SB 778 – Contests and Sweepstakes

1. SB 778 – Contests and Sweepstakes Mike Falasco Wine Institute

2. Why Did WI Sponsor Legislation? • 49 other states allow contests and sweepstakes • Contests and sweepstakes were once informally allowed in California (no statute or regulation) • Overly aggressive brewer marketing led to a ban • Current Rule 106 only allows suppliers a limited right to SPONSOR contest, but not to conduct one • SB 778 establishes the privilege in statute

5. Difference Between Contest and Sweepstakes? Generally, sweepstakes are games of chance. Contests involve games with a degree of skill. • A “contest” is defined as “a game, contest, puzzle, or similar activity that holds out or offers to participants the opportunity to receive or compete for gifts, prizes, gratuities, or other things of value as determined by skill, knowledge, or ability rather than upon random selection. Skill, knowledge, or ability does not include the consumption or use alcoholic beverages.” • “Sweepstakes” is defined as “a procedure, activity, or event for the distribution of anything of value by lot, chance, or random selection where the odds for winning a prize are equal for each entry.”

6. Who Can Offer a Contest or Sweepstakes? Only “Authorized Licensees” can conduct contests and/or sweepstakes • An authorized licensee is “a winegrower, beer and wine importer general, beer manufacturer, out-of-state beer manufacturer certificate holder, distilled spirits manufacturer, distilled spirits manufacturer’s agent, distilled spirits importer general, distilled spirits general rectifier, rectifier, out-of-state distilled spirits shipper’s certificate holder, brandy manufacturer, and brandy importer.”

7. Common Provisions • Only adults can enter a contest or sweepstakes. Authorized licensees, wholesalers, retailers, their employees, or family members are not eligible. • No limitation on number of prizes • No limit on dollar amount of prizes awarded (but no wine, beer or spirits as prizes) • No annual cap on the number of contests or sweepstakes, (but note that an authorized licensee is required to maintain records for all of their contests or sweepstakes for 3 years from the completion of either type of game). • No purchase requirement to enter

8. Some Limitations • No sweepstakes entry fee • No consumption of licensed beverages by a consumer to participate in either a contest or sweepstakes • No instant prize winners, but OK to provide instant notification to the consumer that he/she is a winner • Cannot conduct either game for the benefit of any permanent retail licensee • OK to conduct either game in the tasting room of a winery’s or brewery’s principal license, but not at their duplicate license

9. Means of Entry on Packaging? • Generally banned for both sweepstakes and contest entries. • Exceptions are made for neck hangers on wine and spirits bottles and entry forms through electronic or other media such as point-of-sale scan codes. An authorized licensee is mandated to provide an alternative means of entry other than a visit to licensed premises.

11. Role of Retailer? • Entry forms may be available at a retailer’s premises. • A retailer is permitted to promote either game to the extent already authorized by statute or ABC regulation. • A retailer is expressly prohibited from collecting entries, awarding prizes, or redeeming prizes. • For sweepstakesalone, a retailer may provide the matching of entries with numbers or pictures on point-of-sale materials and collection boxes for entry forms.

12. Placement of Signs OK to put up signage as long as their placement is not conditioned on the removal or repositioning of another authorized licensee’s products or on the purchase or sale of any product of the supplier.

13. “Unaffiliated Retailers” Rule • An authorized licensee is mandated to conduct a contest or sweepstakes at a minimum of 3 “unaffiliated retail licenses” in California. • An unaffiliated retailer means an independent retailer, not one that is owned or controlled in whole or in part by the same retailer. • A retailer and a supplier are prohibited from precluding a contest or sweepstakes being held at a retail competitor.

14. Sweepstakes andRule 106 • Rule 106 has allowed for years supplier SPONSORSHPS of contests with limitations: a) requires sponsorships only in the form of money to bona fide amateur or professional organizations; b) no exclusive sale of supplier’s products at event; c) no money to any organization other than the one conducting the contest; and d) no purchase requirement. The existing Rule 106 prohibits supplier-sponsored sweepstakes. • SB 778 supersedes Rule 106 and allows authorized licensees to CONDUCT AND SPONSOR sweepstakes with no limits • SB 778 allows authorized licensees to sponsor sweepstakes almost anywhere, like sport stadiums and golf courses, and those being held by entities other than licensed retailers, such as non-profits or for-profit businesses. The limitations imposed on supplier-sponsored contests in Rule 106 (i) do not apply.