LegalMatters: Sweepstakes: Legal Considerations and Best Practices

JB: What are the insurance implications and steps a nonprofit must take to avoid any wrongdoing?

MA: There are a few insurance considerations. First to note is the surety bond, which is required as part of the N.Y. state registration for sweepstakes offering prize value in excess of $5,000. This surety bond is equivalent to an insurance policy that guarantees the prize structure in the event the sponsor goes out of business. The other type of insurance is a bit more technical. Though not required, it is a sound idea for extra protection. That is insurance that backs up the indemnification clause (i.e., protection) that the independent judging agency gives you insuring that the rules and random drawing are all legal, fairly conducted and in proper compliance.