You see them promoted in stores, on social media, and in the pages of magazines. Win a trip to Orlando! No purchase necessary! Void where prohibited by law! Not responsible for lost or stolen entries! You must be 18 or older!

So many disclaimers, so little chance of winning. Or is there? That depends on whether you plan on submitting an entry to a contest or a sweepstakes. While some people might use the two terms interchangeably, there’s actually a huge difference between the two—and if you’re in charge of the promotion, not understanding that can carry serious consequences.

Simply put: a contest is a competition in which entries are judged on merit; a sweepstakes winner is determined by random chance. In a contest, you might be evaluated based on an essay, a cheesecake recipe, or some kind of design. A panel of judges makes a subjective determination based on the judging criteria outlined in the fine print.

In a sweepstakes, luck takes the place of talent. All entries are given equal consideration and tossed into a random drawing. Publishers Clearing House doesn’t require you to write a poem on why you deserve the jackpot; they just pluck a winner from a pile.

Here’s where it gets slightly tricky. According to scattered state laws and federal law, charging money for a sweepstakes entry would classify it as a lottery—and that’s usually illegal, unless it’s being sponsored by a state's government. (That’s where the “no purchase necessary” phrase comes in handy.) Contests, on the other hand, can charge an entry fee since there’s a degree of skill involved.

You might think that major giveaway sponsors would know the difference, but that’s not always the case. In 2006, the CVS pharmacy chain was ordered to pay $152,000 in civil penalties in New York after they promoted a “sweepstakes” in which entries were automatically submitted for customers buying Nicorette gum; the chain didn’t make the offer available to people who didn’t buy the product.

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