Sponsored vs. Operated Lotteries

The difference between lotteries and sweepstakes.

How to tell the difference between a sponsored lottery game (free) and an operated lottery (pay to play).

If you have received a lot of Lottery Scam Letters, you have undoubtedly seen that some that claim to be sponsored by Bill Gates or Jesse Jackson.

Let's set the record straight: lotteries are NOT sponsored.

Lotteries are "operated."  That means that they are managed by a company (either government owned or independent) that specializes in every aspect of lottery law,  promotion, and financial responsibility.

Now why is that?  Well, just think of the numbers for a moment.  Lotteries winnings are a portion of the total fees paid into the lottery by players.  That's an awful lot of money.  And that money has to be disbursed.  Here are just some (not all) of the expenses incurred by operating a lottery:

	Marketing and Advertising (ad development, cost of advertising in the media, marketing and advertising specialists)
	Printing
	Point of purchase machines and machine maintenance
	Security specialists
	Cash pick-up and delivery services
	Corporate salaries
	Bookkeeping
	Computers
	Software
	Corporate overhead
	Attorney fees (to keep up with lottery laws)
	Web site maintenance
	Game development
	General overhead (rent, insurances, office furniture, office supplies, etc.)
	Disbursement oversight (to schools and other public works, to tax authorities, to winners).

All those expenses are paid for by the amounts that players pay for their game.  The winnings are what is left over after expenses and disbursements to public works.  Taxes are deducted from the winnings of the specific player once that player reports his claim to the lottery.

A SPONSORED lottery is normally called a sweepstakes.  Sponsored games are free, and are an enticement for players to provide their name, address, and telephone number for marketing and advertising purposes.

Where does the money come from?  From advertisers.

The most important information for advertisers is called demographics.  'Demo' - from the Greek "demos" meaning  POPULACE or the people; and 'graphic' - relating to a written or pictorial presentation.

Briefly, demographics tell advertisers who is spending money and what they are spending it on.  And that information is so important that advertisers are willing to spend a great deal of money to get it.

On top of that, new Internet laws are cracking down on Spam (unsolicited emails).  While the laws don't have much bite to them right now, they will be stronger as time goes by.  Advertisers must look to the future.  There is so much money to be made on the Internet that merchants simply cannot afford to miss even one day of advertising.

This means they are willing to buy your permission to send you email advertising.

So they sponsor sweepstakes, or free betting games with any number of catchy and traditional names, in return for your information and the right to send you advertising.

Many advertisers get together and set aside a portion of their profits to send out as sweepstakes winnings, and you will find a profile of one such advertiser-sponsored game site at GroupLotto vs. Lottery Scams.

REMEMBER! A RESPONSIBLE ONLINE LOTTERY OR SWEEPSTAKES:

	Requires that a person register in order to play.
	Provides an online account for each player.
	Provides full corporate information so that anyone can verify licenses, registrations, complaints, corporate officers, and the existence of outside agents without relying on the claims of that corporation or agent.
	Does not require any fees to be paid in advance of disbursing winnings.
	Encourages you to talk about them - there is no confidentiality required.  On the contrary, talking about your winnings is encouraged so that others will participate.
	Does not get the winning numbers mixed up.
	Has well-defined and easy to read Rules, and the responsible corporation and/or government commission is plainly listed in these Rules so that you can research everything about that lottery or sweepstakes on your own.
	Deducts whatever expenses and/or taxes are required as listed in the Rules or under the Terms and Conditions, or are available by contacting the company.  These expenses and/or taxes are deducted from the winnings before disbursement. CAUTION: not all sweepstakes deduct taxes - in some cases they are reported to tax authorities and it is up to the player to report winnings as income and pay the taxes accordingly. US State lotteries may withhold state taxes, but do not withhold federal taxes.  The winnings are reported to the IRS by the state lottery agency, and it is the responsibility of the winner to report his or her income from lottery or sweepstakes winnings.

EXCEPT FOR TAXES YOU PERSONALLY PAY TO YOUR OWN GOVERNMENT, THE AMOUNT LISTED AS YOUR WINNING AMOUNT IS FINAL.

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