Is it illegal to hold online cash drawings?

Question

Are there laws in the US about holding online lotteries? I have seen alot of scam news from the UK.

Answer 1

The quick and simple answer is yes. A cash drawing falls under the lottery clause and you cannot hold one. However you can hold a raffle or drawing for a prize, however that prize cannot be money. You must also give them something when they give you money like a ticket because they are not actually purchasing a chance to win money they are purchasing a ticket that will enable them to win money.

You can also give money away to people who sign up, but you must provide the US with a tax ID in order to do so and provide the government with the winning persons social security number in order to pay taxes on their winnings.

In short the government doesn't want you scamming people out of millions of dollars.

Check your local and state regulations on creating lotteries, raffles, drawings and other prize oriented contests. You must use specific verbiage in order for your contest to be legitimate.