Giveaways are one of the best ways to grow a Twitch, YouTube, or Kick channel — but they also come with legal and tax responsibilities that most streamers never think about until something goes wrong. Prize winners expecting a delivery, the IRS asking about reported "income," and platform moderators flagging non-compliant promotions all become real problems at scale.
This guide covers the basics in plain English. It's not legal advice — for anything high-stakes, talk to a lawyer or CPA who understands creator businesses.
Sweepstakes vs Contests — The Critical Distinction
Under US law, there are three key elements that determine whether a promotion is a sweepstakes (legal to run) or an illegal lottery:
- Prize — a valuable reward (this is what you're offering)
- Chance — winner determined by randomness
- Consideration — a payment or effort to enter
The legal rule: you can combine any two of these three, but not all three.
- Sweepstakes = Prize + Chance. Anyone can enter for free.
- Contest = Prize + Consideration. Winner determined by skill, not chance.
- Lottery (illegal) = Prize + Chance + Consideration. This is what you must avoid.
For streamers: if you require a viewer to subscribe, donate, or purchase something to enter — and the winner is chosen randomly — you've just created an illegal lottery in most US states.
Is a Sub-Only Giveaway Legal?
This is the single most common question we get. The short answer: sub-only giveaways are risky and often technically non-compliant.
The Federal Trade Commission and most state attorneys general treat "subscribe to enter" as consideration — because you're receiving money (sub revenue) in exchange for entry. Combine that with random selection, and you have the three elements of a lottery.
What Actually Works
There are three legitimate ways to reward subscribers without creating a lottery:
- Free alternative entry. Give subscribers bonus chances, but also allow free entry via a form, Discord reaction, or chat command. Everyone has a legal path to enter.
- Skill-based contest. Require a creative submission (best clip, best caption, best meme) — subs get priority review, but the winner is judged on merit, not chance.
- Loyalty giveaway (with free entry). Reward long-time viewers based on watch time. Watch time isn't consideration because viewers didn't pay for it — but random selection still requires some free entry component to be safe.
If in doubt, always include a free entry method. It's the single most effective way to stay compliant.
Age Restrictions
Every giveaway needs an age rule in the official rules. Standard practice:
- 13+ — minimum age for any giveaways involving digital rewards (games, gift cards, Discord Nitro)
- 18+ — required for physical prizes, cash, or anything requiring a shipping address in some states
- 21+ — required if the prize involves alcohol, gambling, or age-restricted items
Also: for winners under 18, you'll typically need written permission from a parent or guardian before awarding the prize. If that sounds like too much work, just make it 18+.
Tax Reporting — The Part Nobody Warns You About
In the US, prizes are taxable income for the winner. If you're running a giveaway, you have a reporting responsibility.
The $600 Rule
If a single winner receives a prize worth $600 or more, the IRS requires you to collect their information (W-9 for US persons, W-8BEN for non-US) and file a{" "} Form 1099-MISC reporting the prize value.
Under $600
You're not required to file a 1099, but the winner is still legally obligated to report the prize as income on their own taxes. Most streamers handle this by stating in the official rules that "winners are responsible for any applicable taxes."
Practical approach
- Keep prizes under $600 in value if you want to avoid paperwork. Gift cards in the $25–100 range work well.
- For higher-value prizes, collect winner information and file the 1099-MISC form at year-end. You can use online services or ask your accountant.
- Keep records. Document every giveaway: date, prize, value, winner handle, and confirmation of delivery.
Platform Rules You Must Follow
Twitch
Twitch's Terms of Service require that giveaways comply with all applicable laws. Twitch itself doesn't regulate giveaways much, but you're still on the hook legally. The platform will not protect you from a state attorney general's investigation.
YouTube
YouTube requires giveaways to have official rules and include a free entry method. Read their{" "} Community Guidelines section on promotions if you're running regular giveaways.
Kick
Kick's rules are less developed but follow the same principle: comply with local laws, include a free entry method, publish official rules.
What to Include in Official Rules
Every giveaway should have a short set of official rules. Minimum requirements:
- Eligibility: Age, geographic region, and any exclusions (e.g., "void where prohibited")
- Entry period: Start and end date/time in a specific timezone
- How to enter: Step-by-step, plus the free entry method
- Prize description: What the winner receives and approximate retail value
- Winner selection: How and when winners are chosen (random draw, skill-based judging, etc.)
- Notification: How winners will be contacted and by when
- Taxes: "Winners are responsible for any applicable taxes"
- Sponsor info: Your legal name or business name and contact email
You can host the rules on a simple page on your website, a pinned tweet, or a Google Doc. Just have them somewhere accessible.
Where to Publish Your Rules
Three common options:
- Command in chat — "!rules" that links to a Google Doc or webpage
- Panel under your stream — link to the rules in your channel description
- Separate page on your website — the most official-looking option
Practical Compliance Checklist
- Free entry path exists. Anyone can enter without paying.
- Age restriction stated. 13+, 18+, or 21+ as appropriate.
- Region restrictions stated. "US only" or "worldwide except where prohibited."
- Official rules published. Somewhere accessible with the elements above.
- Winner selection method documented. Random draw or skill-based.
- Tax responsibility stated. Winner pays applicable taxes.
- Records kept. Every giveaway logged with date, prize, winner, and delivery confirmation.
- Winner verification. Confirm age and eligibility before awarding.
- 1099-MISC filed if prize ≥ $600. Use a service or your accountant.
What About Random.org and "Provably Fair" Claims?
Using a tool like SelectAWheel that uses cryptographically secure randomness helps you demonstrate fairness — but it doesn't make a giveaway legally compliant on its own. Fairness and legality are two different things.
A technically perfect random spin from a sub-only giveaway is still legally a lottery in most US states.
Use both: secure randomness for fairness, and legal design for compliance.
Author
SelectAWheel Team — we build and maintain the free SelectAWheel wheel spinner. This article is educational and not legal advice; consult a lawyer or CPA for your specific situation. Reach us at admin@selectawheel.com.
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