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People use these words as if they mean the same thing. They don't, and knowing the difference is the easiest way to spot a giveaway that isn't playing fair.
The three ingredients
A prize promotion can include three things: a prize, an element of chance, and a payment to take part (lawyers call this "consideration"). In the US, private companies generally can't run promotions that combine all three, because that is a lottery, and lotteries are usually run only by states.
Sweepstakes: prize and chance, but free
Winners are picked at random, so to stay legal a sweepstakes removes the payment. That is why you see "No purchase necessary" in every genuine sweepstakes, along with official rules and usually a free way to enter.
Contests: prize and skill
A contest picks winners by judging something, like a photo, an essay or a recipe, against published criteria. Because skill decides the winner, some contests can charge an entry fee, depending on state law.
Lotteries: prize, chance and payment
You pay for a ticket and winners are drawn at random. Official state lotteries are legal. A private "lottery" that asks you to pay, especially by gift card or wire transfer, is almost always a scam.
The quick test
- Picked at random and asks you to pay to enter or claim? Walk away.
- Says "No purchase necessary" and has official rules? Likely a real sweepstakes.
More warning signs: How to spot a fake sweepstakes. This guide is general information, not legal advice.