                                  Auwrrnr   1,. TEXAS
PRICE  DANIEL
ATTTORNEY
        GENERAL



                                    Mar& 7, 1952

         Hon.     Elmer   Mcvey        Opinion No. V-1420
         County Attcmey
         Freestone~County              Re: Le+ty        of   “Appreclatlon
         Falrf l&d, Texas                            a retail trade pro-
                                               motion enterprise,under
         Dear Sir:                             submitted'facts.
                   You h&e requested the .oplnionof this office
         concerning the lega;lty,under the Texas anti-lbtteyy
         laws, of a retail sales promotloa'enterpi4aecalled
         "AppreciationDay."
    _-
                   Acqo~ing to the lnfoimatloncodaIn@ la the
         ~descrlptlveolrculars submltt&d with your request, the.L
         plan operates through local nieehants vho contribute to
         a central;fund called the "ComMnltg Treasure Cheat.'!.'
         These merchants distribute "TreasureCheat Coupons," each
         of which la marked In denoml~ationsranging froiu5% to 56$.r
         The coupons We given to customers wlth.each pui?chase;  and
         they are punched 80 aa to Indicate denomlnat1oti,'according
         to the amount of the purchase. W1th.a purohaee worth from
         254 to gg#, a customer may receive a 5s coup&.    The per-
         centage denomination Indicated on the coupon le Increased
         according to the value of the purchase, up to a maxi
         of 50$, which requires a purchase of $25.00 or more. The
         coupons are signed and placed ln a box In each store, and' i *
         these In turn are placed ln a ejeneralcontainer f5om vhlch
         the winner Is drawn on weekly  Appreciation Days. The
         holder of the winning coupon 18 awarded the percentageOf
         the "TreasureC&eet" fund vhlch la indlca'ted on hla coupon.
                   The\submlttedfacts reflect that although the
         coupons are distributed prlmaril~~~uljon
                                                the basltiof spur-
         chase8 ,fromthe pfirtlclpatlngfirms, a number of'ooup6ne
         are alao made available to non-patrons.
                   Section 47 of Article TII of the Constltutlon.of
         Texas reads aa followe.:
                                           ,,
       Hon. Elmer McVey, page 2 (V-1420)
                       ;.

                 ?he Leglalatimeshall pass laws pro-
            hlbltlng the eatabllshmentof lotteries and
            gift enterprise8 In thla State, a8 well as
            the sale of ticket8 In ~lotterles,gift enter-
            prlsea oti.otherevaelonf~lnv~lVlngthe lot-
            tery prlnolple, establishedor exletlng In
,...        other S~tatee."
!               Article 654, Vetion's Penal Code, the Texas
       anti-lotteryt&at&e, protides:
                 "If/any person shall eatabllaha.lottery
            or dfiipoeeof any estate, real or per8ona1,
            by lottery, he shall be fined not lees than
            one hundred nor more than one thousand dollars; .
            Or If any perscm shall'sell,.offerfor sale or
            keep for ale any tioket or pert ticket la any
            lottery, he shall be fined 'not'
                                           less than ten
            nor more than fifty dollers..?
                  There is no .Texasstatute &l&h deflii~e~ a lot-
        tery, but the courts~~haveconsistentlyadoptea the follow-
       .lng~defJnltlon:' A lottery.18'a.achem for the dl&trlbutlon
       .of prlad by lot or e&an00 amoag~pers~pr, vhohave -*-id,Tr
        vho-have%greed to pay, a valuable oonsideratlonfor the
        .opportunltyto win these avards. City of Wink v. Griffith
        AmuseisentCo., I.29Ta. 40 llO,S.W.2d695 (1936).;54 C.J.S.
             Lotteries; Sec.'1-j 26 Tex. Jur. 409, 410, Lotteries,
                 Thus It Is-apparentthat every lottery oonelets Of
               88enttil eleIUent8,88 fOllOW8:  (1) pitie j (2) ChsWe;
        and (3) conelderatlon.
                 The elements of prlae and &%I& are obviously
       present'Inthe fact situation whloh'youljresent. Cash
       prices atieawardqd gegkly oa.the basis of's simple drawing.
       The only question for our datermlnatlon,then, Is whether
       a considerationla to be paid for the .prlvllegeof &~OIIWt-
       lng for the prlses.
                 There are many authorities,beth ln Texas and
       In other jurisdictions,whloh deal v&th.the queetlon of
       consideration.%mlott6rieei~Ho unifoirarule is bollowed
       by the co&s Qf other states, an&their'~declslou8~a+eIn
Hon. Ehner’NoVey,page 3 (V-1420)


confl1at.l Siuce the holding iu eaah 0868 depends to a
large extent upon the facta of the pimticular SitUatiOn
before the oourt, witShould briefly ermine the facts of
8one of the leading Texas dealielonsr


motion plau knovn 81) "Aoah'bArk.” -%mre the merchante~paid
license fees to a promoter for the jwkillege of pfwtlolpat-
1143In the program. The promter dlstrlbu$ed cards to the
merchants, who In turn gave thoa to their ouetomers in ex-
change fo? box tops aad other evidences of pU??ChaSeSmade at
their reapeatlvs stores, Provisionva8 aleo made for the
diStrlbut&m of Card8 to thOsQ who did not make purchases at
t&e pBrtisi~titlg  establislmmltr. There OardS entitled their
holders to ohaacee for 6 prise. The Court held this plan to
be a lothwy. The license foes paid b the merchants con-
stituted aonelderationmoving lndlrmt 3y frpm the contestants
to the promotor,thecourt reaeomed, ar&dthe merchant8 re-
oelved their oousldrrrtlcm in the foma of aUvertlalng and
InareaseUpatronago,
           In F     rrrton
Ass+lon,      Zi?% 2d S&'{T%!%?!~e~~,si!a;~:p             of
6em oe rktloa &&or8 dirtributodohences on an automo-
bile among their onsthrs.    A nrmbrrtOS tlokets were also
given to peraonn rho msde no puro~aea. ,Xt was held that
the pureha!me ooastltutedthe oona&der&tionfurnished by the
ourtommr+ for the ohance of seeuriag tha prize, therefore
the plan was a lottery. The fact that 8ome of the chances
i?ere given to non-ptmhasere ~88 held not to change the le-
gal effect of the sohome a8 8 whole4 In this oonnectlon,
the Court, at p     l27, said:
.




    Hon. hr        l(cVey,. psge 4 (V-1420)


              II
                   .  While de&lerS, uneer the ne* plan,
                       .   .

         distributed tickets to noncustomers88 veil 86
         to customers, It aeenm that the aoheme w&8 to
         distribute tickets, ln the a6it~ to aWtomer8,
         -as the evidence ~dlecloeesth8t oaly 8 fev,,neg-
          liglble In number, t?eregiven to pOrSOaS.Ot&r
         tttsll'eost~mers. That the giving Of tiOket8,
        .-audae dr8Ylxigt3 8M ~diEtributIQa or prises,
         were lndwements to patron&go and uuque#tiOna-
       . bPy lured owtomers, IS shorn iron the very
         ee;tlefao',orybusiness result8 tb8t followed.
         PeeQ,luge thus indwed we8 the oonsider8tion
         that peased from the tloket holder for.-the oh8noe
         reoeivod, In that the grioe .psid, rheterer it
         08~. the 8wunt belag amuterisl, ooostitutedthe
         ~8ggrugoteprloe for thu muruhe@Ise   'orsumloe
         &md.the tloket th8t represeated8,eh8EQe tQ Win
         the prlse; 3.nother word@, for Qae undiv1de.d~ .
         prioe both rerepureh8wd, the mero~ndl8e, or
         8ervlae, and tloket, thu tio,ket bolq 88 mmh
         lmq#lt~8e~thoughprlouu uop8rately. . . . ."
               Varlotui“‘Bank Alto" ~o~te8tt hold by.mtlon pit-
     turethuaters #8ve.beeo ooneider&dby the $e%es Qoorte end
     elmtautoIthQut'uxceptloathera p3.e~ h8v~beea held'to be
    ~lot~~~~.d~~;ta~~t~~~t-tbst--lrothgctro~'&U&~.~OU~~t~~
     o? the the&tea% were 8lloved t6~~p8rtIoIgsk. The dlstribu-~
     tioa~f "frdd?~oliauaus~ w&o ocmeldarudbat 8~8ubbteFme which.




             In 0 J OM 08ser'~lifIth f
    g8S.U.Zd 844      Clv.~Aop. 19 1
    lu@. -This dealslou, however, ,%a
    areatlrely different tram tho#o y@u PMront and 08anot be
    ~eda~8tr~llInghere.
              T h a rit islrld~at thdir       'kh   the purewe or
    WI80        oonetifoter the.oorrrldmtiol vhloh la neoe8-
    a8ryl8 8 1Qttory where the pur~h884seatltlm the garQhaser
    to r OhMoo .et tbe~grI$0. The uloruot.of aoru~iuqr8tion    is
    n~trrr~cr~b'Berely   bea&UW the m&zWh8& hiriwli doerrnot
    a      the 808rd8, but tog#hur      r;tth thO.OthWO mkO6 8 CQQ-
    tHMtIOnto600latre1f!md       iror,vhg+tho prIsor8re
.   .




        Hon. El~e;ri%cVeg,pELge5 \V-1423)


        distributed. And If the ohances are distributed upon th.e
                            the fact that "free" chance& are also
        baSi8 of puroha(lee)~,
        given avay do68 not change the legal affect of the SClleUe.
                  These principle8have not bean overturned by
        the recent decision In Brlce v. S~ta
                                         r tr 242 S.W.2d-433
        (Tex. Srlm. 1951)~..There, nono o t l ohanoes for the
        awards were ~dlstrlbutedoa the be818 of pu&KLSeS from the
        donor. The gene~ralpub116 V&B Invited to Peglater for the
        contest, end .&pparentlyno favorlt188,rv8sshorn customers.
        The court &$d, In effect, that the element of consldera-
        tion was ndt added by mere prospect of increased patronage.
        i+eviou~~oplnlon8of this offloe are In aocord with this
        result. ~See Attly ,&n. Op. V-l@/ (1947). See'alao Att'y
        Oen. op. 0-2309 (1940).
                   In then-pastthis offI. haa.be& called-upon'tn
        'zonsiderthe legalltjrof 8 amber of promotion plane based
         up+ thenlottery principle. In Attommy   ffeneral'sOpinion
         0-2ti3 (.1940)the plan Involved vaa~ldentlc8lvlth'tilatIn.-
         valvedwhere. The fact6 Involved in that opinlonrefl&t:
                   "The miwchants of 'Cleburnewant offlclal
             rullng,regardlnga trades day plan called
             .~Appreclatlon Day.' The p&&n operates by.mer-.
             chants vho pay to a common fund called Appre-
             ciation Day. These merchants give couwna
            ..called%-easure Cheat' coupons,.vhlchompnn
            -ccM%ln marking@ from 5 to 5054. After puri
             chase~~~&remade 1~ these participatingfirms
             the customer Is given a coupon which is punched
             from any~dehomlnatlonfrom -9 5 tb 5O$. The
             custom to be,gqmerally foi$ch?irgd,
                                              that a CustOmr
             who purclases from 256 to 9gQin a partldiwt-
             ing Store 18 given a 5% punched COup0nj.a pur-
             chase of l.OO to 1.99, a 10% COUpOIlj   a
             chase OS 02.00 to f2.99, 8 20% coupon; a r3.00
             to $3.99, 8 30% coupon, a 4400 to 4.90; a 40%
             coupon, and e~purchaee of %,5.00 to d10.00, a'
             50% coupon.
                  'The ouetomer then algae his or her niune
             and address on the back of'the coupon, drop8 it
             In a box, On 'Drawing'day the tickets or oou-
             pane are placed in a general container from which
             is dP8lin8 vlnnlng ticket, The pereon whose name
             Is drawn la awarded the 5,,lo, 20, 30, 40, and 50%
             of the tr8deS day fund money dependins on the per-
             centage of the coupon which 18 drava.
.   .   .

                                                                     -
                                                                         .



            eon. m.mer ~cvey; page 6 (V-1420)"


                      In holding'thlsplan to'be S lottery in viola-
            tion of AzWcle 654, V.P.C., it was sal&:~
                      "This departmeat.haaon.aume;oueooca-
                slonti.plrssed.oathe questlixrdt'vh&her or
                not v&rtous nteroantlls advertl8ing schemes
                ,co&%tute B 3rotterg;  -andvltfioutwxceptlon
                .has.so-brand~:them~wheo  the elemetitsof
                ohwoe, prize aad oonslderatloahave,been
                found ko:be preseat:
                        .&-
                      II . . .
                     %.
                     “For the reamns~ sot .?ort&la Oplnidne
                                                bndxuiderthe
                &mi O-1174, 0-2t?teb~~aaC~O-2563,~               '
                aalor~uile8 them-o~~tad,~lt1s oilroplaioa
                .a&-you 8~8 reepeutf'ully.advPee&thst the mer-
                ~atiZe~sdvertlelng -sohSny ~worIba& ‘in.your
                        Uppreci-stloa
                -,letter,             Day,' oanstltutes.a
                lottery as IS.eotieniae&byArtiblb~654of the.
                Pear&Code-oi'Texw.'
                                                       I
                      More reeetly, a baslee+Uy similar plea known           -
            as. i'Bonanaan
                         was held to be a lottery, ,Att'yQen. Op.
            V-238 (1947). We believe these ti&nlciasoontrol the
            problem.beforeus.        ,_
                       In the "AppreoiatlonPeg" plan, 4s de&rLbed
            la jour request,,lt appears that o sub'stantial   portion
            of.,thechanoea for averds me to be distributedupon the
            basis of piwchases from the merghsote~whopartloipate in
            the plan,.aad the slse of the aiff+rd ~a8to such ohanaes
            depends.upoathe value~ol,$hepurchase.,This constitutes
            a valuable consideration  moving. Sropr the ooatesfantswho
            .mke parahases  to the do,pii~of theiprlre &ad, uader the
            authorltip8olted above,~‘that eleneat is aot removed by
            the QLstributioaoi a number oi "free' ohsrrdeson request.
            It Is our oplaloa, therefore, that"the "Appreo&atlonDay"
            plan outline&la your request ooastitutesa lottery pro-
            hlbltdd by Arttile 654, Veraonfe Pea81 Code.
Hdn. Elmer MoVey, page 7 (v-1420)


                         SUMMARY

          A retail sales Fomotion plan, know
     as "AppreciationDay vharein prlses are
     distributed on the basis'of a drawing of
     coupons given to et&e patrons vlth pur-
     chases of merchandise and servioe, is 8
     lottery and prohibitedby Article 654;
     V.P.C.
APPROVED:'".                               Yours verg,truly,
Ned McDanle&                                 PRICE DANIEL
State Affala~ Dlvlslon                     Attorney General
E. Jaoobson~
Reviewing Asslstant
                                              Caivln B. t&wood, Jr.
Charlea D, Mathevs                            Assistant
First Asslstimt




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