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Attorney General Marty Jackley

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OFFICIAL OPINION NO. 87-27, Political action committee raffle

August 10, 1987

Representative John Sears
306 E. St. Joseph
Rapid City, South Dakota 57701

OFFICIAL OPINION NO. 87-27

Political action committee raffle

Dear Representative Sears: 

You have requested an official opinion based on the following factual situation: 

FACTS: 

Some residents intend to form a political action committee.  Among other fund raising activities, the committee intends to conduct raffles.  Proceeds from the raffles will be contributed to various candidates whose political philosophy is consistent with that of the committee as well as to possible election issues.  The concept is intended to be an ongoing project.

The raffle may consist of 'scratch tickets.'  The 'scratch tickets' will include a disclaimer and will be distributed to various individuals and/or retail outlets on a prepaid basis if possible.  Those individuals at retail outlets will then sell the raffle tickets.

By using 'scratch tickets,' it is intended that any purchaser of the tickets will be able to instantly determine whether or not he or she has won a prize.  Prizes may be merchandise and/or cash.

Based upon the foregoing facts, you have asked the following questions: 

QUESTIONS: 

1.   Is a raffle a form of lottery as defined by SDCL 22‑25‑24?  

2.   If the answer to question number 1 is yes, will SDCL 22-25-25 restrict donations earned by the committee from sale of raffle tickets to be distributed to only one candidate for political office existing under the laws of the state of South Dakota? 

3.   Are federal candidates for political office included within those candidates who are eligible for donation from the committee through the provisions of SDCL 22‑25‑25(1)?  

4.   If the raffle tickets are distributed on a 'prepaid'[1] basis to commercial retail outlets and individuals, would such distribution be considered as a campaign contribution under the provisions of SDCL ch. 12-25 and thus be subject to contribution limits? 

5.   If the answer to question 4 is yes, can the 'prepaid tickets' be distributed to corporate retail outlets for sale?  

6.   Is the political action committee required by law to maintain records of each purchaser of raffle tickets, even if less than one hundred dollars per individual, so as to comply with the possible audit requirements of SDCL 12-25-13? 

7.   If the answer to question number 6 is yes, do distribution of 'scratch tickets' to individuals in commercial retail outlets which are not on a 'prepaid basis' classified as campaign contributions under SDCL ch. 12-25? 

IN RE QUESTION NO. 1: 

SDCL 22-25-24 defines a lottery as: 

As used in this chapter 'lottery' or 'lotteries' means a plan whereby for a valuable consideration money is raised by selling chances to share in the distribution of prizes.  

A lottery has three essential elements.  Those are chance, consideration, and prize.  AGR 51-52, pp. 402-403.  The "raffle" you have described has all three elements.  Accordingly, my answer to your first question is yes.  

IN RE QUESTION NO. 2: 

Only lotteries conducted within the guidelines set forth in SDCL 22‑25‑25 and the South Dakota state lottery (SDCL ch. 42-7A) are legal.  All other lotteries are illegal under SDCL 22-25-26.  SDCL 22-25-25 provides: 

The game 'bingo' as defined in § 22-25-23 or lottery as defined in § 22-25-24 may not be construed as gambling or as a lottery within the meaning of § 22-25-1, provided that:

(1)  The bingo game or lottery is conducted by a bona fide nationally chartered veterans, religious, charitable, educational, or fraternal organization, local civic or service club, political party or volunteer fire department or political committee on behalf of a candidate for a political office which exists under the laws of the state of South Dakota; 

(2)  The proceeds there from do not inure to the benefit of    any individual;

(3)  No separate organization or professional person is      employed to conduct the bingo game or lottery or assist therein;

(4)  No compensation of any kind in excess of thirty dollars   in value is paid to any person for services rendered during any bingo session in connection with the conduct of the bingo game or in consideration of any lottery.  However, the provisions of this subdivision do not      apply to games or lotteries conducted in connection      with any of the following events: a county fair   conducted pursuant to § 7-27-3, the state fair      conducted pursuant to chapter 1‑21, or a civic celebration recognized by resolution or other similar official action of the governing body of a county, city, town, or village;

(5)  No prize in excess of two thousand dollars is awarded at any one play of bingo and no lottery prize is in excess of eighteen thousand dollars in value.  However, a lottery prize of eighteen thousand dollars or less in value may also be given to a person who sells a winning lottery ticket or share as long as the winning lottery ticket or share is selected at random; and 

(6)  The organizations authorized under subdivision (1) of this section, before conducting a bingo game or lottery give thirty days' written notice of the time and place thereof to the governing body of the county or municipality in which it intends to conduct the bingo game or lottery, and the governing body does not pass a resolution objecting thereto.  However, any organization that conducts a lottery and tickets or shares for such lottery are sold state-wide shall provide written notice of such lottery pursuant to this subdivision only to the secretary of state and to the governing body where the drawing for such lottery is held.  A municipality pursuant to § 9‑29‑5 may by ordinance prohibit within the municipality the sale of lottery tickets or shares for such lottery issued pursuant to § 22-25-25.

The operative language that controls this question is found in the phrase "political committee on behalf of a candidate for political office."  The use of singular language in the statute indicates that lotteries are only authorized for political committees on behalf of a single candidate.  The only exception to this provision is if the organization is a "political party."  Accordingly, based upon the foregoing the answer to your second question is yes.  

IN RE QUESTION NO. 3: 

SDCL 22-25-1(1) authorizes lotteries to be conducted under that section for political committees on behalf of candidates "for a political office which is duly existing under the laws of the state of South Dakota."  SDCL 12-1-3(2) defines a candidate as:

A person whose name is on the ballot or who is entitled to have his name on the ballot to be voted upon for nomination or election at any election. 

This language when viewed in conjunction with the language in SDCL 22‑25‑25(1) compels me to believe that the Legislature intended to authorize political committees on behalf of candidates for federal office that are elected by South Dakota voters to conduct lotteries under this statute.  Accordingly, the answer to your third question is yes if the federal candidate is one which electors from the state of South Dakota are qualified to vote for.

IN RE QUESTION NO. 4: 

As indicated previously, only lotteries conducted pursuant to SDCL 22-25-25 are legal.  A lottery must comply with all of the provisions of SDCL 22-25-25 in order to be legal.  In my opinion the sale of "prepaid" tickets by retail outlets violates several of the express provisions of SDCL 22-25-25 and certainly the spirit of that statute.  The lottery must be "conducted" by the organization authorized to do so.  Unless the retail outlet is a member of the organization, in my opinion they cannot sell the tickets without "conducting" the lottery in violation of the statute.  Your factual situation does not expressly indicate whether any compensation or benefit would be bestowed upon the retail outlet.  If any sort of compensation or benefit was given to the retail outlet the provisions of SDCL 22‑25‑25(2) and 22-25-25(3) would be violated.  Furthermore, it is my opinion that the language of SDCL 22-25-25 as a whole when read in conjunction with article III, § 25 of the Constitution indicates an intent to only authorize lotteries conducted and operated by the authorized organizations.  I do not believe that either the Legislature or the people of the State of South Dakota intended to allow these organizations to simply endorse a lottery and allow commercial retail outlets to actually "conduct" the lottery.  

If the tickets are distributed on a "prepaid" basis to individuals who are a part of the "political committee on behalf of the candidate for political office...", records must be maintained to record who purchased the individual tickets.  Individuals who purchase tickets would be making a political contribution on behalf of the candidate.  Any individuals who distributed "prepaid" tickets would be making a contribution to the candidate for any tickets not subsequently resold.  Therefore, my answer to your fourth question is that retail outlets, in my opinion, may not resell "prepaid" tickets and that individuals who are members of the political committee may resell "prepaid" tickets.  The individual purchasing a "prepaid" ticket would be making a political contribution and any "prepaid" tickets that were not sold would be considered a contribution on behalf of the person who had "prepaid" for the tickets.

IN RE QUESTION NO. 5:

Because I have indicated in my answer to question number 4 that it is my opinion that retail outlets may not sell "prepaid" tickets, it is not necessary to answer this question.  

IN RE QUESTION NO. 6:

SDCL 12-25-13 provides in part:

Any candidate for any state office at any general or primary election or any committee participating in such an election shall file with the secretary of state...a detailed statement,...The statement shall itemize all contributions and expenditures and shall include the name, residence address and place of employment of any person who has contributed an aggregate amount of more than one hundred dollars or the equivalent thereof in that calendar year...

In order to determine if the purchasers of raffle tickets have contributed an "aggregate amount of more than one hundred dollars" it will be necessary to maintain a record of each purchaser of raffle tickets.  Only by maintaining individual records will the committee or political candidate be able to properly report the names of individuals who contributed more than one hundred dollars in a calendar year.  Accordingly, the answer to your sixth question is yes.

IN RE QUESTION NO. 7: 

As indicated previously, in my opinion, commercial retail outlets cannot distribute "scratch tickets."  If the tickets were distributed to individual members of the political committee, no contribution would be made until the committee member sold the ticket.  Therefore, the mere distribution of the tickets to committee members for sale would not constitute a campaign contribution.  Accordingly, my answer to your seventh question is no when individual committee members are distributed tickets that are not "prepaid."   

Sincerely, 

Roger Tellinghuisen
ATTORNEY GENERAL

[1] The word "prepaid" is intended to mean or refer to a situation in which the committee issues a block of tickets to someone who will immediately pay for the tickets at face price and sell them at face price.  There may or may not be a refund for tickets not sold.