PRICE DANIEL 

Auwrrnr 1,. TEXAS 

ATTTORNEY GENERAL 

Mar& 7, 1952 

Hon. Elmer Mcvey Opinion No. V-1420 

County Attcmey 

Freestone~County Re: 

Falrf l&d, Texas 

Le+ty of “Appreclatlon 

a retail trade proDear Sir: 

motion enterprise, under 

submitted 'facts. 

You h&e requested the .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&d with your request, the. L 

plan operates through local nieehants vho contribute to 

a central; fund called the "ComMnltg Treasure Cheat.'! .' 

These merchants distribute "Treasure Cheat Coupons," each 

of which la marked In denoml~ations ranging froiu 5% to 56$.r 

The coupons We given to customers wlth.each pui?chase; and 

they are punched 80 aa to Indicate denomlnat1oti, 'according 

to the amount of the purchase. W1th.a purohaee worth from 

254 to gg#, a customer may receive a 5s coup&. The percentage denomination Indicated on 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 placed ln a ejeneral container f5om vhlch 

the winner Is drawn on weekly Appreciation Days. The 

holder of the winning coupon 18 awarded the percentage Of 

the "Treasure C&eet" fund vhlch la indlca'ted on hla coupon. 

The\submltted facts reflect that although the 

coupons are distributed prlmaril~~~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 Leglalatime shall pass laws prohlbltlng the eatabllshment of lotteries and 

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-lottery t&at&e, protides: 

"If/any person shall eatabllah a. lottery 

or dfiipoee of any estate, real or per8ona1, 

by lottery, he shall be fined not lees than 

one hundred nor more than one thousand dollars; . 

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 valuable oonsideratlon for the 

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

Amuseisent Co., I.29 Ta. 40 llO,S.W.2d 695 (1936).; 54 C.J.S. 

Lotteries; Sec.' 1-j 26 Tex. Jur. 409, 410, Lotteries, 

Thus It Is-apparent that 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 'In the fact situation whloh'you ljresent. Cash 

prices atie awardqd gegkly oa.the basis of's simple drawing. 

The only question for our datermlnatlon, then, Is whether 

a consideration la 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+e In 
Hon. Ehner’NoVey, page 3 (V-1420) 

confl1at.l Siuce the holding iu eaah 0868 depends to a 

large extent upon the facta of the pimticular SitUatiOn 

before the oourt, wit Should briefly ermine the facts of 

8one of the leading Texas dealielonsr 

motion plau knovn 81) "Aoah'b Ark.” -%mre the merchante~paid 

license fees to a promoter for the jwkillege of pfwtlolpat1143 In the program. The promter dlstrlbu$ed cards to the 

merchants, who In turn gave thoa to their ouetomers in exchange fo? box tops aad other evidences of pU??ChaSeS made at 

their reapeatlvs stores, Provision va8 aleo made for the 

diStrlbut&m of Card8 to thOsQ who did not make purchases at 

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 license foes paid b the merchants constituted aonelderation moving lndlrmt 3 y frpm the contestants 

to the promotor,the court reaeomed, ar&d the merchant8 reoelved their oousldrrrtlcm in the foma of aUvertlalng and 

InareaseU patronago, 

In F 

Ass+lon, 

rrrton 

Zi?% 2d S&'{T%!%?!~e~~,si!a;~:p of 

6em oe rktloa &&or8 dirtributod ohences on an automobile among their onsthrs. A nrmbrrt OS tlokets were also 

given to peraonn rho msde no puro~aea. ,Xt was held that 

the pureha!me ooastltuted the oona&der&tion furnished by the 

ourtommr+ for the ohance of seeuriag tha 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, 

distributed tickets to noncustomers 88 veil 86 

to customers, It aeenm that the aoheme w&8 to 

distribute tickets, ln the a6it~ to aWtomer8, 

-as the 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,luge thus indwed we8 the oonsider8tion 

that peased from the tloket holder for.-the oh8noe 

reoeivod, In that the grioe .psid, rheterer it 

08~. the 8wunt belag amuterisl, ooostituted the 

~8ggrugote prloe for thu muruhe@Ise 'or sumloe 

&md.the tloket th8t represeated 8, 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~te8tt hold by.mtlon pitturethuaters #8ve.beeo ooneider&dby the $e%es Qoorte end 

elmtaut oIthQut'uxceptloa thera p3.e~ h8v~beea held'to be 

~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 08anot be 

~eda~8tr~llInghere. 

Tha r 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 .et tbe~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 distributed upon 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 principle8 have not bean overturned by 

the recent decision In B rl ce v. S~ta 

(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 increased patronage. 

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 

'zonsider the legalltjr of 8 amber of promotion plane based 

up+ then lottery principle. In Attommy ffeneral's Opinion 

0-2ti3 (.1940) the plan Involved vaa~ldentlc8l vlth'tilat In.- 

valved where. The fact6 Involved in that opinlonrefl&t: 

"The miwchants of 'Cleburne want offlclal 

rullng,regardlng a trades day plan called 

.~Appreclatlon Day.' The p&&n operates by.mer-. 

chants vho pay to a common fund called Appreciation Day. These merchants give couwna 

..called %-easure Cheat' coupons,.vhlch ompnn 

-ccM%ln marking@ from 5 to 5054. After puri 

chase~~~&re made 1~ these participating firms 

the customer Is given a coupon which is punched 

from any~dehomlnatlon from -9 5 tb 5O$. The 

custom to be,gqmerally foi$ch?irgd, that a CustOmr 

who purclases from 256 to 9gQin a partldiwting Store 18 

0 

given a 5% punched COup0nj.a purchase of l.OO to 

f 

1.99, 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&rtous nteroantlls advertl8ing schemes 

,co&%tute B 3rotterg; -and vltfioutwxceptlon 

.has.so-brand~:them~wheo the elemetits of 

ohwoe, prize aad oonslderatloa have, been 

found ko: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~654 of the. 

Pear&Code-oi' Texw.' 

I 

More reeetly, a baslee+Uy similar plea 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,,lt appears that o sub'stantial portion 

of.,the chanoea for averds me to be distributed upon the 

basis of piwchases from the merghsote~who partloipate in 

the plan,.aad the 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 removed by 

the QLstributioa oi a number oi "free' ohsrrdes on request. 

It Is our oplaloa, therefore, that"the "Appreo&atlon Day" 

plan outline&la your request ooastitutes a lottery prohlbltdd by 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 

distributed on the basis'of a drawing of 

coupons given to et&e patrons vlth purchases of merchandise and 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~ 

Reviewing Asslstant 

Charlea D, Mathevs 

First Asslstimt 

Caivln B. t&wood, Jr. 

Assistant 

. 

: