Untitled California Attorney General Opinion ( 1999 )

TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
BILL LOCKYER
Attorney General
:
OPINION : No. 98-1101
:
of : February 4, 1999
:
BILL LOCKYER :
Attorney General :
:
GREGORY L. GONOT :
Deputy Attorney General :
:
THE HONORABLE JAMES P. FOX, DISTRICT ATTORNEY, COUNTY
OF SAN MATEO, has requested an opinion on the following question:
May a charitable organization offer raffle tickets at $100 each or $500 for six
tickets, with an automobile as the contest prize, if all prospective purchasers are told they
may obtain one raffle ticket free?
CONCLUSION
A charitable organization may not raffle tickets at $100 each or $500 for six
tickets, with an automobile as the contest prize, even if all prospective purchasers are told
they may obtain one raffle ticket free.
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ANALYSIS
The question presented for resolution concerns whether a charitable
organization may conduct a raffle if it allows each participant to obtain one raffle ticket free.
Would the proposal violate the terms of Penal Code section 319,1 which implements article IV,
section 19, subdivision (a) of the California Constitution? The constitutional provision states:
“The Legislature has no power to authorize lotteries and shall prohibit the sale of lottery
tickets in the State.”2 Section 319 defines a lottery as follows:
“A lottery is any scheme for the disposal or distribution of property by
chance, among persons who have paid or promised to pay any valuable
consideration for the chance of obtaining such property or a portion of it, or
for any share or any interest in such property, upon any agreement,
understanding, or expectation that it is to be distributed or disposed of by lot
or chance, whether called a lottery, raffle, or gift enterprise, or by whatever
name the same may be known.”3
We conclude that the proposed raffle would violate the terms of section 319.
A lottery has three essential elements: (1) a prize, (2) distributed by chance,
and (3) payment of consideration. (Cal. Gas. Retailers v. Regal Petroleum Corp. (1958) 50
Cal. 2d 844, 851.) As section 319 indicates, a raffle is another name for a lottery. (71
Ops.Cal.Atty.Gen. 139, 153 (1988).) In a typical raffle, valuable merchandise (the prize)
is distributed by chance (drawing the winning ticket) to those who have paid a valuable
consideration for the chance to win the prize. (Ibid.)
Here we are given that the item to be awarded to the winner of the contest is
an automobile (see Holmes v. Saunders (1952) 114 Cal. App. 2d 389, 390 [automobile is
property which satisfies the prize element of a lottery]) and that the prize will be distributed
by chance (see People v. Cardas (1933) 137 Cal. App. Supp. 788, 789-790 [drawing the
winning ticket from a container is a method of distribution by chance]).
1
All undesignated section references hereafter are to the Penal Code.
2
The Constitution authorizes the California State Lottery as an exception. (Cal. Const., art. IV, § 19,
subd. (d).)
3
The Constitution (Cal. Const., art. IV, § 19, subd. (c)) and a statute (§ 326.5) allow charitable
organizations to conduct bingo games without violating section 319. Otherwise, all games of chance organized
for charitable purposes are subject to the state’s gambling laws (§ 319 - 337).
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We are also given that each ticket will cost $100, but that all persons solicited
for participation in the contest will be told that they may obtain one free ticket by contacting
a representative of the charitable organization at its headquarters. Prospective participants
will further be told that if they pay $500, they will receive six tickets. Thus, an extra chance
at winning the contest will be given to anyone paying $500. Do these circumstances provide
the third element–consideration paid for the chance to win–that is necessary to make this
particular fund-raising scheme an illegal lottery?
The question whether valuable consideration will be paid in the proposed
contest is to be determined from the standpoint of the holders of the tickets who might win
the prize, not from the standpoint of those who are conducting the event. (People v. Cardas,
supra, 137 Cal.App.Supp. at 791; Cal. Gas. Retailers v. Regal Petroleum Corp., supra, 50
Cal.2d at 860.) Accordingly, it is immaterial that the sponsor will not profit from the game
or that a worthy charity will be benefitted. (64 Ops.Cal.Atty.Gen. 114, 117 (1981).)
Since the statutory definition requires that the consideration paid be “valuable,”
it has been held that requiring a ticket holder to go to the contest operator’s place of business
to deposit the ticket stub cannot constitute the necessary consideration. (Cal. Gas. Retailers
v. Regal Petroleum Corp., supra, 50 Cal.2d at 861-862.) Similarly, it cannot be said here
of the proposed raffle that a holder of one free ticket, and no others purchased, will have paid
a “valuable consideration” simply by having to go to the headquarters of the charitable
organization to acquire the free ticket.
If a distribution of free tickets is “general and indiscriminate,” the plan is a
gratuitous distribution of property, not a lottery, because the ticket holders do not pay a
valuable consideration for their tickets. (71 Ops.Cal.Atty.Gen., supra, at 149.) However,
this requires that every chance to win be made freely available. (68 Ops.Cal.Atty.Gen. 275,
277 (1985).) A contest does not cease to be a lottery because some are admitted to play
without paying for the privilege, so long as others do pay for their chance to win the prize.
(People v. Shira (1976) 62 Cal. App. 3d 442, 460.) While a donation gratuitously given does
not constitute consideration (68 Ops.Cal.Atty.Gen., supra, at 276; 60 Ops.Cal.Atty.Gen. 130,
132-133 (1976)), a “donation” required to be given, whether to the contest operator or to a
designated charity, does constitute consideration (68 Ops.Cal.Atty.Gen., supra, at 277, fn.
2; 64 Ops.Cal.Atty.Gen., supra, at 116-117).
Here, all participants will be entitled to one free ticket. Hence, it could be
argued that anyone who pays $100 for a ticket will be making a voluntary donation because
an equal chance at winning the prize will be available for free. Nevertheless, since each
participant is limited to one free ticket, anyone paying more than $100 for additional tickets
must be considered to be paying “valuable consideration” for the additional chances to win
the new automobile. This is particularly true of those paying $500 because they will receive
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more than their proportional share of the chances to win.
In 64 Ops.Cal.Atty.Gen. 114, supra, we had little difficulty in concluding that
a game of keno, in which some players participated without paying anything and others made
a “donation” to a charity entitling them to greater prizes if they won, was an illegal lottery.
(Id., at p. 117.) Similarly, in the proposed scheme before us, some of the participants will
pay valuable consideration to increase their chances of winning the prize. They will obtain
a benefit not otherwise available to every contestant. As to those persons, the game is a
lottery and therefore the entire scheme is a lottery. (People v. Shira, supra, 62 Cal.App.3d
at 460.) In State v. Mabrey (1953) 245 Iowa 428 [60 N.W.2d 889, 893], in language relied
upon by the court in People v. Shira, supra, 62 Cal.App.3d at 460, and by our office in 64
Ops.Cal.Atty.Gen., supra, at 117, the court analyzed the relevant issues as follows:
“. . . [T]he game here was a lottery at least as to those who purchased
tickets. It did not cease to be a lottery because some were admitted to play
without paying for the privilege, so long as others paid for their chances.
Presence of the nonpaying participants did not change the status of those who
paid. If it was a lottery as to some who played the game it was nonetheless a
lottery.
“Unless we close our eyes to reality the conclusion is justified that in
actual operation ticket purchasers— perhaps unwittingly— paid for their own
chance at prizes and also for the chance of those who were admitted to the
game without paying. Thus presence of the non paying participants did not
change the essential character of the enterprise. Indeed, as several courts have
pointed out, opening a lottery to nonpaying participants is, in a sense, all the
more objectionable in that it reduces the chance for the prize of those who pay
therefor and would seem to be entitled to it.”
We therefore conclude that a charitable organization may not offer raffle
tickets at $100 each or $500 for six tickets, with an automobile as the contest prize, even if
all prospective purchasers are told they may obtain one raffle ticket free.
*****
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