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Registration & Bonding

July 01, 2003 - Article

Posted: 7/2003

Registration & Bonding
Game Promotions: Playing By the Rules  Part 3 of 3

David O. Klein and Deena B. Burgess

Editors Note: This is the third of a three-part series addressing the legal issues surrounding game-based promotions. The first and second parts appeared in the May and June issues of PHONE+. They can be viewed online at

Are you ready to begin your game promotion this week? You know what prize(s) you are going to offer. You know that you must offer an alternative means of entry to participants. You even have a written set of rules ready to go. So, you are all ready, right? Not so fast. Have you registered and bonded your game promotion? If your game promotion is not registered and bonded or, if you, in fact, have no idea what registration and bonding entails, you are going to have to wait to start that game promotion.

As discussed in the second part of this series, a list of all contest winners must be maintained by the sponsor, made available to entrants at no charge (and the State of Rhode Island upon request), and filed with the states of Florida and New York within 60 or 90 days of the end of the contest period, respectively. In the United States, three jurisdictions have registration and bonding requirements under their applicable governing legislation.

Florida. Where residents of Florida are permitted by contest rules to enter a promotion, Florida requires that the game be registered and bonded where the aggregate value of all prizes to be awarded exceeds $5,000. Failure to comply with this registration requirement is a second-degree misdemeanor and carries a civil punishment of $1,000 per violation.

At least seven days prior to the launch of a contest promotion, the contest sponsor must register with the Florida Department of Agriculture and Consumer Services (DACS) by submitting a $100 nonrefundable fee, a list of all promotional prizes and prize categories offered and a copy of the applicable contest rules and regulations. Once the rules are filed with DACS, these rules cannot be changed or modified in any way for the duration of the game promotion.

Game sponsors also must either establish a trust account or secure a surety bond in the aggregate amount of the monetary value of the prizes offered and submit proof of such account or bond at least seven days prior to the launch of the promotion. These funds are to be used exclusively to pay for prizes and only upon certification by DACS of the amounts of the prizes and the names of each winner. There is one exception to this provision, however. If a game sponsor has legally run promotions in Florida for at least five years, without incident, the sponsor may apply for a waiver from the bond or trust account requirement.

New York. New Yorks registration and bonding requirements are very similar to those of Florida. The most significant difference between the New York regulations and those of Florida is New York law requires all contest documentation (rules, fee and proof of bond or trust account) be submitted to the secretary of state at least 30 days prior to the launch of the game promotion, rather than the seven days required in Florida.

The prize value threshold in New York for registration and bonding also is an aggregate of $5,000. Contests that fall into this category also must have filed with the New York secretary of state a $100 nonrefundable fee, a statement setting forth the minimum number of prizes to be offered, the minimum value of such prizes and a copy of the applicable contest rules and regulations. Failure to comply with the registration laws in New York State is a Class B misdemeanor.

The trust account or surety bond provisions are the same as those of Florida, with the exception that the five-year good-standing exemption does not apply.

Rhode Island. The Rhode Island registration requirements are quite dissimilar from those of Florida and New York. The Rhode Island prize value threshold for registration is an aggregate of only $500. Although the Rhode Island statute does not specify how far in advance registration must be completed, it does state that contest rules must be filed prior to the launch of the game promotion.

The most notable difference in the case of Rhode Island is that there is no bonding or trust account requirement. However, in order to register, contest sponsors must submit to the Secretary of State a $150 filing fee, a statement setting forth the minimum number of prizes to be offered, the minimum value of such prizes and a copy of the applicable contest rules and regulations. Failure to file such a statement is a misdemeanor under Rhode Island law.

What if you do not want to register your game promotion in New York, Florida or Rhode Island? Can you still run your game promotion? The simple answer is yes. If you choose not to register and/or bond your game promotion in any state in which it is required, you may not allow residents from those states to enter your game promotion. In order to protect yourself and your company, you should specify in your contest rules that not only is the game void where prohibited by law, but also that the game is void in the states of Florida, New York and Rhode Island (unless you have registered and/or bonded there, as applicable).

Note that this is only a brief overview of some of the more significant issues that you will face when you launch a game promotion. We recommend that you consult with experienced promotional law counsel prior to embarking on such an undertaking.

David O. Klein, Esq., is a partner and Deena Burgess, Esq., is an associate in the firm of Klein, Zelman, Rothermel & Dichter LLP, New York, N.Y. Kleins practice is in promotional and telecommunications law, and Burgesss practice is in Internet and telecommunications law. They can be reached at +1 212 935 6020 or by e-mail at


Klein, Zelman, Rothermel & Dichter LLP


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