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ARTICLE · 20 OCTOBER 2021

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NFT Contests And NFT Sweepstakes: What Businesses Need To Know

Klein Moynihan Turco LLP
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NFTs (short for non-fungible tokens) represent a rapidly-growing industry in the online space. As evidence of this trend, sales of NFTs exceeded $2 billion in the first quarter of 2021 alone.

United StatesTechnology
David O. Klein
David O. Klein
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NFTs (short for non-fungible tokens) represent a rapidly-growing industry in the online space. As evidence of this trend, sales of NFTs exceeded $2 billion in the first quarter of 2021 alone. In an effort to attract consumers in this increasingly competitive environment, NFT purveyors frequently turn to promotional NFT contests as a marketing tool.

However, there are legal issues that frequently arise when contests are added to the mix. For example, NFT sellers may allow entry into contests to be achieved via the purchase of NFTs. But unless a free alternative means of entry ("AMOE") is also provided, it is likely that these contests would violate applicable state lottery laws. There are serious regulatory repercussions for violation of any of these laws. Given the risks, it is essential that NFT purveyors that wish to operate NFT contests retain attorneys who have experience in the laws applicable to both NFTs and sweepstakes promotions to assist them.

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