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CONTESTS, PRIZES CAN MEAN UNEXPECTED SURPRISES, LIABILITIES FOR BUSINESS EXECUTIVES

 CLEVELAND, Dec. 23/ PRNewswire/ -- As American businesses increasingly use sweepstakes, contests and prize drawings as marketing tools, they also increasingly need to be aware of how to plan and carry out such promotions while avoiding unintended costs and liabilities, including violation of federal and state anti-gambling laws.
 The risks of running a contest that can lead to problems are even greater among small businesses, according to Mark S. Edelman, an attorney in the Corporate and Securities Practice Group in the Cleveland office of the Ohio law firm of Benesch, Friedlander, Coplan & Aronoff. That is because it is among small businesses where promotions may be a relatively simple, inexpensive and effective marketing technique, but awareness of how to protect against unintended liabilities may be lacking, according to Edelman.
 "When business executives plan a promotion, the same care should be given as in any other business endeavor," Edelman said. "Just like a poor business decision, an improperly planned and executed contest can end up costing a business far more than anticipated."
 Adherence to a few key principles can help business executives plan their promotions in a way that reduces the chances of the business becoming the target of a lawsuit by a disgruntled contest participant or violating anti-gambling laws. They include:
 -- An adequate written description of the contest's rules must be made available to prospective participants, including precisely what prizes will be awarded, what a participant must do to win and how the winner will be determined.
 -- Employees and their families should not be eligible to participate, defusing the argument that the contest was not fairly conducted if such a person should win.
 -- The winner's obligations should be made clear, including that the winner will be responsible for taxes related to their winnings in the promotion.
 -- Winners should be required to execute an affidavit of eligibility and release prior to being awarded prizes. This may reduce the business' exposure to potential lawsuits by the winner claiming to arise out of the promotion. Such an affidavit might require the winner to state that he or she has complied with the contest rules, releases the business from any liability arising from the winner's contest participation and grants the business the use of the winner's name and likeness to promote the contest.
 -- To avoid having the promotion classified as a "lottery," which is prohibited except in very limited circumstances under both Ohio and federal criminal law, entrants must not be required to buy anything to participate or be required to do anything out of the ordinary to receive their prize. Running an illegal lottery is a first-degree misdemeanor in Ohio, punishable by a fine of up to $1,000.
 It takes only a careful analysis of a contest's rules and mechanics before the promotion hits the streets for business operators to protect themselves against the potential pitfalls, according to Edelman.
 -0- 12/23/92
 /EDITOR'S NOTE: Edelman is available for interviews at 216-363-4199/
 /CONTACT: Cathy Petryshyn, director of marketing, Benesch, Friedlander, Coplan & Aronoff, 216-363-4407, or Tammy Whitehouse, media relations manager, Wirtz Public Relations, 216-376-7115, for Benesch, Friedlander, Coplan & Aronoff/


CO: Benesch, Friedlander, Coplan & Aronoff ST: Ohio IN: SU:

SM -- CL004 -- 9479 12/23/92 10:16 EST
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Date:Dec 23, 1992
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