Answers to your promotional and service questions

Arrowhead provides end-to-end management for sweepstakes, contests, rebates, and coupons using a scalable, four-step onboarding process—Discovery, Design, Development, and Deployment—to ensure measurable success across industries like Automotive, Beauty, and Home Furnishings.

Getting started is a guided, four-step onboarding process:

1. Discovery: We define your program rules, discount structures, and legal requirements.

2. Design: We build the submission forms, coupon formats, and workflows.

3. Development: We integrate tracking, POS systems, and payment processing.

4. Deployment: Your program launches with active fraud monitoring and winner notification systems in place.

We specialize in sweepstakes management, skill-based contests, manufacturer coupon redemption, and consumer rebate processing. We also offer gamification strategies and social media promotion design to drive brand loyalty.

Yes. While we serve some of the world’s largest consumer brands, our product-based solutions (like QTM) are designed to be scalable for companies of all sizes.

We have over 40 years of expertise across a wide variety of sectors. Our most common industries include Animal Health, Automotive, Beauty, Beer, Wine & Spirits, Cannabis, Consumer Packaged Goods, Healthcare & Pharmaceutical, Sporting Goods, and Tobacco. However, we have served many others, including Home Furnishings and broad Manufacturing.

For a new client, the timeline is typically 3 to 8 weeks depending on the complexity of the project. This ensures we can complete our full, guided onboarding process and rigorous technical testing. Current clients are able to launch significantly faster because they have already completed the initial onboarding and platform configuration phases.

A sweepstakes is a game of chance where winners are selected at random. A contest is a game of skill where winners are chosen based on specific criteria. Legally, this distinction is critical for how we draft your official rules.

Yes. We manage the entire lifecycle, including prize procurement, secure storage, and direct fulfillment to winners.

Absolutely. We specialize in drafting official rules, terms, and conditions to ensure total legal compliance across all relevant jurisdictions.

Yes. We manage the random selection process for sweepstakes and the verification of winners to maintain the total integrity of your promotion.

During our Development phase, we implement specific protocols for verifying winner eligibility and handling legal notifications.

We streamline the experience for both brands and customers. Participants can use mobile-optimized platforms to upload receipts directly from their devices. Once submitted, our systems perform accurate validation and built-in fraud checks before processing payments.

We manage digital, mail-in, and paperless options. Our platforms support various models, including loyalty integrations, refunds, and digital reward payouts.

Yes. We offer a full range of submission methods, including traditional mail-in, digital uploads, and entirely paperless options.

We perform accurate receipt validation and built-in fraud checks, identifying suspicious patterns to protect your budget.

As a manufacturer’s redemption agent, we manage the complete lifecycle of both digital and physical coupon programs, including direct-to-consumer mailings and branded digital deployments.

We implement strict fraud controls to ensure that only valid retailers and offers are reimbursed.

Yes. We provide timely redemption processing for retailer reimbursements, supported by dedicated call center services to handle retailer inquiries.

Yes. Our Promo Portal allows you to plan, activate, and track your coupon programs with detailed performance reporting.

To remain legal in the U.S., a sweepstakes must avoid being classified as an “illegal lottery.” This requires removing one of three elements: prize, chance, or consideration. Since sweepstakes involve a prize and random chance, you must remove “consideration” (payment or significant effort) by offering a free Alternative Method of Entry (AMOE).

As of 2026, New York and Florida require registration and bonding for any sweepstakes where the total prize pool exceeds $5,000. Rhode Island requires registration (but not bonding) for retail-based promotions with a prize pool over $500.

This is the “Equal Dignity” rule. It ensures that those who enter for free have the exact same odds of winning as those who may have purchased a product. Legally, it prevents your promotion from being labeled an illegal gambling operation.

Yes. Official Rules act as a legal contract between the sponsor and the participant. They protect you from liability and provide a pre-defined framework for resolving disputes, determining eligibility, and handling prize fulfillment.

While federal law is the baseline, states have specific “hooks.” For example, Arizona has strict requirements for skill-based contests involving purchases, and Virginia has a broader definition of “consideration” that can include minor tasks. California recently updated laws (AB 831, effective Jan 2026) specifically targeting “sweepstakes casinos,” making it crucial to distinguish marketing sweepstakes from gambling simulations.

International laws are far more varied. Many countries require a “skill-testing question” (Canada), government-witnessed drawings (Mexico), or a percentage of the prize value to be paid as a tax to the local government before the launch.

The big difference is Skill vs. Chance. Sweepstakes are random; contests are based on merit (like a photo or essay). Because contests are skill-based, you can sometimes require a purchase or entry fee (except in states like North Dakota). However, you must have clear judging criteria and unbiased judges to stay legal.

Bonding is a financial guarantee (a surety bond) that the prizes will be awarded. In NY and FL, for prize pools over $5,000, you must secure a bond to protect consumers. If the sponsor fails to provide the prize, the state uses the bond to compensate the winner.

You should allow 30–60 days. New York law requires filing at least 30 days before the promotion begins. Florida requires filing at least 7 days prior.

Non-compliance can lead to heavy civil penalties, “Cease and Desist” orders, and potential criminal charges for operating an illegal lottery. It can also cause a brand to be “blacklisted” from future bonding.

Per the latest 2026 FTC Guidelines, disclosures like #Ad, #Sweepstakes, or #Contest must be “clear and conspicuous.” They must appear at the beginning of the post or caption, before the “more” button, so they are visible on all devices without clicking.

Yes. You must state that “odds depend on the number of eligible entries received.” For games with a fixed number of prizes (like “1 in 500 wins”), the exact odds must be disclosed.

The AMOE must have “Equal Dignity” to the purchase method. It must be clearly disclosed, easy to find, and provide the same number of entries as a purchase would.

New for 2026: The IRS reporting threshold for Form 1099-MISC has increased from $600 to $2,000. Sponsors are now only required to collect a W-9 and issue a 1099 if the total prize value for a single winner reaches or exceeds $2,000 in a calendar year.

Yes, if the prize value hits the $2,000 threshold. However, keep in mind that the winner is still legally responsible for reporting the “Fair Market Value” of any prize as income on their personal taxes, regardless of whether they receive a 1099.

Yes, and for high-value or “experiential” prizes (like trips or events), it is a best practice. This protects the sponsor from being held liable for any injury or loss the winner may experience while using the prize.

Think of your documentation as your “audit insurance.” You should maintain a central file containing the final Official Rules, all marketing materials (emails, social posts, print), the full list of entrants, winner selection logs, and proof of prize delivery.

The industry gold standard is three to four years after the promotion ends. This timeline covers the statute of limitations for most state consumer protection laws and aligns with IRS audit windows. Some states, like New York, specifically require you to keep records for at least six months after the winners’ list is filed.

For any prize valued over the 2026 threshold of $2,000, you must keep copies of the winner’s Form W-9 and the 1099-MISC you issued. Even for smaller prizes, keep a ledger of the “Fair Market Value” (FMV) of what was given away, as these are deductible business expenses.

While you don’t always need to keep every physical entry (like 100,000 postcards), you must keep a digital record or database of all entrants until the promotion is closed and any potential disputes have passed. For digital entries, a secure database export is sufficient.

You need a “Selection Log.” This document should record the date, time, and method of the drawing. If you used an automated random number generator (RNG), keep the system log. If it was a judged contest, keep the scorecards from the judges to prove the selection wasn’t arbitrary.

Always keep proof of receipt. For physical prizes, keep shipping tracking numbers or signed delivery receipts. For digital prizes, keep the email “sent” logs or “claim” confirmations from your reward platform.

The biggest challenge is the “Strictness Standard.” You have to write your rules to satisfy the most restrictive state included in your promotion. This means navigating different definitions of “consideration” and varying registration thresholds (like the $5,000 limit in NY and FL).

We use a “Master Rule” strategy. We draft rules that meet federal standards and then add specific “state-mandated” language (like specific font sizes or disclosure terms) for states like Virginia or California to ensure the entire program remains compliant nationwide.

New York and Florida are the most hands-on due to registration and bonding requirements. Rhode Island is strict for retailers. However, as of January 1, 2026, California has become much more aggressive in regulating any promotion that even slightly resembles “sweepstakes gaming” (AB 831).

No. A single set of “Official Rules” can cover all states, provided they include the necessary localized disclosures (e.g., “Void in Hawaii”).

Yes. You have the legal right to limit your promotion to specific states. Many brands exclude New York and Florida simply to avoid the cost and administrative burden of registration and bonding.

Facebook (Meta) requires that you acknowledge the promotion is in no way sponsored or endorsed by them. You also cannot ask users to tag their friends in a photo or share a post on their personal timeline as a requirement for entry—this is a common violation that can get a page banned.

Instagram’s rules are similar to Facebook’s, but the FTC is particularly focused here. Because Instagram is a visual platform, your #Sweepstakes or #Ad disclosure must be in the caption before the “more” link, so it’s visible without the user having to click.

The FTC requires “Clear and Conspicuous” disclosure. If a participant is posting content to enter, they must include #Sweepstakes or #Contest in their post so their followers know they are posting for a chance to win a prize.

In registered states (NY/FL), you must file a “Winners List” with the state agency after the promotion ends. Federally, your primary reporting is via the IRS for prizes over $2,000.

Audits usually happen for three reasons: a consumer complaint to the Better Business Bureau or Attorney General, a tax discrepancy, or if you are running a high-volume promotion that triggers state registration reviews.

What are common compliance violations to avoid?

1. Changing the rules mid-promotion (never do this!).

2. Forgetting the AMOE (Alternative Method of Entry).

3. Failing to disclose the “Approximate Retail Value” (ARV) of prizes.

4. Poorly defined judging criteria for contests.

In 2026, the landscape has shifted toward automation. The most common threats are AI-powered “form-filler” bots that mimic human behavior, Professional “Sweepers” who use hundreds of synthetic identities to bypass entry limits, and Digital Forgery, where AI is used to create realistic but fake receipts for rebate programs.

We employ a sophisticated Three-Layered Defense that balances aggressive security with a seamless user experience. This “Zero Trust” approach ensures that every submission is verified through multiple filters before being accepted into your program:

1. Layer 1: Proactive 2FA (Two-Factor Authentication) To stop fraud before it starts, we offer 2FA to verify the identity of the participant in real-time. By requiring a one-time code sent via SMS or email, we effectively block 100% of automated bot attacks and “scripted” entries that cannot bypass a physical device check.

2. Layer 2: Proprietary AI Risk Scoring Submissions that pass 2FA are then analyzed by our proprietary technology. This system uses machine learning to flag suspicious patterns that a human might miss—such as “synthetic identities,” IP address spoofing, or behavioral anomalies (like a form being filled out in 0.5 seconds).

3. Layer 3: Expert Human Review Technology is powerful, but human intuition is the final safeguard. Any submission flagged by our AI as “High Risk” is manually audited by our compliance team. This layered approach allows us to catch the most sophisticated “professional sweepers” while ensuring legitimate customers aren’t accidentally disqualified.

We monitor for “velocity spikes”—sudden bursts of entries from a single geographic location or IP range. Other red flags include the use of “disposable” or “burner” email domains, repetitive alphanumeric patterns in names, and suspicious metadata in uploaded receipt images that suggest digital tampering.

When we detect a coordinated “fraud ring,” we immediately quarantine the entries and “black-hole” the associated IP addresses and device IDs. We then provide a detailed Fraud Forensic Report to our clients, giving your legal team the data needed to defend any mass disqualifications.

We utilize OCR (Optical Character Recognition) technology to scan every receipt. The system verifies the store name, date, specific product SKUs, and total price against your promotion’s requirements. Any “high-risk” receipts are flagged for human review.

This is the process of ensuring a participant actually bought the product. Beyond just looking at a receipt image, we can cross-reference transaction data with participating retailers to confirm the purchase was legitimate and hasn’t been returned.

We use “De-duplication” logic. Our system scrubs your database to ensure that the same person (verified by a combination of name, email, and physical address) hasn’t exceeded the daily or per-promotion entry limit defined in your Official Rules.

In automotive promotions, we use VIN (Vehicle Identification Number) Decoding. We check the VIN against national databases to ensure it’s a real vehicle, matches the make/model required, and isn’t being used by multiple people to enter.

First, the entry is “quarantined.” It isn’t deleted, but it is removed from the winner selection pool. This preserves the data in case your legal team needs to defend a disqualification or if the participant contests the decision.

We follow a Zero Trust Architecture. This means that data is encrypted both “at rest” (stored in our servers) and “in transit” (being sent from the user’s browser). We use AES-256 encryption, the same standard used by banks and government agencies.

Yes. For any promotion involving cash rebates or physical payments, we adhere to PCI-DSS (Payment Card Industry Data Security Standard). This ensures that sensitive financial information is never stored on our servers in an unencrypted or vulnerable format.

We use a combination of SSL/TLS certificates, WAF (Web Application Firewalls) to block malicious traffic, and advanced CAPTCHA (like Google reCAPTCHA v3) which stops bots without frustrating your real customers with “click the traffic light” puzzles.

Absolutely. In 2026, you cannot fight AI with manual checks alone. Our AI-driven Risk Scoring assigns a “trust score” to every entry. This allows legitimate customers to have a seamless experience while automatically slowing down or blocking suspicious traffic.

We use a hybrid pricing model designed to be both predictable and scalable. Our digital products (such as QTM, QTM Pro, and the Digital Hub) have standardized pricing for the platform license. For our transactional services, such as rebate processing and coupon redemption, pricing is based on the scale of the promotion—specifically the volume of submissions or redemptions processed. This ensures you only pay for the exact level of activity your program generates.

The total investment for a program is generally determined by these three primary factors:

1. Platform Choice: Whether you are utilizing a streamlined QTM setup or a more robust Digital Hub configuration.

2. Activity Volume: The scale of the promotion, specifically the number of rebates, coupons, or entries we are validating, processing, and storing.

3. Support & Security Layers: The specific “add-on” services you choose to include, such as 2FA (Two-Factor Authentication) for additional fraud prevention, Call Center support for participant inquiries, or Prize Fulfillment logistics

Yes. Every promotion requires a dedicated setup phase. This covers the technical configuration of your portal, security implementation, and the rigorous “pre-flight” testing required to ensure your program runs smoothly from day one.

Unlike a flat-fee digital license, rebate and coupon programs are priced according to the size and scope of the promotion. We look at the estimated number of claims to be processed, and the depth of validation required. This “per-claim” or “per-redemption” structure allows the cost to scale directly with your program’s success.

Yes. State filing fees and surety bonds are external costs mandated by state law (specifically for prize pools over $5,000 in NY/FL). We handle the administrative work of filing and bonding as an additional service, while the state fees themselves are passed through based on the specific requirements of your prize pool.

Every partner is assigned a dedicated account team that stays with you through every promotion you run. This isn’t a general support queue; you will work with a consistent team consisting of an Account Director, Account Manager, and Account Coordinators. This team understands your brand’s history, your specific compliance needs, and the nuances of your campaign, providing both strategic guidance and technical oversight.

We operate with strict Service Level Agreements (SLAs) because we know that in a live promotion, time is of the essence. Your dedicated team is available to address critical technical issues with immediate priority. For general inquiries or campaign adjustments, you can typically expect a response within a few business hours.

Yes, all reporting is centralized through our Promo Portal product. Rather than waiting for manual reports, you have the power to build your own custom dashboards and visualizations. This allows you to filter the data that matters most to your stakeholders—whether that’s entry volume, geographic heat maps, or conversion rates—giving you full control over your campaign’s story.

Absolutely. Because the Promo Portal is a live environment, you have 24/7 access to real-time performance metrics. You can watch your engagement grow and monitor transactional data as it happens. This data-driven transparency allows you to make informed, mid-campaign adjustments to your marketing strategy.

Yes. We offer omnichannel customer care as a modular add-on service. This includes help desk support via email, chat, or a dedicated call center. Our team acts as a professional extension of your brand, answering participant questions about rebate status or sweepstakes entry to ensure a positive consumer experience.