets for $5 each, which gives them a chance to win a variety of donated items, such as restaurant gift certificates, local artisan crafts, or a weekend getaway package. The proceeds from ticket sales support the organization's charitable programs.

  This is an example of a gift enterprise because participants pay money ($5 per ticket) to acquire a chance to win prizes through a raffle. Even though it's for a charitable cause, the structure involves consideration (payment), chance (the raffle drawing), and a prize, fitting the definition.