On Monday, California Governor Brown signed into law Senate Bill 778, which allows alcoholic beverage suppliers to run contests and sweepstakes in California. California has been the only state in which consumers have not been permitted to enter contests and sweepstakes sponsored by alcoholic beverage suppliers, so the new law is a welcome change for both industry members and consumers. The bill adds Business & Professions Code Section 25600.1, which covers contests, and Section 25600.2, which addresses sweepstakes, and it will go into effect on January 1, 2013. The new code sections will also supersede some of the provisions of CAL. CODE REGS. tit. 4, § 106 (“Rule 106”), which specifically prohibits contests and sweepstakes. An updated version of Rule 106 is expected in 2013.

The new law permits alcohol suppliers, including wineries, breweries, distilleries, and importers to run contests or sweepstakes. 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 of alcoholic beverages.” A 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.”

The new code sections are very detailed with respect to the requirements to run a contest or sweepstakes in the state, and the following are only a few of the requirements of the new sections:

- Entry or extra chances in a contest or sweepstakes shall not be made available via the purchase of an alcoholic beverage.

- A contest or sweepstakes may not be conducted for the benefit of any retailer.

- Entry forms may be provided through electronic or other media, including point of sale.

- The authorized licensee shall provide at least one means of entry that does not require a visit to a licensed premises.

- Alcoholic beverages may not be awarded as a prize.

- No entry fee may be charged to participate in a sweepstakes.

The new law on contests and sweepstakes has many requirements, so be sure to read the new statutes thoroughly or consult one of the attorneys at Strike Kerr & Johns for more details before conducting a contest or sweepstakes.

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