Luis G. Rivera Marín, Secretary of the Commonwealth of Puerto Rico’s Department of Consumer Affairs (DACO), this week announced the enactment of the country’s revised Sweepstakes and Games of Chance Regulation, effective Nov. 27, 2009. The new rules remove legal barriers that previously forced advertisers and other promoters to void sales promotions in Puerto Rico and to limit participation in many product and service sweepstakes to only residents of the 50 United States and the District of Columbia. When effective Nov. 27, the regulation will provide Puerto Rico’s 3.9 million residents with broader access to the many chance-to-win participation opportunities available within the U.S. market.
“I am pleased to announce that the many practical complications U.S. advertisers previously experienced conducting sweepstakes in Puerto Rico, which routinely led to excluding our residents from participation in their promotions, are now behind us,” Mr. Rivera said. “For many years, our laws made it impossible for companies to conduct national sweepstakes here, and consequently we have been excluded from the opportunity to take part in these potentially valuable promotions. We enter a new chapter now whereby our law adequately protects consumers without locking ourselves out of perfectly legitimate sweepstakes.”
Changes in Puerto Rico’s Sweepstakes and Games of Chance Regulation align the Commonwealth’s rules and definitions with regulations in the United States promulgated by the U.S. Postal Service, the U.S. Federal Trade Commission and individual states. Highlights of the new regulation include:
- The definition of "consideration" contains some of the best language for SMS and other technology-based sweepstakes in the United States
- Certification by a notary requirement for rules is GONE
- The vague reference to having to deliver prizes within three months is GONE
- An express provision defining "abbreviated rules" has been added with "material terms" that are even more reasonable than Florida’s. Furthermore, the regulation provides for the use of abbreviated rules in advertising so long as they point to where the full rules are published.
- Although rules still need to be "published," you can now satisfy that requirement by just putting them on an Internet site
- The requirement that the rules be published, disseminated and spread in Spanish is GONE. Now, you just need to publish the rules in the language that the advertising appears in.
- Complicated odds statements have been simplified to conform with typical odds statements
- Complicated publication dates for different types of promotions are GONE
- Notarized certification of drawing procedures is GONE
- Notarized certification of game piece security codes is GONE
- Tax liability, which was placed on the promoter, is now on the entrant
- Requirement that full rules appear in print ad that covers more than two-thirds of the page is GONE
- Provision concerning unavailability of prizes based on "foreseeability" of circumstances is GONE
- Penalty for not awarding prizes if the circumstances were foreseeable is GONE
- Although changes to rules still need to be approved by the Secretary, there is now default approval after 10 business days with no action
- The prohibition against not awarding prizes within three months, or awarding prizes that are not the quality advertised, is simplified to just require that prizes be awarded as advertised
- The requirement that alternate winners be chosen is tempered by the caveat that some prizes, because of their nature–like sports events or perishable items,–cannot be awarded to an alternate winner
- The distinction between games originating inside or outside of Puerto Rico is GONE
“DACO is grateful for the assistance of John Feldman, a partner in the Washington, D.C. office of Reed Smith LLP, an international law firm, and Gabe Karp, Executive Vice President and General Counsel of ePrize LLC, the worldwide leader in interactive promotions, who both provided the Department with a great deal of information and significant input and suggestions in redrafting the sweepstakes regulations,” Mr. Rivera said. “Without Mr. Feldman’s and Mr. Karp’s able consultation and guidance over the past several months, the opening of a vibrant Puerto Rican sweepstakes market for U.S. advertisers and our people would not have been possible.
“Both Reed Smith and ePrize are cutting edge in the area of promotions, particularly in the cross-border aspects of this advertising specialty,” Mr. Rivera continued. “They provide aggressive and creative thinking, as John and Gabe did in helping us solve our longstanding issue with sweepstakes barriers.”
Why This Matters:
These changes will be a boon to U.S. advertisers who use sweepstakes promotions in their advertising campaigns, as well as to Puerto Rican residents now able to vie for U.S. sweepstakes prizes.