THE ATI-OKNEY GENERAL
OP TEXAS

Au- 11. TExAm

June 7, 1947

Honorable J. G. Anderson County Attorney Freestone County Fairfield,Texas OpinionNo. v-238

Re: Are the lottery laws of Texas violatedunder a cooperative advertisingplan known as "bonanza"

Dear Mr. Anderson:

Your request for ‘ an opinion as ,towhether or not the plan referred to as "bonanza"and outlined, in'your letter constitutesa lottery has been carefully considered. You have submitted the rules, regulations,and Instructions under~which this advertisingplan operates,,and the plan as a nhole has been reVieWed. Due to the length of the various enclosures,It is impossible to set them out in their entlrety,~ butthey are returned herewith in accordancewith your request..

"Bonanza"is a program designed for use by motion pfcture theatres or radio stations In cooperationandln conjunction with a group of business firms. The object,.of the plan Is the stimulationof bus1nes.s which is ac,compllshed bg~creatingan lncentlve for the public to patronlze,thefirms of the,partl.cFpants. The business firms contributes to, a fund known as then bonanza award fund, and,dlstrlbuteto the public and to thelrpatrons,'~ coupons entitlingthem to participate in a drawing held.weeklyin which a portion of the bonanze'fund is awarded to certain c,oupon holders. The coupons are punched or otherwisemarked,ln accordancewith a schedule of values, and the greater the amount of,the~:Durchase, the greater the value of the ccupan. These coupons entitle the' holder,upon qualifying,to a portion of the bonanza award fund varying from l/20 to l/2 of the fund, dependingupon the amount punchedupon the coupon at the time of purchase. The plan further provides that one question to be known as the initial skill questionmst be answered true or false on the back of the coupon in order for the contestant to~quallfy. In other words, the person becomes eligible to,receivea cash prize upon his coupon being drawn and upon the true false question on the reserve side being answered correctly. After thus qualifying,the contestant is asked to answer from one to ten questions,the number' of questions asked dependingupon the valu'e ofthe coupon. In other words, if the coupon entitles, him to l/20 of the total amount in the bonanza award fund, he is asked to answer one questton and the number of questions is increaseddependentupon the value ofHonorable J. G. Anderson,page 2, v-238

the coupon to a maximum of ten questions,which are asked of the contestantholding a coupon entitlinghim to l/2 of the emtint In the bonanza award fund. These letter questions ere known es the final skill questions end ere to be distinguishedfrom the single true-falsequestion answered on the'reverseside of the coupon, which is designatedquellfylng skill questlon. In order for the contestantsto famlllerizethemselveswith the group of questions from which will be chosen the final question or questions es the case may be, these questioris may be broedcest,posted near the' coupon deposit'

boxes, or tiiled. The plan further provides thet a contestant

may elect to answer questlons from such category es he or she chooses to select, end the plan provides that all questlons will be made available In plb1i.c places fop persons to read and study. The plan contains the further stipulationthat a free doupon ~111 be given any quellfledadult person wtthout conslderetion of purchase oFpatronage when e request for the coupon 1s made of the heed of e firm giving them.

In the pest, this departmenthaa been called upon on numerous occasionsto render oplnlons es to the validity of verlous advertising

end promotionalplans. However, e review of theae opinionsshows that none of them were written on e fact "' situationsimilarto the one presented In your request. After a consideration

of the plan known ea "bonanza", we believe that two questicmsare involved in determiningwhether or not this scheti ,Fsa lottery. The first question is whether of not the fact that e personupon requestmay receive a free couponwould remove the element of conslderetionfrom this plan thereby depriving it of one of the three essentialelements of a lottery. The second question presentedIs whether sfter a conslderetionof all the facts the plan involvesthe element of chance.

Article 654 of the Penal Code provides:

"S any person shell establisha lottery or disposeof.eny estate, reel or' personal,by lottery, he shallbe fined not less than one hundrednor more than one thousanddollars; or If any person&all sell, offer for sale or keep for sale any ticket or part ticket in any lottery,he shell be fited not less tfaga

ten nor more than fifty dollars.

In 28 Texas Jurisprudence409, 410, we find the following definition

of lottery:
"'lbe term lottery has no technical slgnlflcetlcm In the law, end since our statute does not prwide a definition,Its meaning mast be determined from popularusage. According to that test a lottseyIs a scheme for the distributionof prizesHonorable J. G. Anderson, page 3, v-238

by lot or chance among those who have paid or agreed to Pay a considerationfor the right to participatetherein, or the distributionitself."

A slmllar definition to the one above eppeers in 34 American Jurisprudence 647, 648, end in addition, this language Is also found:

"As appears from the foregoingdefinitions, the three essentialelements of a lottery are: (1) conslderetlon; (2) prize; and, (3) chance. In order to comprise e lottery, these three elements or ingredientsmust be present;

. . . . .'
After a reading of the above definitions,It appears thet the element of prize Is present in the plan known es "bonanza". However, the elements of consideration

and chance are not so clearly present, and It Is necessary to determinewhether or not these elementsare contained in the plan before us.
The first question is whether or not the element of considerationIs present In this plan. It hes been settledby the " Texas Courts that the element of conslderetlonis presentunder e plan whereby coupons for a drawing are given with purchases of merchendlse. In support of this proposition,we cite the following languagefrom Featherstonev. IndependentService Statlon Assocletlon of Texas, 10 S.W. (2d) 124:

"Patronagethus Inducedwas the consideration that passed from the ticket holder for the chance received, in that the price paid, whatever it was, the amount being immaterial,conatiututed&& aggregateprice for the merchendlsem service end the ticket I&& revresented'&chance to win the prize; In other woraa, for, one undivided price both were purchased,the merchandise,or service, end ticket, the ticket being es nmch bought as though priced separately." (Emphasisadded)
The Instructionsstate that a free coupon will be given any qualifiedadult person without considerationof purchase or patronagewhen requested from the heed of e firm glvlng coupons.

In this connection,we should like to cite the case of City of Wink v. GriffithAmsement Company,decided b the Supreme Court of Texas, In 1936, and reported In 100 S.W. (2d 7 6%. This cese was a "bank night" cese, and persons were allowed to reglster for the drawing without buying e theetre ticket. Judge Cureton, speakFng for the Court, used this language :HonorableJ. 0. Anderson, page 4, V-238

"The actual money returns on 'banknight' would suggest that if any free numberswere ever distributed,they were negligible. We gather from the whole testimonythat the so-celled 'free numbers' featurewas largely one that existed in the minds of those who operated, the t.heatre,

and that it was never made a real active part of the 'banknight' plan. True, no doubt if anyone had applied for a free registrationto the drewFng, It would have been gFven, but human nature is such that the average person would seldom, If at all, sufferthe natural embarrassment of asking for e free registration. Indeed, if this were not so, the Income from 'banknights'would not have been substantially

more than that which had obtained prFor to the operationof the plan. In fact, the whole plan Is built up end made profitablebecause no normal person likes to 'bum'his neighbor for something,end by en appeal to the psychologyof cupiditywhich makes some take e chance of making large gains by a small outley. Those who invented end formuletedthe plan may not have been 'learned in the law' but their knowledge of mass-psychology we9 not wanting."

Xe believe this language sufficientto show that the elementof considerationis not removed by the giving of free couponsupon request. It is our opinion that the further fact thet the request must be made to the heed of a firm will serve even more to deter a person from asking for a free coupon.

The next question Is whether or not the element of chance is presentIn the plan. In order to win a cash award a person's name must first be drawn end then certein questionsmst be correctly answered. At first blush the plan seems to involveboth chanceand skill. In 27 Corpus Juris 968, we find this deflnltion of "gameof chance":

"The phrase 'geme of chance', it has been said, is not one long known In the law end having there in a settled signification. It is a game determinedentirely or in pert, by lot or mere luck,and in which judgment,practice, skill or adroitness

heve honestlyno office et all, or ere thwerted

by chance; a game in which hazard entlrely predominates."

An excellentend exhaustiveannotationon games of chance and games of skill appears in 135 A.L.R. 104-188. This annotation reviewsthe verlous types of games end discusses the IngredientsHonorableJ. G. Anderson, page 5, V-238

of chance end skill es they appear In these games. Unfortunately, no Texas ceses appear nor have any been found elsewhere,in which a Court has drawn a dlstlnct line between games of chance end games of skill. The case of Adams v. Antonio, 88 S.W. (2d) 503, error refused,was decided by the Waco Court of Civil Appeals in 1935. ThLs cese involvedthe question of whether or not marble machineswere gamblingdevices under Articles 619 and 620, Vernon's Penal Code. We think the opinion pertinent only because of Judge Alexander'sadoption of the language cited above from 27 Corpus Juris. The following statement is quoted from the oplnlon:

"In passing on the question here involved, we have not found It necessary to determinewhether the game played on the machines here under conslderetion is one of skill or one of chance for the reason that the statutemakes no such distinction but epplles alike to all such tables exhibitedfor the purpose of gambling, regardlessof the character of the game played thereon. However, if a declslon of this question be necessary to a solution of the case before us, It la our opinion from the evidencethat the element of chance, es the game is played, so predominatesover the element of skill es to make the game essentiallyone of chance and not of skill. 27 C. J. g68-969."

As to whether the element of chance nest control over the element of skill in order to bring a pertLculer schemeunder the lottery laws, we cite 34 American Jurisprudence, pages 649, 650 :

"In the United States, however,& what aunears to be the weight of authorityat the present day, it 5 zt-ii&essery that this element of chance be pure chance,but It may be eccompanledby en element of calculationor even of certainty; it is s;;z;",;ent if chance is the dominant z controlling

.

-- 8,

. . . . . . . "It has been said that no sooner is the term 'lottery'

defined by a court than ingenuity evolves some schemewithin the mlschlef discussed,although not quite within the letter of the definitiongiven; but an examinationof the meng cases on the subject -- -- --- will show that It Is ve~g difficult, If not Lmuossible. rortheost Tiiii enious and subtle mind to devise x schemeor- shorEf e gratuitous distributiona prouerty,whichhz xot been heldvthe ----Honorable 3. G. Anderson,page 6, V-238

courts of this country to be In violetlon of the lottery laws In force In the various stateTo the Union. The courts will inquire,not intothe --- Ge.-but Into the -however sklllfullge guised. in order& ascertainu It is urohtbited, (Emphasis or if it has the elementf chance." added) Ageln, to show the general rule followed,we quote from Volume 2 of Brlll's Cyclopediaof Criminal Law, page 1715:

"It is not e lotterywhere the prizes ere awarded es the result of e contest depending solely on skill or judgment. And It has been held by some courts that the dlstributlonnest be purely by chancewithout eny other element effectingthe result. m accordingto the welnht of authorityfi -- & sufficientIf chance is the dominating element, althouahthe result w be to some extent effected hthe exerciseOp judnment ,r skill, or thoL$h there may also be an element of uncertainty. (Emphasiseddedr
The following languagequoted frcm 38 Corpus Juris 291, also sets forth the general rule: followed,inthe United 'lotterr'includesthose schemeswherein thence is the dominant factor In determinlna

the result, although It may be effected & somedegree by-u exercise of skill or judgment; but= mle, known as 'thepure chance doctrine', that e contest Is not a lottery unless ifs issue depends entirelyon chance, is supportedby some authorities

Fn this country, end Is of general eppllcation In England and Canada.
"Whilethe better rule Is that the fact that skill OP judgmentmay be applied in a competition does not prevent it from being e lottery Ff the elementof thence predominates, yet, even where that rule prevails, It Is also well settled that competltlons

In which skill or judgment is the predominant

factor in determiningthe winners are not lotteries,even though the competitorsere requiredto p3y en entrance fee." (Emphasisadded)

You heve submittede list of qualifyingend final questions whichmst be correctlyansweredby the personswhose names are chosen. The instructIonsFnformus that these questionswillHonorable J. G. Anderson, page 7, V-238

be publicizedprior to the drawing, and that a person may select from the publicized list the category of questions he wishes propounded to him. As already stated, the mFn1m.m number of final questions asked of a contestantlsone and the maximm ten. Kowever, even though all final questions are not answered correctly, the contestantreceives a share of the award fund for each question properly answered. We have read the questionsbearing In mind the above facts, and it is our opinion that Fn the plan known as "bonanza"the element of chance predominates.

It is therefore the opinion of this department that the plan "bonanza"contains the three essential elements of a lottery and wuld be violative of Article 654 of Vernon's Penal Code.

SUMMARY
Under a sales stlmulatlonplan known as "bonanza"

whereln customers are given coupons with each purchase,which coupons entitle them to participatein a drawing, for a cash award, the fact that upon request, a couponmay be received without a purchase,does not remove from the scheme the element of considerationnecessary for a lottery. The plan "bonanza"contains the three essential elements of a lottery -- consideration,prFze and chance -- and Is violative of Article 654, Vernon's Penal Code.

Yours very truly,

ATTORNEY GENERAL OF TEXAS

By s/ClarenceY. Mills Clarence Y. Mills ,Asslstant

APPRGVED: s/PriceDaniel A'J?PORNEYGENERAL
Enclosures

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