Case Information
*1 THE ATI-OKNEY GENERAL OP TEXAS
Au- 11. TExAm
June 7, 1947 Opinion No.
Honorable J. G. Anderson
County Attorney Freestone County Fairfield, Texas Re: Are the lottery laws of Texas
violated under a cooperative advertising plan known as "bonanza" Dear Mr. Anderson:
Your request for ‘an opinion as ,to whether or not the plan referred to as "bonanza" and outlined, in'your letter con- stitutes a lottery has been carefully considered. You have sub- mitted the rules, regulations, and Instructions under~which this advertising plan operates,,and the plan as a nhole has been re- Due to the length of the various enclosures, It is im- VieWed. possible to set them out in their entlrety,~ butthey are return- ed herewith in accordance with your request..
"Bonanza" is a program designed for use by motion pfc- ture theatres or radio stations In cooperation andln conjunction with a group of business firms. The object,.of the plan Is the stimulation of bus1nes.s which is ac,compllshed bg~creating an ln- centlve for the public to patronlze,the firms of the,partl.cFpants. The business firms contributes to, a fund known as then bonanza award fund, and,dlstrlbute to the public and to thelrpatrons,'~ coupons entitling them to participate in a drawing held.weekly in which a portion of the bonanze'fund is awarded to certain c,oupon holders. The coupons are punched or otherwise marked ,ln accordance with 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, depending upon the amount punched upon the coupon at the time of purchase. The plan fur- ther provides that one question to be known as the initial skill question mst be answered true or false on the back of the coupon in order for the contestant to~quallfy. In other words, the per- son becomes eligible to,receive a 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 ques- tions asked depending upon 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 increased dependent upon the value of *2 Honorable J. G. Anderson, page 2,
the coupon to a maximum of ten questions, which are asked of the contestant holding a coupon entitling him 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 distinguished from the single true-false question answered on the'reverse side of the coupon, which is designated quellfylng skill questlon. In order for the contestants to famlllerize themselves with 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 ques- tlons will be made available In plb1i.c places fop persons to read and study. The plan contains the further stipulation that a free doupon ~111 be given any quellfled adult person wtthout conslder- etion of purchase oFpatronage when e request for the coupon 1s made of the heed of e firm giving them.
In the pest, this department haa been called upon on numerous occasions to render oplnlons es to the validity of ver- lous advertising end promotional plans. However, e review of theae opinions shows that none of them were written on e fact "' situation similar to the one presented In your request. After a consideration of the plan known ea "bonanza", we believe that two questicms are involved in determining whether or not this scheti ,Fs a lottery. The first question is whether of not the fact that e personupon request may receive a free coupon would remove the element of conslderetion from this plan thereby depriving it of one of the three essential elements of a lottery. The second ques- tion presented Is whether sfter a conslderetion of all the facts the plan involves the element of chance.
Article of the Penal Code provides: "S any person shell establish a lottery or dispose of.eny estate, reel or' personal, by lottery, he shall be fined not less than one hundred nor more than one thousand dollars; 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 Jurisprudence 409, 410, we find the following definition of lottery:
"'lbe term lottery has no technical slgnlflce- tlcm In the law, end since our statute does not prwide a definition, Its meaning mast be deter- mined from popular usage. According to that test a lottsey Is a scheme for the distribution of prizes *3 Honorable J. G. Anderson, page 3,
by lot or chance among those who have paid or agreed to Pay a consideration for the right to participate therein, or the distribution itself."
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 foregoing definitions, the three essential elements of a lottery are: (1) conslderetlon; (2) prize; and, (3) chance.
In order to comprise e lottery, these three ele- ments or ingredients must 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 determine whether or not these elements are contained in the plan before us.
The first question is whether or not the element of con- sideration Is present In this plan. It hes been settled by the " Texas Courts that the element of conslderetlon is present under e plan whereby coupons for a drawing are given with purchases of mer- chendlse. In support of this proposition, we cite the following language from Featherstone v. Independent Service Statlon Assocle- tlon of Texas, 10 S.W. (2d) 124:
"Patronage thus Induced was 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 && aggregate price for the merchendlse m 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." (Emphasis added)
The Instructions state that a free coupon will be given any qualified adult person without consideration of purchase or patronage when requested from the heed of e firm glvlng coupons.
In this connection, we should like to cite the case of City of Wink v. Griffith Amsement Company, decided b the Supreme Court of Texas, In and reported In 100 S.W. (2d 7 6%. This cese was a "bank night" cese, and persons were allowed to regls- ter for the drawing without buying e theetre ticket. Judge Cureton, speakFng for the Court, used this language :
Honorable J. 0. Anderson, page 4, V-238
"The actual money returns on 'bank night' would suggest that if any free numbers were ever distributed, they were negligible. We gather from the whole testimony that the so-celled 'free numbers' feature was 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 'bank night' plan. True, no doubt if anyone had applied for a free registration to the drewFng, It would have been gFven, but human nature is such that the average person would seldom, If at all, suffer the natural embarrassment of asking for e free registration. Indeed, if this were not so, the Income from 'bank nights' would not have been substantially more than that which had obtained prFor to the operation of the plan. In fact, the whole plan Is built up end made profitable because no normal person likes to 'bum' his neighbor for something, end by en appeal to the psychology of cupidity which makes some take e chance of making large gains by a small outley. Those who invented end formuleted the plan may not have been 'learned in the law' but their knowledge of mass-psychology we9 not wanting."
Xe believe this language sufficient to show that the element of consideration is not removed by the giving of free coupons upon 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 present In the plan. In order to win a cash award a person's name must first be drawn end then certein questions mst be cor- rectly answered. At first blush the plan seems to involve both chance and skill. In 27 Corpus Juris we find this deflnltion of "game of 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 determined entirely or in pert, by lot or mere luck, and in which judgment, practice, skill or adroitness heve honestly no office et all, or ere thwerted by chance; a game in which hazard entlre- ly predominates."
An excellent end exhaustive annotation on games of chance and games of skill appears in 135 A.L.R. 104-188. This annotation reviews the verlous types of games end discusses the Ingredients *5 Honorable J. 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 involved the question of whether or not marble machines were gambling devices under Articles 619 and Ver- non's Penal Code. We think the opinion pertinent only because of Judge Alexander's adoption 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 determine whether the game played on the machines here under consld- eretion is one of skill or one of chance for the reason that the statute makes no such distinction but epplles alike to all such tables exhibited for the purpose of gambling, regardless of the character of the game played thereon. However, if a decl- slon of this question be necessary to a solution of the case before us, It la our opinion from the evidence that the element of chance, es the game is played, so predominates over the element of skill es to make the game essentially one 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 scheme under the lottery laws, we cite 34 American Jurisprudence, pages 649, :
"In the United States, however, & what aunears to be the weight of authority at the present day, it 5 zt-ii&essery that this element of chance be pure chance, but It may be eccompanled by en element of calculation or 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 scheme within the mlschlef discussed, although not quite within the letter of the definition given; but an examination of the meng cases on the subject -- --- -- will show that It Is ve~g difficult, If not Lmuossi-
ble. rortheost Tiiii enious and subtle mind to de- vise x scheme or- shorEf e gratuitous dis- tribution a 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 sklllfullg e guised. in order & ascertain u It is urohtbited, or if it has the element f chance." (Emphasis added)
Ageln, to show the general rule followed, we quote from Volume 2 of Brlll's Cyclopedia of Criminal Law, page 1715:
"It is not e lottery where 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 dlstributlon nest be purely by chance without eny other element effecting the re- sult. m according to the welnht of authority fi -- & sufficient If chance is the dominating element,
althouah the result w be to some extent effected hthe exercise Op judnment ,r skill, or thoL$h there may also be an element of uncertainty.
(Emphasis eddedr
The following language quoted frcm Corpus Juris 291, also sets forth the general rule:
followed,in the United 'lotterr' includes those schemes wherein thence is the dominant factor In determinlna the result, although It may be effected & some degree by-u exercise of skill or judgment; but= mle, known as 'the pure chance doctrine', that e contest Is not a lottery unless ifs issue depends entirely on chance, is supported by some authorities Fn this country, end Is of general eppll- cation In England and Canada.
"While the better rule Is that the fact that skill OP judgment may be applied in a competition does not prevent it from being e lottery Ff the element of 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 determining the winners are not lotteries, even though the competitors ere required to p3y en entrance fee." (Emphasis added)
You heve submitted e list of qualifying end final ques- tions which mst be correctly answered by the persons whose names are chosen. The instructIons Fnform us that these questions will
Honorable J. G. Anderson, page 7, V-238
be publicized prior to the drawing, and that a person may select from the publicized list the category of questions he wishes pro- pounded to him. As already stated, the mFn1m.m number of final questions asked of a contestantls one and the maximm ten. Kow- ever, even though all final questions are not answered correctly, the contestant receives a share of the award fund for each ques- tion properly answered. We have read the questions bearing 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 of Vernon's Penal Code.
SUMMARY Under a sales stlmulatlon plan known as "bonanza" whereln customers are given coupons with each purchase, which coupons entitle them to participate in a drawing, for a cash award, the fact that upon request, a coupon may be re- ceived without a purchase, does not remove from the scheme the element of consideration neces- sary for a lottery. The plan "bonanza" contains the three essential elements of a lottery -- con- sideration, prFze and chance -- and Is violative of Article Vernon's Penal Code.
Yours very truly, ATTORNEY GENERAL OF TEXAS By s/Clarence Y. Mills Clarence Y. Mills ,Asslstant APPRGVED:
s/Price Daniel
A'J?PORNEYGENERAL
Enclosures
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