# THEAYTORNEY GENERAL OFTEXAS

Mr. A. G. Mueller County **Attorney** Llano county Llano, Texas

Dear Mr. Mueller: Opinion No. WW-355 Re: Whether a drawing for prizes constitutes alottery where some of the irrkrt:: ?ZF given with ;,ur~ha;e of merchandise and 5ome of the tick~ct: are &:ttn avfay Irvt.

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“‘I‘hc nlerchants distribute the tickets to persons who visit their establishments, whether or not they purchnse wcr& llandise. Should merchandise be purchased, the cuctonler I: given aticket for each $1.00 invalue so purchaced, mrrely as amatter of limiting the number of tickets to a cuFn.omer. Ifthe customer desires to make no purchases, hc,will be given, upon request, as many tickets a~ lbe~?csires, absolutely free.

“tat.11 S.<turday evening at a stipulated tmle, R drawing is had from the tickets given away (a portion of the ticket bein?.:,deposited ina receptlc:lr maintained in ti.e busincsa t::~.t,wbli.shment of each merchant whr;rti rhe tlciets are ~v::il.il~le. rnd a stub being retaintd tly ‘;lr,Mr. A. G. Mueller, page 2(WW-355)

fol.lows :holder thereof) and the lucky number or numbers are

announced. Ifthe holder of the lucky number or numbers are not present, they will noltheless be handed the prize or prizes provided they contact one of the participating me,rchants within 7days from date of the drawing, and exhibit the stub or stubs to the winning ticket or tickets. Should they not make such exhibition within such time, the prize or prizes are placed back inthe ‘pot’ for redistribution after another drawing.

“Purpose of this arrangement is toencourage people inthe particular town to trade ‘at home’ - but not with any particular merchant. Tickets are available for purchase by ANY MERCHANT OR BUSINESS MAN in the particular town.” Section 47, Article III, Constitution of Texas, provides as

“The Legislature shall pass laws prohibiting the establishment of lotteries and gift enterprises inthis State, as well as the sale of tickets in lotteries, gift enterprises or other evasions involving the lottery principle, established or existing in other States.” Article 654, Vernon’s Annotated Penal Code, reads as follows :

“If any person shall establish alottery or dispose

of any estate, real or personal, by lottery, he shall be fined not less than one hundred nor more than one thousand dollars; or ifany person shall sell, offer for sale or keep for sale any ticket or part ticket in any lottery, he shall be fined not less than ten nor more than fifty dollars.” Chief Justice Cureton, speaking for the Supreme Court of Texas, inthe case of City of Wink v. Griffith Amusement Co., 129 Tex. 40, 100S.W.2d 695, said:

“The State Penal Code does not define alottery, but our courts have interpreted it in accordance with public usage, to mean a scheme or plan which provides for aMr. A. G. Mueller, page 3(WW-355)

In this case the plan clearly contains two of the elements of alottery, towit, “a prize” and distribution by “chance”, and the only question is whether the plan contains the third element, that is, payment of ‘*aconsideration for the right to participate.” We think that under the facts you have submitted in this case there was apayment of a consideration for the right to participate in the plan for the distribution of the prizes by chance; and, therefore, the plan is alottery.

The facts given show that the merchants who participated in the plan gave for each one-dollar’s worth of merchandise purchased a tick,et, constituting a chance on the drawing; and also some tickets were given away free to customers, who apparently came inthe store and who made no purchases. There was *a consi~deration pai.d” to participate, because in return for giv~ing out the chances inthe form ofthe tickets and the giving away of the prizes the merchants received the good will and patronage ofthe persons favored with the tickets. All of the persons receiving tick~ets c3me into the store and the merchant thereby had an opportunity to display his merchandise. It is afundamental rule of merchandising that the first step in selling is tobring customers towhere the merchandise is on display. Merchants pay money for advertising merely to get customers in their place of business, because if customers come into the place apart of them usually buy. The fact that the customer went tothe merchant’s place of business was of value to the merchant, and constituted a consideration. This point is illustrated in the case of Smith v. State, 136 Tex. Cr. R. 611, 127S.W.2d 297, inwhich the defendant was convicted of operating alottery, the facts being that cards were issued by merchants and adrawing held inatheatre, and although most of the card holders had bought merchandise in order to obtain cards and participate some had not paid anything. The Court held the plan was alottery, and on motion for rehearing itwas said:

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. . . It is obvious that the dealer, merchant or business establishment not contributing tothe prize, did not receive any card or stamp for distribution. Consequently, parties desiring to secure a chance at the prize would necessarily have togo to such merchant or business establishment as had contributed to the general fund. As aresult, the good will and patronage ofthe person favored with the cards is secured. This patronage, whatever it may be, is given in exchange for cards and stamps, which is anMr. A. G. Mueller, page 4 (WW-355)

indirect benefit to the operator ofthe :;cheme, znd ensables hrm to conti,nue his game of chance. It **ic.**2b:l!~,i. handed out to the gullible as an inducement tobecome customers of the dealers or me,rch:>nts ewbscribi,ng to the plan.” A similar holding was made nnthe c3se of Featherstone v. Independent Service Station Ass’n, (Ct.Civ.App.j 10S.W.Zd 124, in which theourt said:

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. *I While dealers, under the new plan, distributed t,xkets to noncustomers as well as to customers, it seems that the scheme was to distribute tickets, in the main to customers, as the evidence discloses that only a few, negligible innumber, were given to persons other than customers. That the giving of tlck.ets, and the drawings :3nddistribution of prizes, were inducements to patronage and unquestionably lured customers, ISshown from the very satisfactory business results that,followed. Patronage thus induced was the consideration that passed from theiticket holder for the chance received, inthat the price pnid. whatr,?er itwas, the amount being knm;ikrial, constituted thr aggregate price for the merchandise or se’rvice and the ticket that represented a chance towin the prize; in othtr words, for one undivided price both were purchased, the merchandise, or service, and ticket, the ticket being as much bought as though priced separately. State v. Danz, 140Wash. 546, 250 P. 37, and annotations 48A.L.R. 1109, 1122. We are ofthe opinion, therefore, that the court did not err in concluding that the facts constituted dlottery within the meaning ofthe law.” (Emphasis ours) Another reason why there was “a consideration paid” in this case 1sthst we must look at the whole plan or scheme and ifthe person or persons who give the prizes, that are distributed by chance, receive aconsideration, itmakes no difference that such consideration is paid by only apart ofthe participants. This reasoning was recognized by the Supreme Court of Texas inthe case of City ofWink v. Griffith Amusement Co,, supra, inwhich the Court said:

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. . We are unable to see inwhat manner the giving of free registration numbers to those outside ofMr. A. G. Mueller, page 5(WW-355)

the theater would change the l.egal effect ofwhat was done inside the theater, for which a charge was made; nor does the fact that a claimant’s right ta the prize was evidenced by aregistration book instead of aticket, as is usual in lotteries, change the legal result. The registration numbers represented ‘chances’ at the prize just as effectively as would tickets to the drawing
.” (Emphasis by the Court) The Court of Criminal Appeals of Texas approved this reasoning in the case of Cole v. State, 133Tex.Cr.R. 548, 112S,W.2d 725, inwhich it said:

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. . . They paid avaluable consideration to

participate. The fact that they paid the same prince c.harged on other nights when the theater was running amore popular play without an added attraction is not conclusive or controlling infavor ofthe appel,lants. A valuable consideration was paid. What did the purchaser get? Not simply a ticket for the screen show, but a ticket tothat, and to the chance drawing. The appellants and their patrons so understood and intended it. That was the plan and purpose for which the consideration was paid. Nor is the fact that free tickets were offered to outsiders material inany controlling sense. None such were given out as amatter of fact and, ifthere had been, itwould not of itself have made any difference. If in the flourishmg days ofthe Louisiana lottery its management had advertised that itwould give afree ticket tothe president of every bank inthe city ofNew Orleans, that would not have changed the scheme from alottery, whether or not any one or all of such free tickets were accepted.’ (Emphasis ours) L.

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“In &rt, we think itdoes not materially affect the scheme that there be apossibility that some one might get aprize who had not paid for a ticket.

. . .” Although some jurisdictions hold to the contrary, we believe amajority of the States follow the rule stated in the case of Cole v. State, supra, and which is well expressed in the case ofMcFadden v. Bain, 126Ore. 250, 91Pac. 2d 292, inwhich the Supreme Court of Oregon said:Mr. A. G. Mueller, page 6 (WW-355)

“To constitute alottery, it is not necessary for all participants topay for their chances, but it is sufficient if some do, though many do not pay avaluable consideration. The l,egal effect ofthe transaction is not changed by the fact that some do not pay. If it is alottery as to those who do pay, itnecessarily is alottery as to those who do not pay for their chances.” Other tames to the same effect are Commonwealth v. Wall, 295 Mass. 70, 3N.E.2d 28; Glover V.Malloska, 238 Mich.216, 213N.W. 107, 52 A.L.R. 77; Iris Amusement Corporation v. Kelly, 366 Ill. 256, 8N.E.2d 648; and State v. Omaha Motion Picture Exhibitors Ass’*, 139Neb. 312, 297 N.W. 547.We are advised that those who contend that this plan is legal rely on the c15e of Brice v. State, 156Tex.Cr.R. 372, 242 S.W.2d 433, inwhich the Court held that a certain scheme for giving away prizes at aticket drawing was not a lottery. We think that case is distinguishable by the fact that the State failed to show payment of a consideration inthat it did not show that any money was paid for any of the tickets and did not show that the participants were prospective customers who went into the place of business. The correctness of the holding in the case of Cole v. State, supra, was recognized by the Court inthe Brice case in language as follows:

“As we construe the Cole case, affirmance was based upon the holding that the scheme called ‘Bank Nite’ was but asubterfuge; that itwas the purpose and plan ofthe accused to increase the patronage of his show; that the cost ofthe ticket constituted a consideration also for the chance, and the fact that others might get chances at the drawing without consideration did not materiaily affect such scheme.‘” (Emphasis ours) We think it appropriate to conclude this opinion in the words of the Court in the case ofHoffman v. State, (Ct.Civ.App.) 219 S.W.2d 539. as follows

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. . . Our Constitutional provision against lotteries ‘or other evasions involving the lottery principle’ (Sec. 47, Art. 3) is strongly worded, the same or similar language appearing inall preceding Constitutions; being uniformly construed ‘with aview to remedying the mis-A.. _-

Mr. A. G. Mueller, page 7 (WW-355)

chief intended tobe prevented, and to suppress all evasions for the continuance ofthe mischief.’ 54 C. J. S., Lotteries, g 19, p. 862. ‘Where the question presented is one of enforcing criminal responsibility, or of refusing toaid inatransaction alleged tobe within the statutory prohibition, the courts will ordinarily construe liberally the provisions relating to lotteries so as to include all schemes which appeal to the gambling propensities of men. * State ex rel. Beck V.Fox Kansas Theatre Co., 144 Kan. 687 62 P.2d 929, 933, 109A.L.R. 698.

“Man’s ingenuity has been fertile in the invention of schemes and devices for the purpose of satisfying at least the letter ofthese enactments (Const. sec. 47, Art. **3; Art.**  654, Penal Code). But considering the liberal construction heretofore accorded to them, and, in slight paraphrase of the oft-quoted statement from Long V.State, 74Md. 565, 22A.4, 12L.R.A.425, 28Am. St.Rep. 268, we venture the following assertion. That we believe italmost impossible for the most ingenious and subtle mind to devise any scheme or plan, short of agratuitous distribution of his own property, that will not be held by the courts of this State as in violation of the foregoing statute.” (Emphasis by the Court)

SUMMARY

A plan by which agroup of merchants in atown give away numbered tickets, giving aticket for each onedollar’s worth of merchandise purchased, and also giving some tickets free to customers who do not make purchases, and the stubs of such tickets from all of said merchants are deposited by the recipients inareceptacle, and adrawing held at one central place in the town at acertain time, and the holders ofthe ticket halving the number drawn given aprize, constitutes a lottery in violation of Section 47, Article III. Constitution of Texas, and Article 654, Penal CodeMr. **A.** G. Mueller, page 8 (WW-355)

ofTexas, 

### even though some of the ticket holders received their tickets free. APPROVED: OPINION COMMITTEE : George P. Blackburn, Chairman Jack Goodman Yours very truly, WILL WILSON Attorney General of Texas :I,, ;/ ~, ,:,,, .,_.. L..~. ,,f BY Mark McLaughlin Ralph R. Rash Reviewed for the Attorney General Cecil C. Rotsch Assistant

By: W. V. GEPPERT