Untitled Texas Attorney General Opinion ( 2000 )

OFPlCE OF THE ATTORNE” GENERAL. STATE OF TEXAS
JOHN CORNYN
February 2,200O
Mr. Brett Bray Opinion No. JC-0174
Division Director
Motor Vehicle Board Re: Whether a promotional contest that requires
Texas Department of Transportation entrants to take a “test drive” constitutes a lottery
200 East Riverside Drive, Building 150 under Texas law (RQ-0106-JC)
Austin, Texas 78768-2293
Dear Mr. Bray:
You ask whether an automobile dealer’s promotional contest that requires an entrant to
participate in a test drive as a condition of entry constitutes a “lottery” under section 47.03 of the
Penal Code. For the reasons set forth below, we conclude that it does not.
As you describe the scheme, an individual who visits an automobile dealer is eligible to enter
a drawing for a prize on the condition that he or she take a test drive in one of the dealer’s vehicles.
Section 47.03 of the Penal Code provides that a person commits a Class A misdemeanor “if he
intentionally or knowingly,” inter alia, “for gain, sets up or promotes any lottery.” TEX. PEN. CODE
ANN. $47.03 (Vernon 1994). “Lottery” is defined to mean “any scheme or procedure whereby one
or more prizes are distributed by chance among persons who havepaid orpromised consideration
for a chance to win anything of value, whether such scheme or procedure is called a pool, lottery,
raffle, gift, gift enterprise, sale, policy game, or some other name.” Id. 5 47.01(7) (Vernon Supp.
2000) (emphasis added). The statute codifies the common law definition of “lottery” as
encompassing any “scheme or plan which provides for a distribution of [1] prizes by [2] chance
among those who have paid, or agreed to pay, a [3] consideration for the right to participate therein.”
City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 698 (Tex. 1936). See also Federal
Communications Comm ‘n v. American Broadcasting Co., 347 U.S. 284,290 (1954). In the situation
you present, there is no dispute that there is an award of a prize by chance. The issue we must
resolve is whether the act of taking a test drive in a dealer’s vehicle constitutes the payment of
consideration from customer to dealer.
State courts are divided on the issue of what kind of consideration is required under a statute
prohibiting lotteries. Some hold that the requisite consideration is the same as that for a binding
contract. See, e.g., State v. Safewu~ Stores, 450 P.2d 949 (Wash. 1969) (en bane). Others hold that
the consideration required for lottery purposes is greater than that necessary for a contract. See Cudd
Mr. Brett Bray - Page 2 (JC-0174)
v. Aschenbrenner, 377 P.2d 150 (Or. 1962) (en bane). Texas courts have said relatively little on the
subject. In Brice v. State, 242 S.W.2d 433 (Tex. Crim. App. 1951), the court found that there was
no lottery when the only consideration required of a participant in a contest was to register at the
store. Although the merchant clearly received the benefit of increased sales, customers could not
be said to have “paid a consideration by merely stepping into the house and signing their names.”
Id. at 435 (emphasis added). Likewise, in State v. Socony Mobil Oil Co., 386 S.W.2d 169 (Tex. Civ.
App.-San Antonio 1964, writ ref d n.r.e.), the court held that merely visiting a service station to
request a bingo card does not amount to sufficient consideration for a contest to be deemed a lottery.
Thus, Texas courts have concluded that the mere act of entering a place of business and making a
minimal effort to participate in a contest does not constitute payment of consideration. Clearly,
however, taking a test drive in a vehicle involves something more than minimal effort. Thus, we
turn to the decisions of other states for more apt analogies.
Most ofthe cases from the late 1930s and early 1940s involve “bank night.” In this contest,
customers of a motion picture theater are registered for a drawing when they purchase tickets for a
show. Typically, a person can enter the contest without purchasing a ticket, but since the rules of
the contest generally specify that the prize must be claimed within a short time of the drawing,
patrons of the theater are given a distinct advantage. Some courts hold that the mere “requirement
of registration and appearance within the theater within a specified time after the announcing and
drawing” is “a sufficient consideration to put the scheme within the definition of a lottery.” Stern
v. Miner, 300 N.W. 738,740 (Wis. 1941); see also State ex rel. Draperv. Lynch, 137 P.2d 949,953
(Okla. 1943). In these cases, the meaning of “consideration” for purposes ofthe anti-lottery statutes
is the same as that “applicable to the law of contracts.” State v. Jones, 107 P.2d 324 (N.M. 1940).
As the court said in State v. Wilson, 196 A. 757 (Vt. 1938):
Ordinarily, a detriment incurred by a promisee at the request
of a promisor is a sufficient consideration to support a contract. [I]t
may be an inconvenience, no matter how small. . So here, it may
be said that the acts of registration, attendance in the immediate
vicinity of the theater, or in the lobby thereof, on the appointed
evening, and entry within the stipulated time after the announcement,
were acts done, and a detriment incurred in response to a promise to
award a prize.
To pay a consideration is to furnish or give a
consideration. The word “pay” used in this connection may be taken
to include the doing of an act or the exercise of a forbearance. It is
not apparent why any consideration which would be sufficient to
support a contract will not be equally effective if given in return for
a chance to win a prize.
Id. at 760 (citations omitted); accord, Furst v. A. & G. Amusement Co., 25 A.2d 892, 893 (NJ.
1942).
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On the other hand, other state courts found that the typical “bank night” does not require the
consideration necessary to satisfy the definition of a “lottery.” In State ex rel. Stafford Y. Fox-Great
Falls Theatre Corp., 132 P.2d 689 (Mont. 1942), the court said that, where an anti-lottery statute
requires a contest entrant to “pay any valuable consideration,” the phrase does not embrace the
“slight detriment” of having to claim the prize within one minute of the drawing. Id. at 696-97.
“Consideration,” another court said, must “be a consideration having a pecuniary value.” State ex
rel. Big Chief Corp., 13 A.2d 236,239 (RI. 1940). According to the Supreme Judicial Court of
Massachusetts, “any technical and non-valuable consideration, ‘whether registration of the name or
anything else, “’is not sufficient consideration to make a scheme a lottery. Commonwealth V. Wall,
3 N.E.2d 28,30 (Mass. 1936); accord, People V. Shafer, 289 N.Y.S. 649 (N.Y. Co. Ct.), afld, 6
N.E.2d 410 (N.Y. 1936).
Finally, some courts make a distinction on the basis of whether the proceeding is civil or
criminal. Although “bank night” is not a lottery under the criminal law because it is not evidenced
by a monetary consideration, a contest winner who was outside the theater can enforce the theater
owner’s obligation under ordinary contract principles. See St. Peter V. Pioneer Theatre Corp., 291
N.W. 164, 170 (Iowa 1940); see also State V. Stern, 275 N.W. 626,629 (Minn. 1937).
Beginning in the 195Os, most cases that deal with the issue ofconsideration for purposes of
an anti-lottery statute involve contests sponsored by gasoline stations or supermarkets. In one of the
earliest of these, Knox Industries V.State ex rel. Scanland, 258 P.2d 910 (Okla. 1953), the Supreme
Court of Oklahoma considered a scheme that required merely that participants visit a service station
and ask for a ticket. The court concluded that the contest was a lottery because (1) it required the
“expenditure of time and inconvenience”; (2) it subjected entrants “to the sales appeal of the
merchandise offered for sale”; and (3) it required participants to claim the prize within certain
specified hours, Id. at 914. Likewise, a Florida court found sufficient consideration where
participants in a contest were required to register their name and address in a supermarket, have a
card punched on a weekly basis, and be present in the store’s parking lot within fifteen minutes of
the drawing. See Blackburn v. Ippolito, 156 So. 2d 550, 554-55 (Fla. Dist. Ct. App. 1963), cert.
denied, 166 So. 2d 150 (Fla. 1964); see also Boyd Y. Piggly Wiggly S. Inc., 155 S.E.2d 630,641 (Ga.
Ct. App. 1967). And the Supreme Court of New Jersey, in an oft-cited decision, held that if
consideration is sufficient to sustain a simple contract, it is sufficient to constitute the third element
of a lottery. See Lucky Calendar Co. v. Cohen, 117 A.2d 487, 495 (NJ. 1955). The requisite
consideration need not be of intrinsic value, the court said; rather, quoting Williston on Contracts,
“‘a rose, a hawk, or a peppercorn will suffice.” Id. (citation omitted). In Lucky Calendar, merely
completing a coupon and arranging for its deposit in a box just inside the store’s entrance satisfied
the requirement. See id. at 496.
A clear example of this position has been manifested by the Supreme Court of Washington.
In State Y. Safavay Stores, 450 P.2d 949 (Wash. 1969) (en bane), the court considered a
supermarket’s “bonus bingo” game. In an en bane decision, the court found sufticient consideration
in “the time, attention, and the efforts of countless persons in studying Safeway advertising and in
making at least one trip to a Safeway store.” Safiwuy Stores, 450 P.2d at 956. In State v. Reader’s
Mr. Brett Bray - Page 4 (X-0174)
Digest Association, 501 P.2d 290 (Wash. 1972) (en bane), the court reasoned that even when no trip
to a retail establishment was required, entrants expended “time, thought, attention and energy.”
State v. Reader’s Digest Ass ‘n, 501 P.2d at 297-98. Such effort constitutes “a detriment to the
participant,” while the corresponding increase in sales constitutes a benefit to the promoter of the
contest. Id. at 298; see also Mobil Oil Corp. v. Danforth, 455 S.W.2d 505 (MO. 1970) (en bane);
People v. Brundage, 162 N.W.2d 659 (Mich. 1968).
By contrast, a number of state courts in the post-“bank night” era have found that the simple
consideration required for a contract is not sufficient under the anti-lottery statutes. In State v.
Bussiere, 154 A.2d 702 (Me. 1959) for example, the court said that consideration must have a
pecuniary value paid directly or indirectly by some participant. See Bussiere, 154 A.2d at 707. In
Rhode Island, a drawing for a door prize at a food exhibition was held not to be a lottery where the
only consideration required to participate was to attend as a spectator and till out a card. See Finch
Y. Rhode Island Grocers Ass’n, 175 A.2d 177 (RI. 1961). And in People Y. Eagle Food Centers,
Inc., 202 N.E.2d 473 (Ill. 1964), the Supreme Court ofIllinois considered a supermarket game called
“split the dollar.” The contest required a participant to visit the store to obtain his “split dollar,” and
only one was awarded for each visit. The court noted that the language of the anti-lottery statute
required a person to pay or promise consideration “for a chance to win a prize.” Eagle Food Ctrs.,
202 N.E.2d at 475. Such language did not “admit[] to a construction that consideration may be
found in mere physical inconvenience or disadvantage to the promisee.” Id. Rather, it contemplated
“money or a thing of value.” Id. at 475-76. “‘[IIt would be stretching the statute to the breaking
point,“’ the court found, “to construe it as meaning to embrace the technical concepts of
consideration applicable in the law of contracts.” Id. at 476 (citation omitted). Thus, consideration
could “not be found in the indirect benefits accruing to defendant, or in the physical efforts expended
by its customers to obtain the split dollars.” Id.
The clearest rejection of the contract theory of consideration was voiced by the Supreme
Court of Oregon in Cudd v. Aschenbrenner, 377 P.2d 150 (Or. 1962) (en bane). The contest in that
case required participants to appear in the store for an initial registration, to have their coupons
validated each week, and then to be present in the store’s parking lot at the time of the drawing. The
court observed that the purpose of the anti-lottery statutes were “to prevent the impoverishment of
the individual and its attendant evils.” Id. at 155.
Unless a scheme requires that (1) a participant part with a
consideration, and (2) the consideration be something of economic
value to him, participation therein can rob him neither of his purse
nor his accumulated worldly goods. . We do no violence to the law
of contracts when we hold that a lottery contemplates a greater
consideration than is generally required to support a contract. . . We
merely hold that a lottery is a special kind of contract which requires
a special kind ofconsideration-consideration which can impoverish
the individual who parts with it.
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Id. The court acknowledged that a “substantial number of cases in various jurisdictions have held
to the contrary,” id. at 156, but that they invariably engage in “mechanical application of
preconceived notions of ‘prize, chance and consideration’ without attempting to look behind those
words in order to discover what concepts their users intended to convey.” Id. (citation omitted). The
scheme at issue failed the test because “there is no consideration which is in any way harmful to the
participant. The participant parts with nothing of any value to himself.” Id. at 159.
In the most recent decision involving the issue before us, the Supreme Court ofUtah quoted
Cudd with approval. In Albertson’s Inc. v. Hansen, 600 P.2d 982 (Utah 1979), the situation before
the court involved a “double cash bingo” game conducted by a supermarket. The only consideration
furnished by a participant, the court said, are his “time, effort, inconvenience, and exercise of
choice.” Id. at 985. “A majority of courts in other jurisdictions have found such elements to fall
short of the requirements of valuable consideration.“’ Id. To hold otherwise, the court said,
would invalidate any distribution-by-chance scheme for any property
whatsoever where the participant is required to expend the slightest
effort mailing of a registration ticket, for example, or presence at a
drawing. Without more, the “[vlaluable consideration” required
by our statute cannot be said to have been paid or required, and the
scheme does not constitute a “lottery” prohibited by the Utah
Constitution.
Id. at 986.
The various courts of our sister states have thus adopted two opposing answers, and
rationales, for the question before us: (1) the consideration required for a lottery is identical to the
consideration necessary to support a simple contract; and (2) the expenditure of mere time, effort,
and inconvenience by participants does not furnish sufficient consideration to constitute a lottery,
i.e., the necessary consideration is greater than that required to support a simple contract. We must
now determine which of these opposing views is applicable in the situation you present.
As we have noted, the two Texas cases that considered the matter-Brice and Socony
Mobil-have said that the mere registration of one’s name at a place of business does not furnish
consideration adequate to support a lottery. See Brice, 242 S.W.2d at 435; Socony Mobile, 386
S.W.2d at 172-73. Texas courts have not ventured to say that the consideration required for a lottery
is greater than that necessary for a simple contract. We believe, however, that such implication is
clear from Brice and Socony Mobil. Furthermore, we believe that the line of cases represented by
Eagle Food Centers, Albertson ‘s, and Cudd is more persuasive than those that hold to the contrary.
Although we need not go so far as Cudd to say that the only consideration sufficient to support a
lottery is that which “impoverish[es] the individual who parts with it,” Cudd, 377 P.2d at 155, we
‘We must differ here with the court. Our count results in approximately a 3-2 majority for the opposite
conclusion.
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believe, nevertheless, that when the consideration does not involve money or a thing of value, i.e.,
when it is limited to the expenditure of time and effort by the participant, that expenditure must be
substantial.
We are supported in this view by a 1957 opinion of the General Counsel of the Post Office
Department, which, serendipitously, actually alludes to the very matter before us:
Courts have defined a lottery as a scheme wherein something
of value is exacted from participants for the chance of winning a
prize, and thus you have the three necessary elements, consideration,
chance, and prize. The difficulty ensues when endeavoring to
determine whether any particular plan involves the giving up of a
consideration, or whether the awarding of the prize is governed by
chance. Ordinarily, there is no trouble in determining the presence or
absence of a prize.
There have been two fairly recent decisions in the Federal
courts dealing with the question of consideration in a lottery: Garden
City Chamber ofCommerce v. Wagner, 100 Fed. Supp. 769, wherein
it was held that a requirement that participant visit a number of
stores to determine if his number is posted in one of the store
windows, thereby entitling him to a prize, does not constitute a
consideration for a prize, and that such a scheme is therefore not a
lottery; American Broadcasting Co., Inc. et al. Y. Federal Communi-
cations Commission, 110 Fed. Supp. 374, dealing principally with
requirements of merely listening to the radio or watching television
programs.
This office must continue to hold that the element of con-
sideration is present in a prize scheme when a substantial expenditure
of time and effort is involved. However, in view of the above court
decisions, this office takes the position that consideration is not
present in the following and similar situations: where the sole
requirement for participation is registration at a store and, in addition,
attendance at a drawing or a return to the store to learn if one’s name
was drawn; visiting a number of stores, or a number of different
locations in a store, to ascertain whether one’s name or number has
been posted; witnessing a demonstration of an appliance or taking a
demonstration ride in an automobile, etc.
4 GEORGE E. ROSDEN & PETER E. ROSDEN, THE LAW OF ADVERTISING55.03[3], n. 24 (Supp.
5
1990) (quoting Op. Off. Gen. Counsel P.O. Dep’t, Elements of a Lottery (January 31, 1957))
(emphasis added).
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Applying the requirement of substantial consideration to the situation before us, we con-
clude, like the Post Office Department, that taking a test drive does not supply the requisite
consideration for a lottery. The drive is generally brief; the participant controls the vehicle and may
end the drive at any time. Unlike some ofthe contests described above, no return visits are required,
The “time, effort, and inconvenience” of the participant cannot, in our view, be reasonably said to
be substantial. Accordingly, it is our opinion that an automobile dealer’s promotional contest that
requires an entrant to participate in a test drive as a condition of entry does not constitute a “lottery”
under section 47.03 of the Penal Code.2
%nilarly, we believe that any “non-valuable” consideration deemed suff%ent under section 40.062 of the
Business and Commerce Code must also involve a substantial expenditure of time, effort and inconvenience by the
participant. That section provides:
An offeror may not notify a person that the person has won a prize, will receive a
prize, OI has a chance to win or receive a prize, a condition of receipt of which
requires the person to pay consideration of any kind or a charge or expense to a
person for the prize except for:
(1) expenses incurred for travel to and from the sales location;
(2) a refimdable deposit authorized under section 40.007
TEX. BUS. & COM. CODE ANN. g 40.062 (Vernon Supp. 2000). An offense under this provision is a Class B
misdemeanor. Id. 5 40.121(b).
Mr. Brett Bray - Page 8 (X-0174)
SUMMARY
An automobile dealer’s promotional contest that requires an
entrant to participate in a test drive as a condition of entry does not
constitute a lottery under section 47.03 of the Penal Code.
CORNYN
Attorney General of Texas
ANDY TAYLOR
First Assistant Attorney General
CLARK RENT ERVIN
Deputy Attorney General - General Counsel
ELIZABETH ROBINSON
Chair, Opinion Committee
Rick Gilpin
Assistant Attorney General - Opinion Committee