Last week, the New York Road Runners (“NYRR”) settled a class action lawsuit regarding their famed New York City Marathon and other New York-area races. The class action lawsuit was filed in March 2016, alleging that NYRR charged prospective runners a non-refundable processing fee of up to $11, whereby the entrants had a chance to win the right to participate in the marathon or half marathon. In connection with the settlement, NYRR will issue race credits to certain runners for the non-refundable fees paid. For the next three years, NYRR will not charge any fee to an individual to enter a drawing for a non-guaranteed entry into its races, nor will NYRR apply for a license to conduct a lottery in New York. Interestingly, NYRR will disclose that for the next three years, it will select runners based on specific criteria, including promotion of geographic diversity, among other factors. NYRR will also make a $100,000 donation to the City Parks Foundation and pay legal fees to plaintiff’s counsel not to exceed $650,000.

TAKEAWAY: Random drawings with a purchase must have a non-purchase method of entry. Importantly, purchases made should be for goods or services, and not solely for the chance to win a prize.