I am a guitarist. Admittedly, a pretty horrible one – with everything else going in life, I don’t have nearly as much time to practice as I’d like.
I have an acoustic guitar and while I love a lot of acoustic guitar music, I also like some electric guitar play – everything from rockabilly and country to jazz. After strumming on acoustic for a bit, I thought man, it’d be cool to have an electric as well. Visions of Sultans of Swing, the Hotel California solo, Jeff Buckley’s Hallelujah, and more filled my dreams.
But I can’t really justify spending cash on an electric (plus amp, etc.). I mean, I can barely squeak out simplified songs on my acoustic, so jumping to electric seemed a bit…pretentious.
However, once you search for something related to guitar on the Internet, your social media is immediately filled with ads for guitar gear, including promotions and giveaways.
And therein lies the tale.
Contest vs. Sweepstakes vs. Giveaway
At this point, some terminology is vital.
A sweepstakes or giveaway (such as the awesome one open right now courtesy of RackNerd!) is a random drawing in which prizes are given. No entry fee is paid and there is no skill required. Tickets are drawn out of a hat (virtual or otherwise) and the winner gets the prize.
In the US, because of lottery laws, you’re not allowed to charge money for a giveaway. You’re welcome to put up a web site and give away whatever you want, but if you start charging money, it becomes an illegal lottery. The sole exception is if you are a nonprofit doing a fundraiser.
On the other hand, a contest is a game of skill. For example, “we’ll pick the best essay” or “submit the winning photo” kinds of things. In these cases, you are allowed to charge for money (though there are a few states in the US that ban this: Colorado, Maryland, Nebraska, North Dakota and Vermont).
For contests, you must also provide a free alternate form of entry, such as sending in a postcard.
One law site I read summarized it this way:
Generally, for a promotion to be legal, it cannot have all three elements of prize, chance, and consideration.
What If I Want to Make Money?
So the plan is to buy some prize for $1000, sell $3000 worth of tickets, and profit. Of the three elements – prize, chance, consideration – you can’t get rid of prize or consideration, so…that leaves getting rid of chance.
Conceptually, this is something like “our impartial judges will pick the winning photo” but unfortunately it radically limits participation. Who is going to pay money to enter a photography contest except people who are excellent photographers? That’s a fraction of the potential market of people who might pay to enter a random drawing for a fancy camera.
Also, as a potential participant, I have less faith that my chance is really as good as someone else’s when it depends on human interpretation.
Naturally, scheming humans have thought of a couple hacks.
What If It’s a Skill Test?
Here’s a contest skill test I answered recently:
The function of an amplifier in an electric guitar is to…
(1) tune the strings
(2) protect against theft
(3) amplify the sound
A real head-scratcher and a true test of guitar knowledge.
So let’s say you have these tests, and 500 people pass. How will you determine who the winner is? Well, the only fair way is by random drawing…
Or Purchase Required
You’re allowed to host a giveaway for customers. Oh, you would be interested in winning this $1000 guitar? Buy something on our site! What’s for sale? Photos of the guitar for $5 each and each one gives you a chance to win…
My New Guitar
Naturally, there are tons of local laws (some of which I mentioned above) that step all over these guidelines.
I’ve noticed there are a ton of giveaways for all kinds of things in the UK, and I’ve heard there are a lot of drawings there. Some of these sites say you must live in the UK, but some do not.
As I said, my social feed is now filled with guitar gear and giveaways, and I decided to enter a couple contests for a guitars. Most of these sites do some form of live drawing on YouTube or Facebook, generating the winning number “on-air” by screen-sharing a random.org or whatever page.
Astonishingly, I won one.
I’ve noticed there are now sites in the US offering buy-a-ticket guitar giveaways, and they base participation on the “buy something from our site” model. I suspect this is going to test the bounds of legalities, so it’ll be interesting to watch.
The business model is interesting. Imagine a guitar costs $1000. Some sites can sell 800-1000 tickets at $3-4 each. That’s a pretty healthy margin, and the only other costs are shipping and marketing, which is all digital. It would be interesting to see the customer breakdown because the potential for problem gambling is obvious. I beat the odds.
The live-drawing video is the credibility enabler for these sites, as well as their TrustPilot and other credibility. If they outright scammed people, their videos would be flooded with complaints, but instead they post pictures of winners regularly.
Bonus: How to Calculate Your Overall Odds
One feature of these lotteries…er, I mean, skill contests is that because of the specialized nature of the prize (in this a guitar), sometimes the number of tickets is low. Some drawings I saw had only 200-odd entries. If you bought 5 tickets, that’s a 2.5% chance.
But what if you bought tickets in, say, 10 contests at a 2.5% chance each? What is your overall chance?
It’s not 2.5% added together 10 times. To make the calculation:
- Calculate your chances of losing in each contest. In this case 97.5%.
- Multiple all these chances together. In this case, you get 77.6%, which is your overall chance of losing all 10 contests.
- Now subtract that from 100% to find your overall chance of wining (22.4%)
Remember, this only works if every contest is independent, and past contests have no effect on future odds, so you can’t “look back” and improve your future odds by considering contests in which you lost.
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I also enjoy using LEBs! I have an empire of little guys for VPNs, larger guys for apps, and big guys for databases and storage. When I'm not in front a screen I'm into German Shepherd dogs, quality knives, target shooting, theology, tabletop roleplaying games, and forest hiking.
I enjoy writing technical articles here on LowEndBox to help people get more out of their systems. You can find me on LowEndTalk @raindog308
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