Last Wednesday, Time Inc.’s “Sports Illustrated” brand and sweepstakes app provider Kizzang LLC (“Kizzang”) announced their upcoming $25 million College Basketball Bracket Challenge.

With potential prizes in the millions (or billions) of dollars, how can sweepstakes sponsors minimize their legal risk?

Kizzang’s Sweepstakes App and Sports Illustrated 2016 College Basketball Bracket Challenge

Formed in 2013, Kizzang is a sweepstakes app provider that sponsors games, sweepstakes and contests through its Web and mobile platforms. On March 9, 2016, Kizzang and Sports Illustrated announced their partnership for this month’s “Sports Illustrated 2016 College Basketball Bracket Challenge.”

Like other March Madness contest of its kind, any participant who can correctly predict the winner of all 63 games in the NCAA Men’s Basketball Tournament will win a cash prize – in Kizzang and Sports Illustrated’s case, a $25,000,000 prize. The promotion is accessible through Kizzang’s downloadable sweepstakes app.

March Madness Contest Mishap

As we reported previously, the sponsor of another March Madness contest faced legal issues before the promotion even came to fruition. When Yahoo! Inc. (“Yahoo”) wanted to offer a similar March Madness contest with SCA Promotions, Inc. (“SCA”) in 2014 with a $1 billion prize, Yahoo changed its plans and worked out a deal with Quicken Loans (and without SCA). SCA sued Yahoo, alleging breach of contract and claiming that Yahoo owed SCA nearly $10 million.

The district court ultimately granted Yahoo’s motion for summary judgment and dismissed the sweepstakes lawsuit. Although Yahoo prevailed at the federal district court level, SCA has appealed the ruling.

Legal Concerns for Sweepstakes Sponsors

Sponsoring a promotional contest or sweepstakes app or website can come with a number of legal risks – sometimes before the applicable promotion even gets off of the ground. Sponsors should ensure that they have taken every precaution to conduct their contest or sweepstakes in accordance with applicable regulations and third-party agreements.