Attorney General Opinion WW-0295

AUSTIN 11. TIC&+@ October 31, 1957 Honorable Nelson R. Sharpe Assistant District Attorney Kleberg County Courthouse Kingsville, Texas Dear Mr. Sharpe: Opinion No. WW-295 Re: Whether a certain sales promo- tion scheme his a lottery in viola- tion of the Texas Penal Code. You have requested an opinion as to whether a certain sales promotion scheme is in violation of the Texas Lottery laws. You have stat- ed tbat the sales promotion scheme in question known as “Lucky Day”. is as follows: A business house totals its monthly sales and then divides the number of working days in the month into the total monthly sales to de- termine the average daily sales. At the end of the month the daily sales for each working day is computed and the day of the month on which the sales most nearly approach the average daily sales for that month is de- clared the “lucky day”. All customers who made purchases of merchand- ise on the “lucky day” receive a refund of the entire purchase price of the articles so purchased. vides: Article III, Section 47, of the Constitution of Texas, pro- “The Legislature shall pass laws prohibiting the establishment of lotteries and gift enterprises in this 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, Penal Code of Texas, 1925, provides: “If any person shall establish a lottery 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 if any 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.” Hon. Nelson R. Sharpe, page 2 (WW-295) There is no Texas statute which defines a lottery, but the Texas courts have consistently adopted the following definition: A lottery is a scheme for the distribution of prizes by lot or chance among persons who have paid or who have agreed to pay a valuable consideration for the opportunity to win these awards. The Texas courts have consistently held that a lottery consists of three essential elements, namely, (1) a prize or prizes, (2) the award or distribution of the prize or prizes by chance, and (3) the payment either directly or indirectly by the participants ~of a con- sideration for the right or privilege of participating. City of Wink v. Grif- fith Amusement Company, 129 Tex. 40, 100 S.W.Zd 695 (1956); Cole v. State, 133 Tex.Crim. 548, 112 S.W.2d 725 (1938); Smith v. State, 136 Tex.Crim. 611, 127 S,W.2d 297 (1939); Brice V. State, 242 S.W.2d 433 (Tex.Crim. 1951). The sales promotion scheme that you have described is one whereby a merchant invites customers to purchase his merchandise with the offer that the consideration that the customer exchanges for the mer- chandise will cover the purchase price of the merchandise and the chance to win a prize, i.e., the right to participate in the merchant’s “lucky day”. It seems clear that such a scheme falls within the court’s definition of a lottery and the three essential elements of a lottery, (1) prize, (2) chance, and (3) consideration, are present. It is, therefore, our opinion that such a sales promotion scheme is in violation of Article 654, PenalCode of Texas, 1925. SUMMARY A sales promotion scheme whereby a business house es- tablishes a “lucky day” and refunds to customers who made purchases of merchandise on the “lucky day” the purchase price of the articles so pur- chased, is a lottery and in violation of Article 654, PenalCode of Texas, 1925. APPROVED: OPINION COMMITTEE: H. Grady Chandler, Chairman J. C. Davis, Jr. W. V. Geppert C. K. Richards John Minton George P. Blackburn REVIEWED FOR THE ATTORNEYGENERAL Yours very truly, WILL WILSON Attorney General of Texas By @&d Q-J& Richard B. Stone Assistant Attorney General BY: James N. Ludlum