There’s been a win and a loss the last few days in the legal realm of sweepstakes and contests. Whether that’s due to chance or skill on the part of the lawyers involved we can’t say. On the winning side, a federal court judge in New York ruled that poker is a game of skill and not chance. (Clearly he had watched James Bond in Casino Royale). In doing so the judge tossed out the a conviction of a man under the Illegal Gambling Business Act, which the defendant’s lawyers argued covered only games of chance such as slot machines and lotteries. The Judge’s opinion included a lengthy analysis demonstrating how experienced poker players have an odds on advantage against less experienced opponents (something you might think about the next time you’re in Vegas.) Still to be determined is whether the ruling affects other efforts to either tighten or loosen restrictions on online poker.
On the losing side of the house, the FCC on Tuesday issued a formal notice to CBS Radio finding that the company violated FCC regulations by failing to conduct a consumer contest as advertised and proposing a fine of $10,000.
In the summer of 2011 a CBS radio station in North Carolina ran a “Carolina Cuties” contest where listeners’ could submit a picture of their baby on the station’s website, with the grand prize winner determined by public voting. A listener who clearly thought his or her baby was a “cutie” complained that broadcast announcements about the contest said that voting would end on September 5, 2011 but the station’s website and emails to the contest finalists listed September 4th as the voting deadline.
The FCC has specific rules that a broadcast licensee that offers a prize promotion must disclose the material terms of the promotion (including the time and means of selecting winners), and must conduct the promotion substantially as advertised. The FCC was not swayed by CBS Radio’s explanation that the discrepancies were due to its staff’s inadvertent errors. The FCC observed that inadequate oversight of the staff does not excuse the company’s failure to administer the promotion as advertised. CBS Radio also submitted that the errors did not put any contest participants at an advantage or disadvantage because voting remained open until the originally announced closing date. The FCC rejected that argument, noting that actual consumer harm is not necessary in determining a violation of the relevant FCC rule, and that there was actual and potential harm. According to the agency, the complaining consumer was harmed as a result of being confused by the inconsistent voting deadline announcements, and other participants may have been harmed in the same manner.
The FCC enforcement action against CBS Radio demonstrates that prize promotion sponsors can be held responsible for what may seem to be minor, technical slip-ups in the administration of a promotion. In addition to enforcement actions by regulators like the FCC, the Federal Trade Commission, or state consumer protection agencies, a promotion sponsor could face a consumer class action over problems in running the promotion.