PRICE DANIEL Auwrrnr 1,. TEXAS

ATTTORNEY

GENERAL

Mar& 7, 1952

Hon. Elmer Mcvey OpinionNo. V-1420 CountyAttcmey Freestone~County Re: Falrf l&d, Texas Le+ty of “Appreclatlon a 

### retailtrade proDear Sir: motion enterprise, under submitted'facts.
You h&e requestedthe .oplnion of this office concerning the lega;lty,under the Texas anti-lbtteyy laws, of a retail sales promotloa'enterpi4ae called "Appreciation

Day."
_- Acqo~ing to the lnfoimatlon codaIn@ la the ~descrlptlve

olrculars submltt&dwith your request, the. L plan operates through local nieehantsvho contributeto a central;

fund called the "ComMnltg Treasure Cheat.'!.' These merchantsdistribute "Treasure Cheat Coupons,"each of which la marked 

### In denoml~ations ranging froiu

**5%** 

### to **56$.r** The couponsWe given to customerswlth.each pui?chase; and they are punched 80 aa to Indicatedenomlnat1oti, 'according to the amount of the purchase. W1th.a purohaeeworth from **254** to gg#, a customermay receive a **5s** coup&. The percentage denominationIndicatedon the coupon le Increased according to the value of the purchase,up to a maxi of 50$, which requires a purchase of $25.00 or more. The coupons are signed and placed ln a box In each **store,** 

### and' i * these In turn are placedln a ejeneral container f5om vhlch the winner Is drawn on weekly AppreciationDays. The holder of the winning coupon 18 awarded the 

### percentage Of the "TreasureC&eet" fund vhlch la indlca'ted on hla coupon. The\submlttedfacts reflect that although the coupons are distributedprlmaril~~~uljon the baslti

of spurchase8 ,from

the pfirtlclpatlng

firms, a number of'ooup6ne are alao made available to non-patrons.

Section 47 of Article TII of the Constltutlon.of Texas reads aa followe.:

,,Hon. Elmer McVey, page 2 (V-1420)

;. ?he Leglalatimeshall pass laws prohlbltlng the eatabllshment of lotteriesand gift enterprise8 In thla State, a8 well as the sale of ticket8 In ~lotterles, gift enterprlsea oti.other

evaelonf~lnv~lVlng the lottery prlnolple, established or exletlng In

,.. . other S~tatee." ! Article 654, Vetion's Penal Code, the Texas

anti-lotteryt&at&e, protides:

"If/any person shall eatabllaha.lottery or dfiipoee

of any estate, real or per8ona1, by lottery,he shall be fined not lees than one hundred **nor more**  than one thousanddollars;

. Or If any perscm shall'sell,.offer for sale or 

### keep for ale any tioket or pert ticket la any lottery,he shall be fined 'not' less than ten nor more than fifty dollers..? There is no .Texas statute&l&h deflii~e~ a lottery,but the courts~~have consistently

adoptea the follow- .lng~defJnltlon:' **A** lottery.18'a.achem for the dl&trlbutlon .of prlad by lot or e&an00 amoag~pers~pr, vhohave -*-id,

Tr vho-have%greed to pay, a valuableoonsideratlonfor the .opportunlty

to win these avards. City of Wink v. Griffith Amuseisent

Co., I.29

Ta. **40** llO,S.W.2d695 (1936).; 54 C.J.S. Lotteries;Sec.' **1-j 26**  Tex. Jur. 409, 410, Lotteries, Thus It Is-apparentthat every lottery oonelets Of and (3) 88enttil eleIUent8, 88 **fOllOW8: (1)**  **pitie** j (2) ChsWe; conelderatlon. The elements of prlae and &%I& are obviously present 'Inthe fact situationwhloh'youljresent. Cash pricesatie

awardqd gegkly oa.thebasis of's simple **drawing.** The only question for our datermlnatlon, then, Is whether **a** considerationla to be paid for the .prlvllege of &~OIIWtlng for the prlses.

There are many authorities, beth ln Texas and In other jurisdictions, whloh deal v&th.the queetlon of consideration.%mlott6rieei~ Ho unifoira

rule is bollowed by the co&s Qf other states, an&their'~declslou8 ~a+eInHon. Ehner’NoVey,page 3 (V-1420)

confl1at.lSiuce the holding iu eaah 0868 depends to a large extent upon the facta of the pimticularSitUatiOn before the oourt, wit Shouldbriefly ermine the facts of 8one of the leadingTexas dealielonsr

motion plau knovn 81) "Aoah'b **Ark. ”**  -%mre the merchante~paid license fees to a promoter for the jwkillegeof pfwtlolpat1143 In the program. The promter dlstrlbu$edcards to the merchants,who In turn gave thoa to their ouetomers in exchange fo? box tops aad other evidencesof pU??ChaSeS made at their reapeatlvs stores, 

### Provision va8 aleo made for the diStrlbut&m of Card8 to thOsQ who **did** not make purchasesat t&e **pBrtisi~titlg** establislmmltr. There OardS entitled their holders to ohaacee for 6 prise. be a lothwy. The Court held this plan to

The licensefoes paid b the merchants constitutedaonelderation moving lndlrmt 3

y frpm the contestants to the promotor,thecourt reaeomed,ar&d the merchant8reoelved their oousldrrrtlcm in the foma of aUvertlalngand 

### InareaseU

patronago,
In F Ass+lon, rrrton 2d S&'{T%!%?!~e~~,si!a;~:p of Zi?% 

### 6em oe rktloa 

## &&or8 dirtributod ohences on an automo**bile among**  **their onsthrs.**  A nrmbrrt OS tlokets were also given to peraonn rho msde no puro~aea. ,Xtwas held that the pureha!me ooastltutedthe oona&der&tionfurnishedby the ourtommr+ **for** the ohance of seeuriagtha prize, therefore the plan was a lottery. The fact **that** 8ome of the chances **i?ere** given to non-ptmhasere ~88 held not to change the legal effect of the sohome a8 8 whole4 In this oonnectlon, the Court, at p l27, said:.

**Hon.** hr **l(cVey,. psge**  **4 (V-1420)** 

II

. . . While de&lerS,uneer the ne* plan, distributedtickets to noncustomers 88 veil 86 to customers, It aeenm that the aohemew&8 to distributetickets, ln the a6it~ to 

### aWtomer8, -asthe evidence~dlecloees th8t oaly 8 fev,,

negliglble In number, t?ere given to pOrSOaS.Ot&r tttsll'eost~mers.

That the giving Of tiOket8, .-aud ae dr8Ylxigt3

8M ~diEtributIQa

or prises, 

### were lndwements to patron&go**and** uuque#tiOna-

. bPy lured owtomers, IS shorn iron the very ee;tlefao',ory

business result8 tb8t followed. PeeQ,lugethus indwed we8 the oonsider8tion that peased from the tloketholder **for.-the** oh8noe reoeivod, In that the grioe **.psid,** rheterer it 08~. the 8wunt belag 

### amuterisl,ooostitutedthe ~8ggrugote

prloe 

### for thu muruhe@Ise 'orsumloe &md.the tloket th8t represeated8, eh8EQe tQ Win the prlse; 3.n

other word@, for Qae undiv1de.d~

. prioe both rerepureh8wd, the mero~ndl8e, or 8ervlae,and tloket, 

### thu tio,ket 

### bolq 88 mmh lmq#lt~8e~though

prlouu uop8rately.

. . . ." Varlotui

“‘Bank Alto" ~o~te8tthold by.mtlon pitturethuaters #8ve.beeo ooneider&dby the $e%es Qoorte end elmtaut oIthQut'uxceptloa

thera p3.e~ h8v~beea held'tobe ~lot~~~~.d~~;ta~~t~~~t-tbst--lrothgctro~'&U&~.~OU~~t~~ o? the the&tea%were 8lloved t6~~p8rtIoIgsk. The dlstribu-~ tioa~f "frdd?~oliauaus~ w&o ocmeldarud bat 8~8ubbteFme which.

In 0 g8S.U.Zd **844** J OM 08ser'~lifIth f lu@. -This dealslou,however, ,%a Clv.~Aop. 19 1 areatlrely different tram tho#o y@u PMront and 08anotbe ~eda~8tr~llInghere.

Thar it is l rld~at thdir 'kh the purewe or WI80 oonetifoter the.oorrrldmtiol vhloh la neoe8- a8ryl8 8 1Qttory where the pur~h884s 

### eatltlm the 

### garQhaser to r OhMoo .ettbe~grI$0. The uloruot. of 

## aoru~iuqr8tion

is n~trrr~cr~b'Berely bea&UW the m&zWh8& hiriwli doerr not a the 808rd8, **but** tog#hur **r;tth thO.OthWO**  **mkO6** 8 CQQtHMtIOnto600latre1f!md iror,vhg+tho prIsor8re. .

Hon. El~e;r i%cVeg, pELge 5 \V-1423)

distributed. And If the ohances are distributedupon th.e baSi8 of puroha(lee)~, the fact that "free"chance& **are** also given avay do68 not change the legal affect of the SClleUe.

These principle8have not bean overturnedby the recent decision In B ce v. S~ta rl (Tex. Srlm. 1951)~.. r tr 242 S.W.2d- 433 There, nono o t l ohanoes for the awards were ~dlstrlbuted oa the be818 of pu&KLSeS from the donor. The gene~ral pub116 **V&B** Invited to Peglater for the contest, end .&pparently no favorlt188,rv8s

shorn customers. The court &$d, In effect, that the element of conslderation was ndt added by mere prospect of increasedpatronage. i+eviou~~oplnlon8

of this offloe are In aocord with this result. ~See Attly ,&n. Op. V-l@/ (1947). See'alao Att'y Oen. op. 0-2309 (1940).

In then-past

this offI. haa.be& called-upon'tn 'zonsiderthe legalltjr of 8 amber of promotionplane based up+ then

lottery principle. In Attommy ffeneral's Opinion 0-2ti3 (.1940)

the plan Involvedvaa~ldentlc8l vlth'tilat

In.- valvedwhere. The fact6 Involved in that opinlonrefl&t:

"Themiwchants of 'Cleburne want offlclal rullng,regardlng

a trades day plan called .~Appreclatlon

Day.' The p&&n operatesby.mer-. chants vho pay to a common fund called Appreciation Day. **These** merchantsgive couwna ..called

%-easure Cheat' coupons,.vhlch ompnn -ccM%ln marking@ from 5 to 5054. After puri chase~~~&re

made 1~ these participatingfirms the customer Is given a couponwhich is punched from any~dehomlnatlonfrom -9 5 tb 5O$. The custom to be,gqmerallyfoi$ch?irgd, that a CustOmr who purclases from 256 to 9gQin a partldiwting Store 18

0 given a 5% punchedCOup0nj.a purchase of l.OO to f1.99, a 10% COUpOIlj a chase OS 2.00 to 2.99, **8** 20% coupon; a 3.00 to $3.99, **8** 30% coupon, a 4400 to coupon, and e~purchaee**of** 5.00 to 50% coupon. %, d r 4.90; a 40% 10.00, a'

'The ouetomer then algae his or her niune and address on the back of' the coupon, drop8 it In a box, On 'Drawing' day the tickets or ooupane are placed in a general container from which is dP8lin

8 vlnnlng ticket, The pereon whose name Is drawn la awarded the 5,,lo, 20, 30, 40, and 50% of the tr8deS day fund money dependins on the percentage of the coupon which **18** drava.. . .

-

.

eon. m.mer ~cvey; page 6 (V-1420)"

In holding'thls

plan to'be S lottery in violation of AzWcle 654, V.P.C., it was sal&:~

"This departmeat.haa on.aume;oue

oocaslonti .plrssed.oa

the questlixrdt'vh&her or not v&rtousnteroantlls **advertl8ing** schemes ,co&%tute B 3rotterg; -and vltfioutwxceptlon .has.so-brand~:them~wheo the elemetits

of ohwoe, prize aad oonslderatloa have, **been** foundko:be preseat:

.&- II %.

. . .

**“ For**  the reamns~ sot .?ort&la Oplnidne ' &mi O-1174, 0-2t?teb~~aaC~O-2563,~ 

### bndxuider

the aalor~uile8 them-o~~tad,~lt 1s oilr oplaioa .a&-you 8~8 reepeutf'ully **.advPee&thst** the mer- ~atiZe~sdvertlelng **-sohSny**

### ~worIba& ‘in**.your** -,letter,

Uppreci-stloa Day,' oanstltutes.a lottery as IS.

eotieniae&by

Artiblb~654of the. Pear&Code-oi'

Texw.' **I**

- More reeetly, a baslee+Uysimilarplea known **as.** i'Bonanaan

was held to be a lottery, ,Att'y Qen. Op. V-238 (1947). We believe these ti&nlcias oontrol the problem .before

us. ,_ In the "Appreoiatlon Peg" plan, 4s de&rLbed la jour request,,ltappears that o sub'stantial portion of.,the chanoea for averds me to be distributed upon the basis of piwchases from the merghsote~who partloipatein the plan,.aadthe slse of the aiff+rd **~a8**to such ohanaes depends.upoa

the value~ol,$he

purchase.,This constitutes a valuable consideration moving. Sropr the ooatesfants who .mke parahases to the do,pii~of thei prlre &ad, uader the authorltip8

olted **above,~ ‘** **that** eleneat is aot removedby the QLstributioaoi a number oi "free'ohsrrdes on request. It Is our oplaloa, therefore,that"the "Appreo&atlon Day" plan outline&la your request ooastitutes **a** lotteryprohlbltddby Arttile 654, Veraonfe Pea81 Code.Hdn. Elmer MoVey, page 7 (v-1420)

SUMMARY

**A** retail sales Fomotion plan, know as "Appreciation

Day vharein prlses are distributedon the basis'of a drawing of coupons given to et&e patronsvlth purchases of merchandiseand servioe, is 8 lottery and prohibited by Article 654; V.P.C.
APPROVED:'". Yours verg,truly,
Ned McDanle& PRICE DANIEL State Affala~ Dlvlslon Attorney General
E. Jaoobson~ ReviewingAsslstant **Charlea** D, Mathevs First Asslstimt Caivln B. t&wood, Jr. Assistant

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