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TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 

State of California
 

JOHN K. VAN DE KAMP
 

Attorney General
 

:


 OPINION :
 

:


 of : No. 87-906
 

:


 JOHN K. VAN DE KAMP : April 20, 1988


 Attorney General :
 

:


 JACK R. WINKLER :


 Assistant Attorney General :
 

:
 

THE HONORABLE THOMAS W. SNEDDON, JR., DISTRICT ATTORNEY
 

OF SANTA BARBARA COUNTY, has requested an opinion on the following
 

question: 


May a charitable organization lawfully sponsor and
 

conduct a "casino night" event for which tickets are sold to the
 

general public where those attending would be given chips with
 

which to play roulette, twenty-one and similar casino games and the
 

chips won by the players would be used at the end of the event to
 

(1) acquire raffle tickets to be drawn for valuable merchandise or
 

(2) bid at auction for valuable merchandise?
 

CONCLUSION
 

A charitable organization may not lawfully sponsor or
 

conduct a "casino night" event for which tickets are sold to the
 

general public where those attending would be given chips with
 

which to play roulette, twenty-one, and similar types of games and
 

the chips won by the players would be used at the end of the event
 

to (1) acquire raffle tickets to be drawn for valuable merchandise
 

or (2) bid at auction for valuable merchandise.
 

ANALYSIS
 

We are informed that a charitable organization proposes
 

to sponsor a "casino night" dinner event to which it will sell
 

tickets to the general public. Each person attending would be
 

given chips with which to play roulette, twenty-one, and similar
 

types of "casino games." At the end of the evening the players
 

would use the chips they had won either to acquire raffle tickets
 
 

to be drawn for valuable merchandise or to bid at auction for
 

valuable merchandise. The merchandise would be donated to the
 

charitable organization by local merchants. The charitable
 

organization would use the ticket proceeds only for charitable
 

purposes. We are asked whether such an event would be lawful under
 

California's gambling laws. We conclude that it would not be
 

lawful.
 

Background
 

California's laws have always placed restrictions on
 

certain forms of gambling. Article IV, section 27 of the
 

California Constitution of 1849 provided that "No lottery shall be
 

allowed by this state, nor shall the sale of lottery tickets be
 

allowed." An act to license gaming passed March 14, 1851
 

prohibited "all banking games, and games having a percentage" and
 

made violations a misdemeanor and also prohibited, with the same
 

penalty, the playing of "the game known as 'French monte' or 'Three
 

card game,' or the game known as 'Loop' or 'String game,' or the
 

game known as 'Thimbles,' (a shell game) or the game known as
 

'Lottery.'" The same act authorized counties to license gaming
 

houses in which all but the games outlawed by name could be played.
 

The Constitution of 1879 continued the lottery
 

prohibition in article IV, section 26 which provided: "The
 

Legislature shall have no power to authorize lotteries or gift
 

enterprises for any purpose, and shall pass laws to prohibit the
 

sale in this State of lottery or gift enterprise tickets, or
 

tickets in any scheme in the nature of a lottery." The Legislature
 

enacted chapters in the Penal Code prohibiting lotteries and other
 

forms of gaming.
 

The Penal Code contains one chapter on lotteries (§§ 319­

328), another on gaming (§§ 330-337s) and another on horse racing
 

(§§ 337.1-337.9). The chapter on lotteries makes many forms of
 

participation in a lottery a misdemeanor and section 3271

 prohibits
 

endless chain schemes. The gaming chapter defines gaming in
 

section 330 and prohibits slot machines, bookmaking and fixing
 

sporting events among other things. The chapter on horse racing
 

prohibits touting among other things.
 

The California Constitution has been amended to allow
 

specified forms of gambling. Article IV, section 19 now provides:
 

"(a) The Legislature has no power to authorize
 

lotteries and shall prohibit the sale of lottery tickets
 

in the State.
 

1

Section reference are to the Penal Code unless otherwise
 

indicated.
 

2. 87-906
 
 

"(b) The Legislature may provide for the regulation
 

of horse races and horse race meetings and wagering on
 

the results. [Originally adopted June 27, 1933 as art.
 

IV, § 25a.]
 

"(c) Notwithstanding subdivision (a) the Legislature
 

by statute may authorize cities and counties to provide
 

for bingo games, but only for charitable purposes.
 

[Added June 8, 1976.]
 

"(d) Notwithstanding subdivision (a), there is
 

authorized the establishment of a California State
 

Lottery. [Added Nov. 6, 1984.]
 

"(e) The Legislature has no power to authorize, and
 

shall prohibit casinos of the type currently operating in
 

Nevada and New Jersey. [Added Nov. 6, 1984.]"
 

From the beginning of statehood, California statutes have
 

prohibited certain forms of gambling and allowed others. State
 

statutes on gambling leave considerable scope for local regulation
 

because the state has not preempted the whole field of gambling
 

regulations. (Sullivan v. Fox (1987) 189 Cal.App.3d 673, 678.) 


We assume that no local ordinance is applicable since none was
 

referred to in the question. Our task is to determine whether the
 

"casino night" event contemplated by the question involves any of
 

the forms of gambling prohibited by state law. Since the
 

description of the event provided us speaks of roulette, twenty-one
 

and similar types of "casino games" we assume that the event will
 

not involve slot machines, horse racing, sporting events, or bingo.
 

Our analysis will therefore focus on whether the "casino night"
 

event violates California statutes prohibiting gaming and 

lotteries. 

Gaming 

Penal Code Section 330 defining gaming provides: 


"Every person who deals, plays, or carries on,
 

opens, or causes to be opened, or who conducts, either as
 

owner or employee, whether for hire or not, any game of
 

faro, monte, roulette, lansquenet, rouge et noire, rondo,
 

tan, fan-tan, stud-horse poker, seven-and-a-half, twenty-


one, hokey-pokey, or any banking or percentage game
 

played with cards, dice, or any device, for money,
 

checks, credit, or other representative of value, and
 

every person who plays or bets at or against any of said
 

prohibited games, is guilty of a misdemeanor, and shall
 

be punishable by a fine not less than one hundred dollars
 

($100) nor more than one thousand dollars ($1,000), or by
 

imprisonment in the county jail not exceeding six months,
 

or by both such fine and imprisonment."
 

3. 87-906
 
The crime defined in section 330 has two essential
 

elements: (1) The game must be one of those proscribed and (2) the
 

game must be played for money or representative of value. We will
 

examine each of these elements to determine their application to
 

the "casino night" described above.
 

Section 330 proscribes 12 games by name and two
 

categories of games denominated "any banking or percentage game
 

played with cards, dice, or any device," when played as described
 

therein. Two of the twelve games listed by name are mentioned in
 

the question, roulette and twenty-one. While many of the games
 

listed have fallen into disuse all of them are prohibited by
 

section 330 when played for money or representative of value. The
 

games listed by name are prohibited by section 330 whether or not
 

they are played as banking or percentage games. (People v. Gosset
 

(1892) 93 Cal. 641, 646.) Section 330 prohibits the named games
 

even though they are played with variations in the usual method of
 

play. In People v. Gosset, supra, at page 643, the court held
 

there was no error in refusing an instruction that "faro is played
 

with a full deck of fifty-two cards." The court stated:
 

". . . , when a prohibited game is played in all
 

other respects in the usual way, and according to its
 

established rules, the purpose of the law cannot be
 

thwarted by the simple devise of playing it with one or
 

two cards less than the number usually employed.
 

Otherwise no statute against a particular game would be
 

of any value."
 

A banking game is one where there is a fund against which
 

everybody has the right to bet, the bank taking all that is lost by
 

the bettors and paying out all that is won by them. (People v.
 

Carroll (1889) 80 Cal. 153, 157-158; People v. Ambrose (1953) 122
 

Cal.App.2d Supp. 966, 970.) "Banking game has come to have a fixed
 

and accepted meaning: the 'house' or 'bank' is a participant in the
 

game, taking on all comers, paying all winners, and collecting from
 

all losers." (Sullivan v. Fox (1987) 189 Cal.App.3d 673, 678.)
 

A percentage game encompasses "any game of chance from
 

which the house collects money calculated as a portion of wagers
 

made or sums won in play, exclusive of charges or fees for use of
 

space and facilities." ( Sullivan v. Fox, supra, at p. 679.) A
 

game may be a percentage game whether or not the house or bank
 

participates as a player in the game. (Walker v. Meehan (1987) 194
 

Cal.App.3d 1290, 1299-1301.)
 

If one of the similar types of "casino games" referred to
 

in the question is either a banking game or percentage game, as
 

those terms have been defined by the courts, which is played with
 

cards, dice, or any device it is prohibited by section 330 when it
 

is played for money or representative of value. 


4. 87-906
 
Next we consider the requirement of section 330 that the
 

game must be "played for money, checks, credit, or other
 

representative of value." In People v. Carroll, supra, the
 

information charged the defendant with conducting a banking game
 

known as wheel of fortune in violation of section 330. The Supreme
 

Court reversed the conviction stating (at p. 155):
 

"The information charges no offense under this
 

section [section 330] of the code, or any other. To
 

constitute it an offense to conduct the game, it must be
 

'played for money, checks, credit, or any other
 

representative of value.' The information does not
 

charge that the game was played for money, but that
 

defendant conducted it for money. It may be that those
 

who were engaged in the game were playing for amusement,
 

and paid the defendant a fixed sum, in no way dependent
 

upon the result of the game, for conducting it. This
 

would be within the allegations of the information, but
 

it would not be a public offense or within the statute."
 

(Emphasis added by the court.)
 

Thus there is no violation of section 330 unless the players are
 

playing the game for money or representative of value, i.e., with
 

the expectation of winning money or representative of value. If
 

the game is played without any expectation of winning money or
 

representative of value there is no violation of section 330 even
 

though the players may have paid something "in no way dependent
 

upon the result of game" for the privilege.
 

In Ex parte Williams, (1906) 7 Cal.Unrep. 301 (Court of
 

Appeal, Third District), 87 P. 565, the defendant was convicted of
 

violating section 330 for conducting a banking game by means of a
 

slot machine which his customers played for cigars. The machine
 

was operated by dropping a nickel in the slot and pressing a lever
 

which would cause a cylinder to move and display a combination of
 

cards thereon. If the combination appearing was one of the
 

designated winning poker hands the player received a designated
 

number of cigars. For other combinations the player received
 

nothing. On habeas corpus the court discharged the prisoner
 

because the slot machine was played for cigars and not "for money,
 

checks, credits, or other representatives of value." The court
 

applied the rule of construction known as ejusdem generis to
 

construe the words "other representative of value" to be limited to
 

the same class of things as money, checks and credits. The court
 

said: "Neither is it plain that the Legislature had in mind any
 

kind of property other than money, the thing most common for use in
 

such games, and its representative such as checks and demands for
 

the payment of money." Finally the court said: "There is nothing
 

in section 330 which prohibits gambling for cigars."
 

In In re Lowrie (1919) 43 Cal.App. 564 the defendant was
 

charged with conducting a dice game known as Razzle Dazzle
 

5. 87-906
 
described in detail in the complaint. On habeas corpus the court
 

held that the game was not a lottery as the complaint charged but
 

that the facts alleged did constitute an offense defined in section
 

330 of the Penal Code and remanded the defendant to custody. The
 

complaint alleged that the game was played with five dice rolled
 

simultaneously from a cup. Each player would pay the defendant one
 

dollar and receive ten chips in return. Play began when a player
 

made a bet by putting one or more of his chips on the board and the
 

defendant then rolled the dice and counted the number of pairs he
 

rolled. The player then rolled the dice and counted the number of
 

pairs he rolled. If the player rolled more pairs or the same
 

number of pairs with higher numbers he won and the defendant gave
 

him the same number of chips he bet in addition to the chips he had
 

bet. If the player lost the defendant kept the chips that were
 

bet. Play then passed to the next player where the process was
 

repeated. When play was over the players purchased merchandise
 

with the chips they had with each chip valued at ten cents.
 

The court first concluded that the game was a banking
 

game and then stated that the game the defendant conducted "was not
 

played for cigars or other merchandise, but for chips, each of
 

which under the agreement and scheme represented the value of ten
 

cents and was redeemable at such value by the defendant as banker,
 

in merchandise selected by the winner of the chips, and hence they
 

were representative of the value of the merchandise so received in
 

exchange therefor." The court added that "the merchandise given in
 

exchange for the chips must be deemed of value and the value of the
 

goods which, in accordance with the scheme, were given in exchange
 

for the chips won was represented by the chips, possessing no
 

intrinsic value whatever. Hence, conceding the correctness of the
 

Williams case, wherein it was held that the cigars constituting the
 

stakes were not representative of value, it is distinguishable from
 

the facts in the present case in that the chips played for were,
 

under the scheme and agreement, intended to and did represent ten
 

cents each in value, to be paid for and redeemed in merchandise."
 

While Lowrie distinguished the Williams case we think the
 

distinction is illusory. If the merchandise for which the chips
 

were redeemed in Lowrie "must be deemed to have value" represented
 

by the chips we fail to see why the cigars in Williams did not also
 

have value which was represented by the winning combination of
 

cards on the cylinder of slot machine. In our view an appellate
 

court would now reject the ejusdem generis construction of Williams
 

and hold that when the game is played directly for valuable
 

merchandise that such merchandise is "representative of value"
 

within the meaning of section 330.
 

When we combine the lessons of the Carroll and Lowrie
 

cases we see that whether chips are representative of value within
 

the meaning of section 330 depends on whether the chips may be
 

redeemed for money or something of value and not on what, if
 

anything, was paid for the chips. If we assume that the player
 

6. 87-906
 
pays money for chips having no intrinsic value of their own which
 

he then uses to participate in the game and wins additional chips
 

in the process, unless he can redeem the chips he has won for money
 

or representative of value it cannot be said that he "played" the
 

game for money or representative of value as Carroll construed
 

section 330. This is the reason the Lowrie case focused on the
 

fact that the chips were redeemable for merchandise instead of the
 

fact that the players had paid ten cents each for the chips. As we
 

shall see this is in sharp contrast to the consideration element of
 

a lottery which focuses upon what the players have paid for the
 

chance to win.
 

Thus where the game is played for chips which may be
 

redeemed for merchandise the chips represent the value of such
 

merchandise and hence are "representative of value" within the
 

meaning of section 330. In the "casino night" described the chips
 

are not assigned a particular monetary value (like the ten cents in
 

the Lowrie case) but this does not detract from the fact that they
 

have the value of the merchandise for which they are redeemed and
 

are thus "representative of value". This is particularly true
 

where the chips are used to buy merchandise at auction at the end
 

of the event. When the chips are used instead to buy raffle
 

tickets a new factor is added to the scheme in that the redemption
 

of the chips for merchandise is conditioned upon winning the
 

raffle. In our view the fact that redemption of the chips for
 

merchandise is conditioned upon winning a raffle does not render
 

them valueless or prevent them from constituting a "representative
 

of value" within the meaning of section 330. In other words the
 

chance to win the raffle has a value which is represented by the
 

chips.
 

We conclude that when persons make a wager with chips
 

(whether acquired by gift or purchase) at a game of roulette or
 

twenty-one or any other game prohibited by section 330, when the
 

chips won may be used to (1) acquire raffle tickets to be drawn for
 

valuable merchandise or (2) bid at auction for valuable
 

merchandise, the chips are "representative of value" and section
 

330 is violated.
 

Lotteries
 

Since the "casino night" described in the question
 

includes a raffle and the playing of casino games which may be
 

lotteries we now consider the statutory definition of a lottery.
 

Section 319 provides:
 

"LOTTERY DEFINED. 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
 

7. 87-906
 
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."
 

A lottery has three essential elements: (1) a prize; (2)
 

distributed by chance; and (3) consideration. (California Gasoline
 

Retailers v. Regal Petroleum Corporation (1958) 50 Cal 2d 844,
 

851.) The statutory definition refers to the prize as "property"
 

without any restrictive words and it has been held that the word
 

"property" in section 319 is used in its most general sense.
 

(People v. Settles (1938) 29 Cal.App.2d (Supp.) 781, 786.) It
 

includes real and personal property, money, goods, chattels, things
 

in action, evidence of debt and obligations. (Id.) The courts have
 

recognized the following kinds of property to satisfy the prize
 

element of a lottery: $500 in cash, People v. Gonzales (1944) 62
 

Cal.App.2d 274, 275; a Buick automobile, Holmes v. Saunders (1952)
 

114 Cal.App.2d 389, 390; five dollars worth of merchandise, People
 

v. Bardaty (1934) 139 Cal.App. (Supp.) 791, 793; a free trip to
 

Catalina, People v. Cardas (1933) 137 Cal.App. (Supp.) 788, 789­

790; the right to play further games free, People v. Settles,
 supra, at page 786. (Cf. Gayer v. Whelan (1943) 59 Cal.App.2d 255,
 

263 in which the court held that the amusement afforded by a free
 

game on a pinball machine was not a representative or thing of
 

value within the meaning of section 330a prohibiting possession of
 

a gambling device.) The valuable merchandise for which raffle
 

tickets are drawn referred to in the question would constitute a
 

prize under the lottery statute.
 

A prize must be distinguished from a bet between two
 

persons upon an uncertain future event. In People v. Postma (1945)
 

69 Cal.App.2d (Supp.) 814 the defendants were engaged in bookmaking
 

on horse races. The court held that the defendants were not
 

operating a lottery because there was nothing put up as a prize.
 

(We hasten to add that bookmaking is outlawed by § 337a.) At page
 

818 the court stated:
 

"When two persons bet with each other, it cannot be
 

said that either of them, or the stakeholder, if there is
 

one, has offered any property for disposal or
 

distribution to persons who have paid a consideration for
 

the chance of obtaining it. Each bettor has put up his
 

own property on a venture and at risk of losing it, but
 

has not paid for the chance of winning that of the other
 

bettor. This is true at least where but two persons or
 

two opposing sets of persons are concerned in the bet, as
 

here. In the case of a pari-mutuel pool to which many
 

persons contribute, there are, perhaps (eliminating the
 

question of chance), more persuasive reasons for
 

considering the scheme a lottery than we find here."
 

(Citing cases.) 


8. 87-906
 
 

The second element of a lottery requires that the prize
 

be distributed by chance. Whether the distribution of a prize is
 

distributed by chance is to be determined from the perspective of
 

the players. Where the person conducting the scheme arbitrarily
 

selects the winner the chance element of a lottery is present
 

because "as to the purchaser it is uncertain, it is chance that
 

luck and good fortune will give a large return for a small outlay."
 

(People v. Hecht (1931) 119 Cal.App. (Supp.) 778, 787.) On the
 

other hand where the persons conducting the scheme remove all
 

element of chance in determining the winner by fraudulently
 

contriving to have one of themselves selected as the winner the
 

scheme is not a lottery. ( People v. Carpenter (1956) 141
 

Cal.App.2d 884, 888.) A trading stamp scheme is not a lottery
 

because redemption of the stamps does not depend on chance. ( Ex
 

Parte Drexel (1905) 147 Cal. 763, 768.)
 

Distribution of the prize may depend on skill rather than
 

chance. Competitive shooting at a target is a game of skill and
 

the fact that an entry fee is charged to compete for a prize at
 

such a game does not convert the sport into a game of chance. (See
 

Brown v. Board of Police Commissioners (1943) 58 Cal.App.2d 473,
 

477.) Frequently a game will have elements of both skill and
 

chance. A game is not one of skill merely because that element
 

enters into the result in some degree, or one of chance solely
 

because chance is a factor in producing the result. ( People v.
 

Settles, supra, at p. 787.) It is the character of the game rather
 

than a particular player's skill or lack of it that determines
 

whether the game is one of chance or skill. The test is not
 

whether the game contains an element of chance or an element of
 

skill but which of them is the dominating factor in determining the
 

result of the game. (In re Allen (1962) 59 Cal.2d 5, 6.) Whether
 

skill or chance dominates a particular game can be a difficult
 

question of fact. (See People v. Settles, supra, at pp. 787-788.)
 

The courts have held the following methods to be
 

distribution by chance. Drawing the winning ticket from a
 

container; People v. Cardas (1933) 137 Cal.App. (Supp.) 788, 789­

790. Spinning wheels to determine winning number; People v.
 

Gonzales (1944) 62 Cal.App. 274, 277. Playing tango 2

; Einzig v.
 

Board of Police Commissioners (1934) 138 Cal.App. 664; People v.
 

Babdaty (1934) 139 Cal.App. (Supp.) 791. Adding dart throwing to
 

qualify winners of tango game presented question on which the jury
 

might reasonably have found either way as to whether skill or
 

2

"Tango" is a game similar to bingo using bingo like cards in
 

which the players participate in the selection of the letter-


numbers drawn by taking turns throwing a rubber ball into a table
 

of wooden pockets containing a pocket for each possible letter-


number combination. As a rule the ball bounces around a lot before
 

settling in a pocket.
 

9. 87-906
 
 

chance was the dominant factor in determining the result. (People
 

v. Settles, supra, 29 Cal.App.2d (Supp.) 781, 787.) Picking winners
 

of five successive horse races in betting in a "5-10" pool3 was
 

held to be a lottery as a matter of law. (Finster v. Keller (1971)
 

18 Cal.App.3d 836.) A contest in which participants paying one
 

dollar each selected the most appropriate captions for six cartoons
 

in which prizes were awarded the best by a panel of judges was held
 

to be a distribution by chance, because the elements of a bona fide
 

contest of skill were not present. ( People v. Rehm (1936) 13
 

Cal.App.2d (Supp.) 755, 757.) The game of Ringo consisting of a
 

bingo game in which players paid 25 cents for each card or got a
 

free card if they tossed a small ring over a peg and the winner, to
 

qualify for the prize had to toss a larger ring over a larger peg
 

was held to be a game in which the game of bingo, one of pure
 

chance, dominates. ( People v. Shira (1976) 62 Cal.App.3d 442,
 

462.)
 

In In re Allen (1962) 59 Cal.2d 5 the court held that the
 

game of bridge was a game in which skill predominated and thus was
 

not a game of chance. Draw poker is a game of chance. (Lavick v.
 

Nitzberg (1948) 83 Cal.App.2d 381, 382-383.) Roulette has been
 

described as "a banking and a percentage game." (Vasey v. Campbell
 

(1906) 4 Cal.App. 451, 453.) Rolling the ball into the groove
 

above a spinning roulette wheel would appear to involve little
 

skill, and none which would affect the place on the wheel on which
 

the ball finnaly comes to rest. Shooting craps and other games in
 

which the result depends on a throw of dice are generally held to
 

be games of chance. (38 Am.Jur.2d, § 40; 66 Ops.Cal.Atty.Gen. 276,
 

283 (1983).) Keno is a game of chance. (64 Ops.Cal.Atty.Gen. 114,
 

116 (1981).) Twenty-one, or blackjack as it is sometimes called,
 

is a game of chance. ( Jacques v. State Board of Equalization
 

(1957) 155 Cal.App.2d 448; 65 Ops.Cal.Atty.Gen. 123, 128; 66
 

Ops.Cal.Atty.Gen. 276, 280.) In Tooley v. U.S. (D.Nev. 1955) 134
 

F. Supp. 162, 166-167, the court observed:
 

"No one will question the fact that craps, twenty-


one and roulette are games of chance with percentages
 

heavily loaded in favor of the house, yet there are some
 

expert players, cross-roaders, who can outplay and break
 

the house even on these admitted gambling games. But
 

that does not convert these games from games of chance to
 

games of skill." 


3

While skill may dominate successful performance of a single
 

event chance rapidly overtakes skill when one wagers on the
 

successful repetition of that event. Thus a basketball player who
 

sinks 2 free throws out of 3 for the season has less than an even
 

chance (2/3x2/3=4/9) to sink two in a row, less than one chance in
 

three (2/3x2/3x2/3=8/27) to sink three in a row and less than one
 

chance in five (16/81) to sink four in a row.
 

10. 87-906
 
Applying the distribution by chance element of a lottery
 

to the "casino night" described in the request, we note that both
 

roulette and twenty-one are games of chance, not of skill. Both
 

games therefore constitute lotteries when played for prizes by
 

players who have paid a consideration for the chance to win.
 

Similar "casino games" of chance, such as craps, would also
 

constitute lotteries when played in like manner. It is assumed
 

that the "drawing" of the winning raffle tickets referred to in the
 

question will be selected at random from a container holding all
 

the eligible raffle tickets. Thus the distribution of the
 

merchandise as prizes would be by chance making the a raffle a
 

lottery if the players paid a consideration for the chance to win.
 

The third element of a lottery is consideration. The
 

question of consideration 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 (1933) 137 Cal.App. (Supp.) 788, 791; Cal. Gas Retailers v.
 

Regal Petroleum Corp. (1958) 50 Cal.2d 844, 860.) This follows
 

clearly from the statutory definition that it is the 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." ( Cal. Gas Retailers v. Regal
 

Petroleum Corp., supra, at p. 860.)
 

The kind of consideration necessary for a lottery is not
 

as extensive as the consideration necessary for a contract. Civil
 

Code section 1605 provides that "any benefit conferred, or agreed
 

to be conferred, upon the promisor, by any other person, to which
 

the promisor is not lawfully entitled, or any prejudice suffered,
 

or agreed to be suffered, by such person, other than such as he is
 

at the time of consent lawfully bound to suffer, as an inducement
 

to the promisor, is a good consideration for a promise." The
 

benefit conferred language will not suffice as consideration for a
 

lottery because it is what is paid by the ticket holder that
 

determines consideration for a lottery, not what benefit is
 

conferred on the sponsor. Thus the fact that the sponsor's
 

business is enhanced does not provide the consideration necessary
 

to make a promotion a lottery. ( Cal. Gas Retailers v. Regal
 

Petroleum Corp., supra, at p. 862.)
 

The question to be answered on the consideration element
 

was stated three ways by the court in People v. Cardas, supra, at
 

pages 790-791: Was a valuable consideration paid for the chance of
 

winning the prize by those who stood to win? Was anything of value
 

hazarded upon the chance by them? Did the holders of the prize
 

tickets pay a valuable consideration for the chance? Since the
 

statutory definition requires that the consideration necessary is
 

a "valuable one" paid, or promised to be paid by the one receiving
 

the ticket, the fact that a ticket holder must go to the place of
 

business of the sponsor of the scheme to deposit the ticket stub
 

11. 87-906
 
cannot be considered the necessary consideration. ( Cal. Gas
 

Retailers v. Regal Petroleum Corp., supra, at pp. 861-862.)
 

The consideration to make a transaction a lottery need
 

not be paid exclusively for the chance to win the prize. It is
 

sufficient that the consideration be paid for something else and
 

the chance to win the prize. ( People v. Gonzales (1944) 62
 

Cal.App.2d 274, 279-280; Holmes v. Saunders (1952) 114 Cal.App.2d
 

389, 390-391; Cal. Gas Retailers v. Regal Petroleum Corp., supra,
 at p. 859.) 


A game does not cease to be a lottery because some are
 

admitted to play without paying for the privilege, so long as
 

others paid for their chances. ( People v. Shira (1976) 62
 

Cal.App.3d 442, 460.)
 

Where, in a business promotion plan, there is a general
 

and indiscriminate distribution of free prize tickets whether or
 

not the recipients have made a purchase and valuable prizes are
 

awarded to those holding winning tickets selected by chance, the
 

plan is a gratuitous distribution of property, not a lottery
 

because the ticket holders did not pay a valuable consideration for
 

their tickets. ( People v. Cardas, supra; People v. Carpenter,
 supra; and Cal. Gas Retailers v. Regal Petroleum Corp., supra.)
 

While it is simple to state the foregoing rules announced
 

by the courts to determine the consideration element of a lottery
 

their application to particular cases can be difficult. One reason
 

is the difficulty in choosing which rules apply. Where prize
 

tickets are given both to those who have made a purchase and those
 

who have not, does the rule that the consideration need not be paid
 

exclusively for the chance to win apply so the purchase price paid
 

is not only for the merchandise but also for the chance to win?
 

Does the rule that the game does not cease to be a lottery because
 

some play free while others must pay apply? Or it this just a
 

business promotion with a gratuitous distribution of property? The
 

key to which of these rules apply lies in whether the distribution
 

of free tickets has been "general and indiscriminate". Only when
 

the court concludes that the distribution of free tickets is such
 

that it can realistically be said that the person who bought
 

merchandise did not pay for his ticket because he could have got
 

one free without making the purchase will it be concluded that the
 

person did not pay a valuable consideration for the chance to win
 

the prize. (People v. Shira, supra, at pp. 459-460.)
 

In Cal. Gas Retailers v. Regal Petroleum Corp., supra, at
 

page 859, the court rejected any mechanical application of rules to
 

determine whether a scheme is a lottery. Quoting from 34 American
 

Jurisprudence 650 the court said:
 

". . . that no sooner is the term 'lottery' defined
 

by a court, than ingenuity evolves some scheme within the
 

12. 87-906
 
 

mischief discussed, although not quite within the letter
 

of the definition given; but an examination of the many
 

cases on the subject will show that it is very difficult,
 

if not impossible, for the most ingenious and subtle mind
 

to devise any scheme or plan, short of a gratuitous
 

distribution of property, which has not been held by the
 

courts of this country to be in violation of the lottery
 

laws. . . . The court will inquire, not into the name,
 

but into the game, however skillfully disguised, in order
 

to ascertain if it is prohibited."
 

Thus the courts will cut to the heart of the scheme to determine
 

whether the players paid a valuable consideration for the chance to
 

win the prize however that consideration may be disguised. An
 

examination of six cases which have considered the element of
 

consideration in a lottery will provide some insight on how
 

California courts have applied the rules discussed above.
 

In Holmes v. Saunders, supra, a numbered ticket was
 

provided to each person who paid $1 for a six months subscription
 

to a publication in a subscription drive. The holder of the
 

winning ticket to be drawn on a specified date at the Oakland
 

Auditorium Arena would receive a Buick automobile. The court held
 

this was a lottery stating that "the consideration to make such a
 

transaction a lottery need not be paid exclusively for the chance
 

to win the prize. It is sufficient that the consideration, as
 

here, be paid for something else and the chance to win the prize."
 

In People v. Cardas, supra, a theater owner advertised
 

that free trips to Catalina would be given to the holders of
 

winning prize tickets. Five thousand prize tickets were
 

distributed with programs in the neighborhood of the theater and
 

2000 others were distributed to passing motorists. Others were
 

handed out in front of the theater to patrons and non-patrons
 

alike. No prize tickets were given by the cashier who sold
 

admission tickets and it was not necessary to buy an admission
 

ticket to secure a prize ticket. The prize ticket stubs were
 

deposited in a receptacle outside the theater. The drawing was
 

held on the stage but the winning numbers were announced both
 

inside and outside the theater. A person with a winning ticket
 

could enter the theater to claim the prize without paying an
 

admission. The court held that this was not a lottery because
 

"those who purchased admission tickets and received prize tickets,
 

. . . could not be said to have paid a consideration for the prize
 

tickets since they could have received them free."
 

People v. Gonzales, supra, was another theater promotion
 

involving five theaters. Every two weeks $500 was awarded in a
 

"cash night" drawing to the holder of the winning ticket. The
 

winning number was determined by spinning wheels and announcing it
 

simultaneously over the public address systems in all five
 

theaters. One minute was given for the holder of the winning
 

13. 87-906
 
ticket to claim the prize. One prize ticket was given for each
 

admission ticket bought at the time of purchase and another was
 

handed to each patron as they left the theater. No ticket was
 

given to anyone who had not paid for an admission. There were no
 

announcements or participation outside the theater. The court held
 

the cash night to be a lottery. The court distinguished People v.
 

Cardas, supra, at page 281 by "the fact that there was a general
 

and indiscriminate distribution of the drawing tickets irrespective
 

of whether admission was paid; that attendance inside the theater
 

was not a prerequisite to participation in the drawing; and
 

announcement was made outside the theater for the benefit of non-


customers."
 

Cal. Gas Retailers v. Regal Petroleum Corp., supra,
 involved an advertising and merchandising plan by the operators of
 

several gas stations. Prize tickets were given away free to anyone
 

who asked for them, and to many who did not ask for them both at
 

and away from the stations. Receipt of the tickets was not
 

dependent on any purchase. Ticket stubs had to be deposited at one
 

of the stations. Winning ticket numbers were drawn periodically
 

and posted at each station. The winner had a week to claim his
 

prize. In some cases the scheme was financed by adding a cent to
 

the price of the gasoline which was passed on to the customers.
 

The court held there was no lottery because it clearly appeared
 

from the record that any person could have received a ticket, free
 

for the asking, without making any kind of purchase. 


In Polonsky v. City of South Lake (1981) 121 Cal.App.3d
 

464 the court held that where the city issued a limited number of
 

building permits to those applicant lot owners selected by lot, the
 

fact that the city charged a fee to the applicants to pay for the
 

cost of notifying all lot owners of the plan did not constitute
 

consideration necessary to make the plan a lottery.
 

People v. Shira, supra, involved a game called "Ringo"
 

played in an amusement zone in Long Beach. The defendant had a
 

city license for his "Amusement-Skill" business. The game
 

consisted of a regular bingo game, preceded by a small ring toss
 

phase to qualify those who would play the bingo game, and followed
 

by large ring toss to qualify the bingo winner for the prize. In
 

the small ring toss each person was given small red ring free of
 

charge. If he succeeded in tossing it over a small peg he would
 

get two bingo cards free and could participate in the bingo game
 

without charge. If he missed the toss he could buy a small white
 

ring for 25 cents and receive two bingo cards with it. Those who
 

succeeded in tossing the white ring over the peg got their 25 cents
 

back but not if they missed. In either case they played the bingo
 

cards. Only 12 percent of those playing bingo got their cards free
 

by successfully tossing the small rings. After winning at bingo
 

the person won the prize only if he succeeded in tossing a larger
 

ring over a larger peg. The court held that Ringo was an illegal
 

lottery because the vast majority of the bingo players must pay a
 

14. 87-906
 
 

valuable consideration (25 cents) for the chance to win and the
 

game of bingo, one purely of chance, dominated over the skill
 

involved in the ring tosses. The court analyzed the Cardas,
 Gonzales, Carpenter, and Regal cases at great length. The court
 

stated (at p. 459):
 

"We construe the implicit holdings of those four
 

cases to be, as they pertain to the presence or absence
 

of the element of consideration, that in order for a
 

promotional giveaway scheme to be legal any and all
 

persons must be given a ticket free of charge and without
 

any of them paying for the opportunity of a chance to win
 

the prize. Conversely, a promotional scheme is illegal
 

where any and all persons cannot participate in a chance
 

for the prize and some of the participants who want a
 

chance to win must pay for it."
 

"In Cardas, Carpenter, and Regal the schemes lacked
 

the element of consideration and were legal because there
 

was a general and indiscriminate system of distribution
 

of the drawing tickets and the money paid by the patrons
 

for the admission ticket to the theater or for gasoline
 

was no more than consideration for viewing the movie or
 

for the gasoline itself. The element of consideration in
 

the promotional scheme in Gonzales and the scheme were
 

illegal because there was not a general and
 

indiscriminate distribution of the drawing tickets and
 

money paid for an admission ticket to the theater also
 

constituted consideration paid for the chance at the
 

prize." 


In the "casino night" described in the question we are
 

advised that the chips are "given" to those buying tickets to the
 

event. There is no indication that any of the chips to be used at
 

the games would be given away free to those who did not buy
 

tickets. Thus there is no general and indiscriminate distribution
 

of free chips to make this a gratuitous distribution of property.
 

Instead we believe the courts would find that a portion of the
 

price paid for the "casino night" tickets paid for the chips and
 

thus provided the consideration requisite for a lottery.
 

The players use the chips first to play the casino games
 

at which they would either lose some or all of their chips or win
 

more of them. Some of the "casino games", including roulette,
 

would constitute lotteries in that the players paid valuable
 

consideration for the chips for the chance to win a prize. After
 

the games are over we are advised that the players would use the
 

chips they had left or had won to buy raffle tickets for valuable
 

merchandise. As section 319 indicates, a raffle is another name
 

for a lottery. The valuable merchandise (the prize) is distributed
 

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

valuable consideration (for the chips) for the chance to win.
 

15. 87-906
 
 

The other use of the chips referred to in the question is
 

their use in bidding at an auction for valuable merchandise. Since
 

the auction comes at the end of the event most of the chips used at
 

the auction will be those which have been won at the gaming tables.
 

The auction provides the means of converting those chips into
 

valuable merchandise, making them "representative of value" and an
 

essential element making the playing of such games a violation of
 

section 330.
 

Participation
 

In addition to the elements discussed above a person must
 

participate in a prohibited game or lottery in a manner specified
 

by statute to violate the gaming and lottery laws. Merely being a
 

spectator does not violate either law.
 

Section 330 provides that "every person who deals, plays,
 

or carries on, opens, or causes to be opened, or who conducts,
 

either as owner or employee, whether for hire or not" a game
 

prohibited therein and "every person who plays or bets at or
 

against any of said prohibited games" is guilty of a misdemeanor.
 

Anyone who carries on or conducts a prohibited game played for
 

money violates section 330 whether or not he is an employer or
 

employee. (People v. Sam Lung (1886) 70 Cal. 515, 517.) Applying
 

this language to the "casino night" described, those who deal,
 

play, or bet at or against a prohibited game as well as those who
 

open, cause to be open, carry on or conduct a prohibited game would
 

violate section 330.
 

Section 320 provides that "Every person who contrives,
 

prepares, sets up, proposes, or draws any lottery, is guilty of a
 

misdemeanor." Section 321 provides that "Every person who sells,
 

gives, or in any manner whatever, furnishes or transfers to or for
 

any other person any ticket, chance, share, or interest, or any
 

paper, certificate, or instrument purporting or understood to be or
 

to represent any ticket, chance, share, or interest in, or
 

depending upon the event of any lottery, is guilty of a
 

misdemeanor." Section 322 provides that "Every person who aids or
 

assists, either by printing, writing, advertising, publishing, or
 

otherwise in setting up, managing, or drawing any lottery, or in
 

selling or disposing of any ticket, chance, or share therein, is
 

guilty of a misdemeanor." Section 326 provides that "Every person
 

who lets, or permits to be used, any building or vessel, or any
 

portion thereof, knowing that it is to be used for setting up,
 

managing, or drawing any lottery, or for the purpose of selling or
 

disposing of lottery tickets, is guilty of a misdemeanor."
 

Applying this language to the "casino night" described,
 

those who propose, prepare, set up, furnish chips with the "casino
 

night" tickets, transfer raffle tickets for chips, assist in the
 

raffle drawing, or in some other manner participate in a lottery in
 

16. 87-906
 
a manner prohibited by the above quoted sections are guilty of a
 

misdemeanor.
 

The question states that the "casino night" will be
 

sponsored and conducted by a charitable organization. Of course
 

this will be done by individuals who are acting on behalf of the
 

organization. If any of these individuals do any of the acts
 

prohibited by the gaming or lottery statutes the fact that they
 

acted on behalf of a charitable organization will not provide any
 

defense to such violations. Nor will the fact that the proceeds of
 

the "casino night" will be used only for charitable purposes
 

provide any defense to their violations. (See 64 Ops.Cal.Atty.Gen.
 

114, 117 (1981).) The only exception in California's gambling laws
 

for charities is that provided in section 326.5 authorizing cities
 

and counties to authorize certain organizations to conduct bingo
 

games for charitable purposes only. 


We conclude that a charitable organization may not
 

lawfully sponsor or conduct a "casino night" event for which
 

tickets are sold to the general public where those attending would
 

be given chips with which to play roulette, twenty-one, and similar
 

types of games and the chips won by the players would be used at
 

the end of the event to (1) acquire raffle tickets to be drawn for
 

valuable merchandise or (2) bid at auction for valuable
 

merchandise.
 

* * * * *
 

17. 87-906