           THE       ATI-OKNEY            GENERAL

                         OP      TEXAS

                         Au-       11. TExAm


                           June 7, 1947


Honorable J. G. Anderson           Opinion No. v-238
County Attorney
Freestone County                   Re: Are the lottery laws of Texas
Fairfield, Texas                       violated under a cooperative
                                       advertising plan 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 con-
stitutes a lottery has been carefully considered. You have sub-
mitted the rules, regulations, and Instructionsunder~which this
advertising plan operates,,andthe plan as a nhole has been re-
VieWed.  Due to the length of the various enclosures, It is im-
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,.ofthe plan Is the
stimulationof bus1nes.swhich is ac,compllshed  bg~creating an ln-
centlve for the public to patronlze,thefirms of the,partl.cFpants.
The business firms contributesto,a fund known as thenbonanza award
fund, and,dlstrlbuteto 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,ouponholders.
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'eofthe 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
Honorable J. G. Anderson, page 2,   v-238



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 distinguishedfrom the single
true-false question answered on the'reverse side of the coupon,
which is designated quellfylng skill questlon. In order for the
contestantsto famlllerizethemselves with the group of questions
from which will be chosen the final question or questions es the
case may be, these questiorismay be broedcest, posted near the'
coupon deposit'boxes, or tiiled. The plan further provides thet
a contestantmay 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.cplaces fop persons to read
and study. The plan contains the further stipulationthat 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 occasionsto render oplnlons es to the validity of ver-
lous advertisingend 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
considerationof the plan known ea "bonanza",we believe that two
questicms are involved in determiningwhether or not this scheti
,Fsa lottery. The first question is whether of not the fact that
e personupon request may receive a free coupon would remove the
element of conslderetionfrom this plan thereby depriving it of
one of the three essential elements of a lottery. The second ques-
tion 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 establish a lottery or
    disposeof.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 tfagaten nor more than fifty dollars.
        In 28 Texas Jurisprudence409, 410, we find the following
definitionof lottery:
         "'lbeterm 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 lottseyIs a scheme for the distribution of prizes
Honorable 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
    participate therein, or the distribution itself."
         A slmllar definition to the one above eppeers in 34
American Jurisprudence647, 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
    considerationand 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 conslderetlonis 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 Featherstonev. IndependentService Statlon Assocle-
tlon of Texas, 10 S.W. (2d) 124:
         "Patronagethus 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 considerationof 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 1936, and reported In 100 S.W. (2d7 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 registrationto the drewFng,
    It would have been gFven, but human nature is such
    that the average person would seldom, If at all,
    suffer the natural embarrassmentof asking for e
    free registration. Indeed, if this were not so,
    the Income from 'bank nights' would not have been
    substantiallymore than that which had obtained
    prFor to the operation of 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 psychology of
    cupidity which 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 sufficient to show that the
element of 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 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 968, 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
    determinedentirely or in pert, by lot or mere
    luck, and in which judgment, practice, skill or
    adroitnessheve honestly no office et all, or ere
    thwertedby chance; a game in which hazard entlre-
    ly predominates."
         An excellent end exhaustiveannotation 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
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 620, 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 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 scheme under
the lottery laws, we cite 34 American Jurisprudence,pages 649,
650 :

        "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        enious and subtle mind to de-
                     Tiiii
   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        sklllfullge
    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 dlstributlonnest 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   exerciseOp judnment ,r skill, or thoL$h
    there may also be an element of uncertainty.
    (Emphasis eddedr
         The following language quoted frcm 38 Corpus Juris 291,
also sets forth the general rule:
                              followed,in the United
                             'lotterr'includes those
    schemes wherein thence is the dominant factor In
    determinlnathe 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
    authoritiesFn 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
    elementof thence predominates,yet, even where
    that rule prevails, It Is also well settled that
    competltlonsIn which skill or judgment is the
    predominantfactor in determining the winners are
    not lotteries,even though the competitorsere
    requiredto p3y en entrance fee." (Emphasisadded)
         You heve submitted e list of qualifying end final ques-
tions which mst be correctly answered by the persons whose names
are chosen. The instructIonsFnform 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 contestantlsone 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 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 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 considerationneces-
    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 654, Vernon's Penal Code.
                             Yours very truly,
                             ATTORNEY GENERAL OF TEXAS

                             By s/ClarenceY. Mills
                                  Clarence Y. Mills
                                 ,Asslstant
APPRGVED:
   s/Price Daniel
A'J?PORNEYGENERAL
Enclosures
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