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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

December 19, 2001 **Interpretive Letter #923**

**January 2002**

**12 USC 25AA**

Dear **\[ \]**:

This is in response to your letter of November 20, 2001, in which you
alleged that a number of banks in the **\[ \]** area are violating 12
U.S.C. § 25a by advertising lotteries. You included copies of several
advertisements and promotional mailings for the OCC's evaluation. I have
reviewed all of the items. In addition, I have contacted the legal
departments of, **\[** *A* **\],** and **\[** *B* **\]**, to obtain
further information concerning certain of the advertisements and events.
Based on this information and review, it is my conclusion that none of
the items violate 12 U.S.C. § 25a. My reasoning is explained in more
detail below.

[Discussion]{.underline}

Twelve U.S.C. § 25a prohibits national banks from participating in
certain lottery-related activities. Among other things, national banks
may not "announce, advertise, or publicize the existence of any
lottery." 12 U.S.C. § 25a(a)(3). You believe that the banks have
violated this prohibition.

The statute defines "lottery" as follows:

> The term "lottery" includes any arrangement whereby three or more
> persons (the "participants") advance money or credit to another in
> exchange for the possibility or expectation that one or more but not
> all of the participants ("the winners") will receive by reason of
> their advances more than the amounts they have advanced, the identity
> of the winners being determined by any means which includes ---

(A) a random selection;

(B) a game, race, or contest; or

(C) any record or tabulation of the result of one or more events in
    which any participant has no interest except for its bearing upon
    the possibility that he may become a winner.

12 U.S.C. § 25a(c)(2).

With this background in mind, I will now discuss the individual items.

[**\[** *A* **\]** "Focus on Fashion"]{.underline}

The first item is a newspaper advertisement that reads in part as
follows:

**\[** *Co.* **\]**'s

13th Annual Charity

Fashion Show & Luncheon

"Focus on Fashion"

. . .

Tickets \$35

Grand Raffle and

Elegant Basket Raffle

. . .

Sponsored by: \[**\[** *A* **\]** logo\]

. . .

You asked if this isn't involvement in the sponsoring of the
advertisement, citing OCC Interpretive Letter No. 900, June 19, 2000. In
that letter, I concluded that a national bank could donate an item for a
civic fundraising raffle and be identified in advertisements as the
donor of the item, as long as the bank had no involvement with the
sponsoring or display of the advertisements.

I contacted **\[** *A* **\]**, to obtain information about this
advertisement. The Bank informed me that the **\[** *Co.* **\]** paid
for this ad, not the Bank. **\[** *A* **\]** is listed as a sponsor
because it donated money for the event. Therefore, the fact situation
here is very similar to that in Interpretive Letter No. 900, *i.e.,* the
Bank is identified as a supporter of the event in an advertisement paid
for by someone else. As I concluded in that letter, this type of
situation does not violate 12 U.S.C. § 25a because there has been no
action by the Bank to publicize the lottery.

[**\[** *A* **\]** "Win the Lottery"]{.underline}

The second item is a newspaper advertisement promoting **\[** *A* **\]**
home equity loans. The top of the ad displays the following statement:

> How can the 89,545,673 people who didn't *win the lottery* this
> weekend make those much-needed home improvements? Introducing our
> great rates on a home equity line of credit.

(Emphasis added.) In your view, this is announcing the existence of a
lottery.

As a statute with criminal penalties, (see 18 U.S.C. § 1306), 12 U.S.C.
§ 25a should be narrowly construed. *See Federal Communications
Commission v. American Broadcasting Company*, 347 U.S. 284, 296 (1954)
(construing 18 U.S.C. § 1304, also involving lotteries). For that
reason, the prohibition against publicizing a lottery should be
interpreted to mean an actual, identifiable lottery, not one that is
only hypothetical. *See United States v. Halseth*, 342 U.S. 277 (1952)
(interpreting 18 U.S.C. § 1302, another lottery statute). The phrase
"win the lottery" is simply a figure of speech and does not meet this
standard.

[**\[** *A* **\]** Platinum Visa Card]{.underline}

The third item appears to be a promotional mailing for a **\[** *A*
**\]** credit card. The mailing includes "terms and conditions for the
**\[** *A* **\]** platinum Visa card." Among these terms and conditions
is a transaction fee for the purchase of "betting or casino chips or
similar items." You believe that this violates the prohibition on
publicizing lotteries.

As with the last item, this does not publicize an actual, identifiable
lottery. Therefore, in my opinion, it does not violate 12 U.S.C. § 25a.

[**\[** *B* **\]** \[ \] Shuffle]{.underline}

The next item is a newspaper advertisement for the **\[** *B* **\]** \[
\] Shuffle 8K race. Although this is not mentioned in the ad, you noted
that there was a \$30 entry fee to participate in the race, and prizes
of \$1500, \$1000, and \$750. You believe this violates 12 U.S.C. § 25a
because it is publicizing a game, race, or contest which, in turn, is a
lottery.

I contacted **\[** *B* **\]**, which confirmed that it does sponsor this
event (and other races) as charity fundraisers every year, and that the
Bank did pay for this ad.

Referring back to the statutory definition of "lottery," it is an
"arrangement" in which the winner is determined by the outcome of, among
other things, a "game, race, or contest." It can be seen that the
lottery and the race are two separate things: the lottery is the
"arrangement," while the race is the means of determining the winner of
the lottery. Looking at it another way, under federal case law, one of
the essential elements of a lottery is that the winners are selected by
chance. *Federal Communications Commission v. American Broadcasting
Company, supra*. As between the participants in a race, the winner is
determined by skill, not chance. Therefore, the race, itself, is not a
lottery. Rather, a betting pool among nonparticipants on the outcome of
the race would be a lottery.

Accordingly, this advertisement does not violate 12 U.S.C. § 25a.

[\[ \] Bowling Party]{.underline}

[\[ \] Pro Cup]{.underline}

These are newspaper advertisements in which **\[** *B* **\]** is listed
as a sponsor of the events. You noted that these are fundraising events
in which entry fees are charged and there are prizes for the winners.

It seems likely that these events are not lotteries, for the reasons
discussed above. In any event, the Bank informed me that it did not pay
for either of these ads. Rather, it donated money to the events and was
listed as a sponsor in advertisements paid for by the promoters of the
events. This brings these ads within the rule of Interpretive Letter No.
900 as discussed above, so there is no violation of 12 U.S.C. § 25a.

[**\[** *C* **\]** Cancun Raffle]{.underline}

The next item is a newspaper advertisement for a charity raffle offering
as a prize a trip to Cancun, Mexico. **\[** *C* **\]** and other
companies are listed as sponsors. As **\[** *C* **\]** is not a national
bank and is not regulated by the OCC, I will not comment on this item.

[\[ *D* \] Credit Card]{.underline}

The final item is a photocopy of a mailing promoting a credit card
offered by **\[** *D* **\]**. This is similar to the **\[** *A* **\]**
credit card mailing discussed above. It lists transaction fees for the
purchase of "bets, lottery tickets, and casino gaming chips." The
discussion of the **\[** *A* **\]** credit card mailing applies equally
to this item.

[Conclusion]{.underline}

I have carefully reviewed the advertisements and other items that you
submitted, and contacted the banks involved to obtain further
information where necessary. For the reasons discussed above, I conclude
that none of the items violates 12 U.S.C. § 25a. Either the banks did
not pay for the advertisements, or the items do not publicize a lottery
within the meaning of the statute.

I hope that this has been responsive to your concerns, and I thank you
for bringing this matter to our attention.

Sincerely,

-signed-

Christopher C. Manthey

Counsel

Bank Activities and Structure Division