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ARTICLE · 25 JANUARY 2012

Final Settlement Reached In Class Actions Against Premium SMS Sweepstakes

Perkins Coie LLP
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NBC, FOX Broadcasting and other defendants reached a multi-million dollar settlement with plaintiffs in multiple California class action lawsuits alleging that American Idol and Deal or No Deal SMS sweepstakes were illegal lotteries.

United StatesMedia, Telecoms, IT, Entertainment
Kirk Soderquist
Kirk Soderquist
Jason Howell
Jason Howell
Sarah Lysons
Sarah Lysons

NBC, FOX Broadcasting and other defendants reached a multi-million dollar settlement with plaintiffs in multiple California class action lawsuits alleging that American Idol and Deal or No Deal SMS sweepstakes were illegal lotteries. The settlement—which was approved by a California federal district court on December 20, 2011—marks the end of over four years of litigation and highlights the significant financial liability that sponsors and related companies could face if their promotions (contests and sweepstakes) are not carefully structured to avoid potentially violating lottery and gambling laws.

Premium SMS Sweepstakes Litigation

It is illegal under state and federal lottery laws to require someone to provide consideration (e.g., pay money or expend significant effort) to enter a promotion in which he or she may win a prize if the award is based on a sufficient degree of chance (e.g., a random drawing). In other words, a promotion typically will be considered

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