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TO BE PUBLISHED IN THE OFFICIAL REPORTS

OFFICE OF THE ATTORNEY GENERAL

State of California

BILL LOCKYER

Attorney General

 

OPINION

of

BILL LOCKYER

Attorney General

GREGORY L. GONOT

Deputy Attorney General

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No. 98-1101

February 4, 1999

 

THE HONORABLE JAMES P. FOX, DISTRICT ATTORNEY, COUNTY

OF SAN MATEO, has requested an opinion on the following question:

May a charitable organization offer raffle tickets at $100 each or $500 for six

tickets, with an automobile as the contest prize, if all prospective purchasers are told they

may obtain one raffle ticket free?

CONCLUSION

A charitable organization may not raffle tickets at $100 each or $500 for six

tickets, with an automobile as the contest prize, even if all prospective purchasers are told

they may obtain one raffle ticket free. 
1 All undesignated section references hereafter are to the Penal Code.

2 The Constitution authorizes the California State Lottery as an exception. (Cal. Const., art. IV, § 19,

subd. (d).)

3 The Constitution (Cal. Const., art. IV, § 19, subd. (c)) and a statute (§ 326.5) allow charitable

organizations to conduct bingo games without violating section 319. Otherwise, all games of chance organized

for charitable purposes are subject to the state’s gambling laws (§ 319 - 337).

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ANALYSIS

The question presented for resolution concerns whether a charitable

organization may conduct a raffle if it allows each participant to obtain one raffle ticket free.

Would the proposal violate the terms of Penal Code section 319,1 which implements article IV,

section 19, subdivision (a) of the California Constitution? The constitutional provision states:

“The Legislature has no power to authorize lotteries and shall prohibit the sale of lottery

tickets in the State.”

2

 Section 319 defines a lottery as follows:

“A lottery is any scheme for the disposal or distribution of property by

chance, among persons who have paid or promised to pay any valuable

consideration for the chance of obtaining such property or a portion of it, or

for any share or any interest in such property, upon any agreement,

understanding, or expectation that it is to be distributed or disposed of by lot

or chance, whether called a lottery, raffle, or gift enterprise, or by whatever

name the same may be known.”

3

We conclude that the proposed raffle would violate the terms of section 319.

A lottery has three essential elements: (1) a prize, (2) distributed by chance,

and (3) payment of consideration. (Cal. Gas. Retailers v. Regal Petroleum Corp. (1958) 50

Cal.2d 844, 851.) As section 319 indicates, a raffle is another name for a lottery. (71

Ops.Cal.Atty.Gen. 139, 153 (1988).) In a typical raffle, valuable merchandise (the prize)

is distributed by chance (drawing the winning ticket) to those who have paid a valuable

consideration for the chance to win the prize. (Ibid.)

Here we are given that the item to be awarded to the winner of the contest is

an automobile (see Holmes v. Saunders (1952) 114 Cal.App.2d 389, 390 [automobile is

property which satisfies the prize element of a lottery]) and that the prize will be distributed

by chance (see People v. Cardas (1933) 137 Cal.App.Supp. 788, 789-790 [drawing the

winning ticket from a container is a method of distribution by chance]).
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We are also given that each ticket will cost $100, but that all persons solicited

for participation in the contest will be told that they may obtain one free ticket by contacting

a representative of the charitable organization at its headquarters. Prospective participants

will further be told that if they pay $500, they will receive six tickets. Thus, an extra chance

at winning the contest will be given to anyone paying $500. Do these circumstances provide

the third element–consideration paid for the chance to win–that is necessary to make this

particular fund-raising scheme an illegal lottery?

The question whether valuable consideration will be paid in the proposed

contest is to be determined from the standpoint of the holders of the tickets who might win

the prize, not from the standpoint of those who are conducting the event. (People v. Cardas,

supra, 137 Cal.App.Supp. at 791; Cal. Gas. Retailers v. Regal Petroleum Corp., supra, 50

Cal.2d at 860.) Accordingly, it is immaterial that the sponsor will not profit from the game

or that a worthy charity will be benefitted. (64 Ops.Cal.Atty.Gen. 114, 117 (1981).)

Since the statutory definition requires that the consideration paid be “valuable,”

it has been held that requiring a ticket holder to go to the contest operator’s place of business

to deposit the ticket stub cannot constitute the necessary consideration. (Cal. Gas. Retailers

v. Regal Petroleum Corp., supra, 50 Cal.2d at 861-862.) Similarly, it cannot be said here

of the proposed raffle that a holder of one free ticket, and no others purchased, will have paid

a “valuable consideration” simply by having to go to the headquarters of the charitable

organization to acquire the free ticket. 

If a distribution of free tickets is “general and indiscriminate,” the plan is a

gratuitous distribution of property, not a lottery, because the ticket holders do not pay a

valuable consideration for their tickets. (71 Ops.Cal.Atty.Gen., supra, at 149.) However,

this requires that every chance to win be made freely available. (68 Ops.Cal.Atty.Gen. 275,

277 (1985).) A contest does not cease to be a lottery because some are admitted to play

without paying for the privilege, so long as others do pay for their chance to win the prize.

(People v. Shira (1976) 62 Cal.App.3d 442, 460.) While a donation gratuitously given does

not constitute consideration (68 Ops.Cal.Atty.Gen.,supra, at 276; 60 Ops.Cal.Atty.Gen. 130,

132-133 (1976)), a “donation” required to be given, whether to the contest operator or to a

designated charity, does constitute consideration (68 Ops.Cal.Atty.Gen., supra, at 277, fn.

2; 64 Ops.Cal.Atty.Gen., supra, at 116-117).

Here, all participants will be entitled to one free ticket. Hence, it could be

argued that anyone who pays $100 for a ticket will be making a voluntary donation because

an equal chance at winning the prize will be available for free. Nevertheless, since each

participant is limited to one free ticket, anyone paying more than $100 for additional tickets

must be considered to be paying “valuable consideration” for the additional chances to win

the new automobile. This is particularly true of those paying $500 because they will receive
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more than their proportional share of the chances to win.

In 64 Ops.Cal.Atty.Gen. 114, supra, we had little difficulty in concluding that

a game of keno, in which some players participated without paying anything and others made

a “donation” to a charity entitling them to greater prizes if they won, was an illegal lottery.

(Id., at p. 117.) Similarly, in the proposed scheme before us, some of the participants will

pay valuable consideration to increase their chances of winning the prize. They will obtain

a benefit not otherwise available to every contestant. As to those persons, the game is a

lottery and therefore the entire scheme is a lottery. (People v. Shira, supra, 62 Cal.App.3d

at 460.) In State v. Mabrey (1953) 245 Iowa 428 [60 N.W.2d 889, 893], in language relied

upon by the court in People v. Shira, supra, 62 Cal.App.3d at 460, and by our office in 64

Ops.Cal.Atty.Gen., supra, at 117, the court analyzed the relevant issues as follows:

“. . . [T]he game here was a lottery at least as to those who purchased

tickets. It did not cease to be a lottery because some were admitted to play

without paying for the privilege, so long as others paid for their chances.

Presence of the nonpaying participants did not change the status of those who

paid. If it was a lottery as to some who played the game it was nonetheless a

lottery.

“Unless we close our eyes to reality the conclusion is justified that in

actual operation ticket purchasers— perhaps unwittingly— paid for their own

chance at prizes and also for the chance of those who were admitted to the

game without paying. Thus presence of the non paying participants did not

change the essential character of the enterprise. Indeed, as several courts have

pointed out, opening a lottery to nonpaying participants is, in a sense, all the

more objectionable in that it reduces the chance for the prize of those who pay

therefor and would seem to be entitled to it.”

We therefore conclude that a charitable organization may not offer raffle

tickets at $100 each or $500 for six tickets, with an automobile as the contest prize, even if

all prospective purchasers are told they may obtain one raffle ticket free.

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