One of my most vivid childhood memories involves sitting on the couch in my family’s old home watching an NFL playoff game. There’s a break in the action, and as commercials flash across the screen, something catches my eye.
It’s one of those corny Publishers Clearing House commercials shouting about how one lucky entrant is about to win $5,000 a week for life. The winner, a kindly older woman, looks so happy holding her oversized check.
This memory remains fresh because it’s the first time I can recall thinking, “No way. That’s too good to be true.” Even as a kid, I knew the devil is often in the details.
Can You Really Earn a Side Income Through Contests & Giveaways?
I never bothered to enter a Publishers Clearing House contest, but I’ve participated in plenty of lower-key contests and giveaways over the years. I’ve also done a good amount of research on the contest and giveaway landscape, and some things have become abundantly clear.
Like gambling at casinos and playing a state lottery, participating in contests and giveaways is not a suitable replacement for regular income. The overwhelming odds are that you’ll never win a substantial prize, so don’t plan on making enough to replace your regular income.
But that’s not to say you shouldn’t play at all. A modest cash prize, retailer gift card, or tickets to your favorite sports team’s next home game could still be in your future. Here’s what you need to know before getting started.
Common Types of Contests & Giveaways
Most contests and giveaways fall into one of these four categories. Some fall into more than one — for instance, contests pairing generous all-cash grand prizes with lesser merchandise prizes for runners-up.
1. Cash Prizes
Cash prizes are popular because you can use your winnings however you choose. Payouts are usually made via paper check, direct deposit, or secure peer-to-peer transfer such as PayPal. Payouts may be one-time or recurring. Publishers Clearing House, for example, offers prizes that pay out weekly, monthly, and annually for life.
Under IRS rules, nonprofit contest sponsors may be required to withhold 25% of the cash prize to cover the winner’s federal tax bill.
2. Gift Cards & Certificates
In terms of versatility, gift cards are second only to cash. Gift cards and certificates may be merchant-specific, such as store gift cards, or general-purpose like Visa, Mastercard, or Amazon gift cards.
Bear in mind that gift cards may be treated as cash for tax purposes.
This category covers everything from throwaway items like coasters and notebooks to high-value durable goods like luxury cars and boats.
One particularly generous example is the HGTV Smart Home 2018 giveaway, whose $1.6 million prize package included a 3-bedroom, 3.5-bath home in coastal South Carolina, $100,000 cash, and a Mercedes-Benz 2018 GLC 350e 4MATIC plug-in hybrid.
Examples: Polaris Slingshot giveaway (ends Sept. 30, 2020)
4. Experiences & Entertainment
This category covers everything from regular-priced movie tickets to front-row seats at celebrity-studded special events to all-expenses-paid international vacations.
Like merchandise prizes, experience prizes are often eclectic. The 48th annual Pillsbury Bake-Off Contest grand prize, for instance, included a trip to New York City, a magazine feature, a kitchen remodel, and $50,000 cash. ExxonMobil’s “Every Fill-up Is a Chance to Win” Promotion grand prize included a three-day, two-night trip for two to the 2018 NBA Finals: round-trip airfare, two nights in a hotel, two tickets to a Finals game, and $500 in spending money — all told, an estimated $5,000 value.
8 Tips to Win More From Contests & Giveaways
Follow these best practices to increase your chances of winning valuable prizes and boost your total contest and giveaway earnings.
1. Enter as Many Contests as You Can (and as Often as You Can)
Electrical engineer Hunter Scott devised an ingenious time-saving tool for serial contest entrants. As CNN Money reported, Scott created a bot that relentlessly scans Twitter for free, easy-to-enter contest opportunities. He claims the bot won him more than 1,000 contests and giveaways in less than a year, although most prizes had little tangible value.
You don’t have to go to such great lengths to increase your odds of winning — and probably shouldn’t because as many contests explicitly ban bot-assisted entries. Scott won less than 1% of the contests he entered, and there’s no reason you should expect to do better. That said, the laws of probability do favor frequent entrants.
When contests allow multiple entries per person, enter as often as practically possible. This may require taking a specific action each day, or multiple times per day, for the duration of the contest. You’re the judge of whether the effort is worthwhile to you.
2. Take Extra Action to Earn Bonus Entries
Contest sponsors often reward entrants willing to go the extra mile to increase their odds of winning. They might dole out additional entries to participants who share a promotional message on social media, sign up for an email list, or join a customer loyalty club.
Always be on the lookout for these opportunities; they rarely require much time or effort on your part. One of my favorite travel vendors, Scott’s Cheap Flights, periodically runs free flight giveaways that provide extra entries to participants who post referral links on their social media accounts.
3. Create a Master List to Stay Organized
You can bookmark multiple websites with long, aggregated lists of prize opportunities that change daily, but you’ll keep better track of everything with a spreadsheet or text document of your own making.
Format this list however you see fit. Include any information that will help you decide whether to participate and then help you stay on top of each entry, such as:
- Sponsor and contest name
- Prize types and amounts
- Number of entries allowed
- Entry requirements
- Entry deadline
- Notification date
- Claim window and method
- Other important details such as transferability and bonus entry opportunities
Use a color-coding scheme to track and organize your contests by category:
- Contests you’re considering but haven’t yet entered
- Contests you’ve entered
- Contests you haven’t won
- Contests you’ve won, including prizes won
When contests recur monthly or annually, save prior iterations on your list to track how prizes and entry requirements change over time.
4. Find Opportunities That Align With Your Talents
Plenty of contests are so easy you could practically enter them in your sleep, but the most fulfilling opportunities ask more. If you have the bandwidth and inclination to enter contests that require more than an email address or a social share, look for entry requirements that speak to your interests or align with your talents, such as a fantasy short story, a witty photo caption, or an artistic Instagram post with the perfect hashtag.
A couple of years back, on a flight to Seattle, I came across what seemed like a slam-dunk contest opportunity in the in-flight magazine. To enter, all you had to do was pose with the magazine in any destination served by the airline. The prize: 20,000 airline loyalty miles, enough for a flight to any city in the continental U.S. The most recent winner had posed at sunset before a marshy lake in Orlando, Florida — pretty, but underwhelming, I thought. I could do better.
Well, I tried. Once we were on the ground, I pocketed the magazine, took the train into the city, hiked up to the base of the Space Needle, and took what I assumed would be the perfect Seattle selfie.
Sadly, it wasn’t. The photo was horribly backlit, the magazine’s cover barely visible, and there was a glowing orb where the observation deck should have been. I tried different angles and poses, but nothing worked. Clearly, I wasn’t cut out to be a photographer. In the end, I didn’t even bother sending in a photo entry.
The experience was fun but humbling. Next time, I’ll stick to writing, something I know I’m good at.
5. Seek Out Contests With High-Probability Prizes
Publishers Clearing House’s grand prizes aren’t technically too good to be true because people do win them occasionally. But the likelihood of any one entrant striking pay dirt is exceedingly low.
Not all contests are as destined to disappoint. Some sweepstakes offer thousands or even tens of thousands of individual prizes. Usually, higher-probability prizes are lower in value — think movie tickets, umbrellas, small-denomination gift cards, and free subscriptions to a digital content streaming platform.
But remember our intrepid developer friend. Enter a few hundred low-value sweepstakes, and you’re bound to win a consolation prize or two.
6. Look for Contests With Transferable Prizes
Many sweepstakes tell entrants to take it or leave it. If you don’t like the prizes being offered, they say, don’t bother entering.
Some contest sponsors are more flexible and allow winners to transfer or exchange their prizes for something of comparable or lesser value — most often cash or cash equivalents. Transferability is an attractive perk for picky entrants who can’t pass up the opportunity to win a valuable prize but don’t particularly care for the prize itself.
Scan the contest’s fine print for provisions explicitly excluding transfers. If you can’t find any definitive language, ask the contest sponsor directly.
7. Sell or Gift Unwanted Merchandise Prizes
You might not want the tangible prize you just took home, but you can bet someone will.
There’s a ready market for durable, high-value prizes like cars. Maximize your shiny new auto’s value by selling it in a private-party transaction or take it to the dealer and offload it faster for a discount. Just be mindful of the tax consequences of these maneuvers. You may be required to pay tax on the fair market value of the car when you claim it and on the proceeds from its subsequent sale.
You can find a second life for lower-value prizes too. Amazon and eBay are great options to quickly and fairly sell unwanted merchandise. In many neighborhoods, garage sales also work well. If all else fails, donate prizes to a worthy charity or use them to build an emergency reserve of low-cost holiday gifts and birthday gifts.
8. Sell or Trade Unwanted Gift Card Prizes
The Internet is teeming with reputable platforms for buying and selling gift cards at a discount or face value. Two of the most popular sites are Raise.com and CardCash. Before selling your cards, compare offers from multiple sites to ensure you’re getting the best possible deal.
Reality Check: 7 Limitations to Keep in Mind
Participating in contests and giveaways isn’t all fun and games. Keep these seven caveats in mind as you play.
1. Your Winnings Won’t Replace Your Regular Income
It’s unrealistic to expect contest and giveaway earnings to replace your regular income. Just as the overwhelming majority of lottery enthusiasts go their whole lives without winning the Powerball jackpot, most contest and giveaway entrants end their playing days with nothing more than some modest cash or merchandise prizes to show for their efforts.
Don’t quit your day job in the hopes of becoming the next Publishers Clearing House grand prize winner. If you’re looking to supplement your 9-to-5 income, a better bet is to look for lucrative side gigs or strike out on your own as a freelancer .
2. You May Have to Pay Taxes on Your Winnings
Generally, prize winners are responsible for paying state and federal taxes on their hauls. This is the case even when contest sponsors fail to furnish the appropriate tax forms or withhold portions of payouts. Such oversights don’t absolve winners of their obligations.
With or without official income statements, calculating the value of cash prizes is a straightforward matter. For noncash winnings, the best practice is to calculate the fair market value of your prize as soon as you receive it. For smaller, more common items, you can use a reputable charity’s donation guide — Goodwill’s is a good example. For more valuable items like cars, use a reputable resale engine such as Kelley Blue Book .
Bear in mind that fair market value is not necessarily equal to face value or resale value; it’s often lower. So don’t take the contest sponsor’s value assessment as gospel, and don’t be shy about seeking a professional appraisal if you suspect a substantial discrepancy.
Some contest sponsors sweeten the prize pot by agreeing to cover winners’ tax obligations. Under IRS rules, and depending on the size of the prize and your effective tax rate, this could increase the total take-home value of your prize by 25% or more. It pays to seek out prizes that don’t sock you with an extra tax bill, although they’re the exception rather than the rule.
3. Notification Can Take Weeks or Months
Once you send off your contest entry, you can expect to wait. And wait. And wait some more, right through the entry deadline.
Contest organizers based in the U.S. should clearly indicate when they’ll choose and notify prize winners. If you can’t find this information in the contest terms, contact the sponsor; they’re obligated to tell you. What they’re not obligated to do is notify winners promptly. This is another reason to be organized. Recording the contest deadline and notification date means you’re less likely to let a prize slip through the cracks after weeks of radio silence.
4. You Never Have to Pay to Play
In the U.S., contest sponsors are prohibited by law from requiring payment for entry. They must give you an opportunity to enter a contest or sweepstakes without providing anything of value — that’s what “no purchase necessary” means. Pay-to-play contests are invariably scams.
5. Do Your Due Diligence on Sponsors
Speaking of scams, the contest and giveaway spheres are rife with them. Many scams are easy to see through, but some are surprisingly sophisticated, often masterminded and managed by experienced hucksters.
The Federal Trade Commission has a comprehensive primer on spotting and avoiding prize-related scams. It lists common warning signs like:
- You have to pay to enter
- Your “entry” involves wiring money to a foreign country, sometimes after depositing a check — which inevitably turns out to be fake — into your bank account
- The offer seems to come from a reputable company like Publishers Clearing House, but closer examination reveals it’s actually an imposter
- Your prize notification comes via bulk mail rather than by secure methods like certified or registered mail
- Your prize notification comes via cold call
- Your prize is conditional on your attendance at a sales meeting
The best way to avoid scams is to conduct exhaustive due diligence on contest sponsors. Check their business registrations and other filings, which are usually available from their home states’ Secretary of State offices or equivalent business registration agencies. Read reviews from past customers or entrants, as well as complaints filed with state authorities and entities like the Better Business Bureau .
When in doubt, skip out. There are plenty of legitimate opportunities out there.
6. Don’t Use Your Main Email Address to Enter
It’s wise not to use your primary email address to enter contests. Unless you like spam, that is.
I have several friends who use “burner” email addresses to more easily sort their promotional mailing lists and loyalty club memberships. If you plan to enter lots of contests and giveaways, create an email address solely for that purpose and get in the habit of checking it a few times a week.
7. Read the Fine Print
Always read the fine print before entering a new contest.
Even low-value prizes may come with strings attached. For instance, that free year’s subscription to a streaming video service could carry an auto-renew clause, adding a recurring line item to your budget just small enough to escape your notice.
When bigger, more valuable prizes are involved, you should get extra comfortable with any restrictions, limitations, or obligations that may affect your enjoyment of the prize or unexpectedly sock you in the wallet. Common examples are nontransferability — no option to swap a tangible or experiential prize for cash — and restrictions on use, such as tickets that are only good for a specific concert rather than any event in a broader time window.
Bear in mind that even nonwinning entries may involve unpleasant caveats or obligations. For instance, if you consent to use a third-party app to create and post social media content about your entry, you give that app access to a wealth of potentially private or sensitive information such as your friends and followers, contact information, and birthdate.
Finally, some contest sponsors use cash or merchandise prizes to conceal their real business: collecting and selling entrants’ personal information to third-party marketers. That’s how companies like PrizeGrab earn money. By entering their contests, you consent to what many consumers consider downright invasive treatment. But if the prospect of earning a tidy prize offsets whatever concerns you might have, go for it.
The Space Needle debacle dampened my appetite for contest entries, at least temporarily. In retrospect, I realize I fell victim to a variation on the gambler’s fallacy: I was so sure my entry would be better than all the others that I took it personally when I didn’t win. My unrealistic expectations only made my disappointment greater.
I’m back on the contest bandwagon now, a bit wiser than before. If there’s one piece of advice I wish I could give my younger self, it would be: “Relax. It’s only a game.”
Do you enter contests or giveaways often? What’s the most valuable prize you’ve ever taken home?