Keeping it Legal: Running Promotions in Florida, New York and Rhode Island
It's only a week in and your company's first internet promotion is a huge success. The entries are double what you expected. Then, you receive a letter from the State of Florida. Your game of chance promotion is in violation of Florida Statute 849.094. Florida fines you $5,000 for non-compliance. Not only have you never heard of the statute, you didn't even know you were running a game of chance promotion. Suddenly this "great promotion" is losing money. How do you avoid this mistake? Learn the rules in the three states that have registration requirements for game of chance promotions, and make sure you're compliant.
|1.||What is a game of chance (GOC) promotion?
A promotion in which winning the prize is primarily determined by chance, not skill. A few exceptions include:
|a.||If the promotion is NOT open to the general public, it is not a GOC (employee incentive contests, industry-only trade show promotions, and exclusive client only promotions)|
|b.||If the promotion requires the consumer to use their own skill to win the prize, it is not a GOC (basketball shot to win a car, golf hole-in-one to win $10,000)|
|2.||What is GOC bonding and state registration and what triggers the requirement?
A bonding company (think insurance, not bail) issues a GOC bond which guarantees the sponsor's financial ability to award the prizes.
State registration is just that, you must register your promotion in writing with the state.
Each state has its own requirements. Fortunately they are easy to understand:
|a.||Florida and New York – A GOC bond must be issued and the promotion must be registered if the promotion meets both of the following criteria:|
|i.||The total ARV of all prizes exceeds $5,000|
|ii.||The promotion is a GOC
Paperwork is due to the state of Florida 7 days prior to the start date.
Paperwork is due to the state of New York 30 days prior to the start date.
|b.||Rhode Island – The promotion must be registered if it meets the following criteria:|
|i.||The promotion has a retail component. Internet-only promotions are not required to register.|
|ii.||There is no bond requirement for Rhode Island.|
|iii.||The total ARV of all prizes exceeds $500
Paperwork is due to the state prior to start of promotion
|Wondering whether or not you should file with a state? Go ahead and file the required documents by the applicable deadline. Believe it or not, if your promotion does NOT fall within the state filing requirements, they will send everything back to you along with your filing fee.|
|3.||What if I'm running a promotion in a state bordering one of these three states?
It's better to be safe than sorry. If you're located in a state that borders one of these three states and you're running a local promotion, you have one of two options:
|a.||If you are allowing residents from the bordering state to participate in your promotion AND your promotion meets the criteria for registration or GOC bonding, then comply with the bordering state's requirements.|
|b.||In the promotion rules, you may exclude the residents of the bordering state from participating in your promotion. Example: Georgia sponsors may exclude Florida residents from participating in their promotions if they do not want to comply with Florida's state regulations.|
|4.||Are there ways to avoid the GOC bond and registration requirements?
|a.||Florida and New York – You may exclude the state's residents from participating in the promotion, but that usually defeats the purpose of the promotion. Keep the total ARV of all prizes at $5,000 or less. Design the promotion so the dominant factor for winning is skill-based instead of chance-based.|
|b.||Rhode Island – If the promotion does not have a retail component (internet only), you are not required to register with the state.|
|5.||Where do I purchase a GOC bond and how do I register with the state?
There are several reputable companies that can provide GOC bonds. State registration forms are available on each state's website if you wish to file the paperwork yourself. Some of these companies also offer turnkey services which include execution of the bond and state registration. They can guide you through the steps, complete all necessary paperwork, and process the state filing. Automated bonding websites make the process quick and painless for promotion sponsors.
Julie Davis is the Research & Development/Sr. Accounts Manager for SCA Promotions. Her focus is on developing and implementing results driven B2C and B2B promotions. With 30 years of experience in advertising and promotions, she is a business consultant and speaker working with clients seeking local, regional and national reach.
When you design a sales incentive promotion, don't start at the top
Sales incentive programs have traditionally focused on rewarding the top producers in a company. What is missing from most programs is that selling within any company is about teamwork. Building a sales incentive program from the ground up will do more for your company than just increase the bottom line. It will make every employee a salesperson.
Who enables the sales rep to do their job? The support staff, from Account Support to the Receptionist, (or the Director of First Impressions). The better they do their job, the more time your sales reps have to sell. The fewer errors made, the faster contracts move and checks flow. The best sales incentive promotions include everyone down to the file clerk. The key is the support staff is rewarded not on the performance of the salesperson they work with, but on the performance of the entire sales force. A support person won't feel penalized because they work with the "rookie" sales rep. This encourages everyone to pitch in and help wherever they're needed and builds teamwork throughout the entire staff.
Incentivize the behavior you want to encourage in your staff. Simply "increasing sales" is too vague and only addresses sales reps' efforts. What is your response time to new inquiries? Five minutes, one hour, one day? How much business are you losing because in the time is takes a sales rep to return a phone call, the prospect has moved on to the next company on Google Search? And how can your support staff help out? Incentivize them to backup sales reps on new inquiries, training them to gather the necessary information from prospects so sales reps can then follow-up with a quote. Are contract reissues increasing as sales increase? If not, sales reps may be spending so much time chasing new business they're failing to follow-up on current sold clients, your easiest sales. Can you implement a program for account support personnel to follow-up on contract reissues giving sales reps more time to focus on new and large accounts? Empower the support staff to go beyond issuing contracts to actively helping increase the company's sales.
Lots and lots of winners and very, very visible. Incentive programs are about reinforcing behavior you want repeated so recognize it immediately and do it often. Don't wait until the program is over to hand out all the goodies. It's like running a race. Each time you pass a mile marker, it's a little victory. When someone shouts your name, it encourages you to pick up the pace. If rewards are handed out only when the program is over you lose most of the power of the incentive. Dangle the big carrots but don't forget the small rewards. Set daily, weekly and monthly goals. Every time a check comes in for new business, reward it. Response time on new inquiries goes from 45 minutes to 25, reward it. An account support person comes up with a faster and more accurate contracting process, reward it. Your desktop support person brings in 5 new business leads, definitely reward it!
The goal of a sales incentive program is to make the company more successful, so get the entire company involved in the program. You'll not only build profits but also community, loyalty and teamwork among all your staff.
Julie Davis is the Research & Development/Sr. Accounts Manager for SCA Promotions of Dallas, Texas. With 30 years of experience in advertising and promotions, she is a promotions consultant and speaker working with clients on local, regional and national programs. SCA Promotions is one of the world's largest prize promotion companies, creating and underwriting results driven B2C and B2B promotions.
We See Surprises Every Day
OK, so the election result surprised us a little. The media's reaction is what we find more curious. We see rare events occurring all the time in our promotions—and it's our business to arrange huge cash payouts when the improbable happens.
On Election Day, most traditionally reliable polling models had Mr. Trump as 10% to 30% to win the election. Those odds aren't great, it made him unlikely to win, but they're better than the odds of sinking a basketball shot from half-court—and we pay out on that all the time. 10-30% is certainly better than the chances of hitting a hole in one on the golf course, even for a top pro. Last March, at the Els for Autism fundraiser, Rickie Fowler made the shot and we arranged a million-dollar payout to a great cause. Here's the video.
There's a couple things to think about here:
First, a 10% chance or a 20% chance isn't no chance. "Unlikely" isn't the same thing as "can't happen". (Conversely, an 80% chance is by no means a Sure Thing.)
Second, an unusual result gets people talking. And that's our business: providing prize coverage if one of your contestants accomplishes something unusual. If your customer picks the magic envelope with $1,000,000 inside or sinks the half-court shot, we'll arrange coverage to get your lucky winner paid. We can help you fit a large prize to a modest budget.
We wouldn't be in business for 30 years if nobody ever won. We're not naïve enough to say "we've seen it all" but we've had a lot of lucky winners. Give us a call: one of your customers could be next.
Rather than expand about something we do frequently in our business, let’s briefly look at something we half-try to avoid: unusual prize fulfillment. Make no mistake: if a Client wants prize coverage for a rare race car, and suddenly needs help with prize fulfillment, of course we’ll try to be of service. But we believe that, most of the time, the coolest prizes are cold, hard cash. Let’s examine why.
Our CEO is fond of the cliché, “cash is king”. Sure, by definition, clichés are expressions that are used too often—but they only get to be used too often because they hold some truth. A race car, a work of art, or a helicopter trip to the South Pole where you get to keep the helicopter would each appeal to some people. Money appeals to almost everybody. Contests with esoteric prizes do have their place—they really stand out for a niche audience. But if clients want to reach as many current and prospective customers as possible, a large cash prize is something every potential contestant can understand.
Sometimes an unusual prize turns sour. When this writer was 19, his friend won a Lamborghini. We were excited. He won it on a Saturday and got to test drive it on an abandoned airport runway. Come Monday he figured he had to insure it…and it was time to sell the Lambo. He didn’t get anything close to sticker price and to this day he talks about how he wishes he had won cash instead.
Most jurisdictions require winners to pay taxes on the value of prizes won. This is regrettable, but much easier to do with cash.
Last, a piece of inside baseball: a cash contest is much easier and less expensive to facilitate on the back end. Each time a contestant wins a physical prize, it has to be purchased, packaged, and shipped. That’s a lot of cost and man hours and it adds up fast. Yes, SCA does provide prize fulfillment services and offering guaranteed sponsor prizes is important to ensure a successful promotion. However, managing promotional budgets through appropriate prize selection is something we help with as well.
A contest can take many forms. Many problems are solved when the prize up for grabs is a huge pile of cash.