March 27, 1986
John Slattery
Union County State's Attorney
Post Office Box 398
Elk Point, SD 57025
OFFICIAL OPINION NO. 86-07
Farm Raffle
Dear Mr. Slattery:
You requested an official opinion from this office in regard to the following factual situation:
FACTS:
A resident of Union County is intending to conduct a farm giveaway for property located in Union County. This person intends to sell a recipe book for $10 and include a chance to win either $50,000 cash or 80 acres of land in Union County. The winner will be chosen by random drawing. You included with your letter a copy of the so-called 'recipe book' that this individual intends to sell for $10. This 'recipe book' consists of two Xeroxed pages taped together which list 34 common recipes ranging from orange jello salad to brownies. These two Xeroxed copies are folded to form a pamphlet. On the back of the pamphlet is a statement informing people they can win a farm or $50,000 in cash. A person wanting to enter is told to complete the coupon and send in $8.00 plus $2.00 for the handling of the book. The official rules state that there must be a minimum of 20,000 entries before the drawing will be held. The rules do state in small print that no purchase is necessary.
Based upon the above facts, you have asked the following questions:
QUESTIONS:
1. Is this scheme an illegal lottery?
2. If this particular scheme is a lottery, can tickets be sold out of state and South Dakota property used as a prize?
IN RE QUESTION NO. 1:
The scheme set forth in the facts you have presented constitutes a lottery as defined by SDCL 22-25-24. Numerous opinions of this office have held that a lottery must contain three essential elements. Those elements are chance, consideration and prize. See AGRs 1920-22, p. 230; 1935-36, pp. 282, 285-286; 1937-38, p. 378; 1951-52, p. 402. There can be no question that this scheme contains the elements of chance and prize. The remaining question is whether there is consideration. Apparently the promoter of this lottery is claiming that since the rules allow a person to enter a lottery without making a purchase of the book, there is no consideration.
The promoter is trying to characterize this drawing as a promotional scheme to promote the sale of merchandise. In certain cases it has been held that where there is a meaningful method for people to participate in the drawing without having to make a purchase, the element of consideration is not present. See generally, 29 A.L.R.3d 888, § 6. Indeed, in certain situations this office has approved promotional schemes whereby merchants allowed any person to enter in a drawing for prizes as long as it was clearly made known to the public that no purchase was necessary and where there was an easy way to enter without having to make a purchase.
However, the situation described is far distant from those legitimate promotional schemes. The so-called 'recipe book' being sold for $10 is obviously an artifice used by this promoter in an attempt to avoid the provisions of the lottery statute. The 'recipe book' is not worth one dollar, let alone ten dollars. The promoter is trying to raffle off his farm and assure that he will obtain a minimum of $200,000 for it before he will conduct the lottery by requiring that there be a minimum of 20,000 entries. This certainly cannot be portrayed as a true trade promotion. It is nothing but a lottery characterized as a trade promotion.
The official rules also are deficient because they do not clearly notify people that they can enter without purchasing the 'recipe book.' The rules states that a person may 'enter by sending a self-addressed envelope for another coupon.' The coupon is already present on the material itself. There is no clear statement that people can simply send in their names, addresses, and other information set forth on the coupon and enter the drawing. The reasons for the promoter not clearly stating this are obvious. People would simply fill out the coupon and send it in and then the promoter, having received nothing, would later be forced to hand over title to this farm.
It is my opinion that this is a lottery within the definition of
SDCL 22-25-24 and a person who conducts an illegal lottery is subject to prosecution under SDCL 22-25-26. The promoter may also be prohibited from continuing with these activities by way of injunction.
IN RE QUESTION NO. 2:
The interstate transportation of gambling materials and use of mails to promote lotteries are violations of federal law. Since this activity is an illegal lottery under South Dakota law, mailing or interstate transportation of tickets and other information to facilitate this lottery are potential federal criminal violations. (See 18 U.S.C. § 1302 and 18 U.S.C. § 1953.)
Respectfully submitted,
Mark V. Meierhenry
Attorney General
