                 THEAYTORNEY                              GENERAL
                          OFTEXAS




Mr. A. G. Mueller                               Opinion    No. WW-355
County Attorney
Llano county                                    Re:    Whether     a drawing    for prizes
Llano, Texas                                           constitutes    a lottery    where
                                                       some of the irrkrt:: ?ZF given
                                                       with ;,ur~ ha;e of merchandise
                                                       and 5ome of the tick~ct: are
Dear   Mr.   Mueller:                                  &:ttn avfay Irvt.




                  6.
                       .   .   .




                 “‘I‘hc nlerchants     distribute   the tickets    to persons
         who visit their establishments,          whether     or not they pur-
         chnse wcr& llandise.        Should merchandise         be purchased,
         the cuctonler     I: given a ticket for each $1.00 in value so
         purchaced,      mrrely    as a matter    of limiting    the number    of
         tickets    to a cuFn.omer.     If the customer     desires    to make
         no purchases,      hc, will be given,    upon request,      as many
         tickets    a~ lbe ~?csires,  absolutely    free.

                 “tat.11 S.<turday evening       at a stipulated   tmle, R
         drawing     is had from the tickets       given away (a portion         of
         the ticket bein?.:, deposited      in a receptlc:lr   maintained      in
         ti.e busincsa    t::~.t,wbli.shment of each merchant       whr;rti rhe
         tlciets   are ~v::il.il~le.    rnd a stub being retaintd      tly ‘;lr,
Mr.   A. G. Mueller,            page     2 (WW-355)




               holder     thereof)   and the lucky number       or numbers    are
               announced.        If the holder   of the lucky number    or num-
               bers are not present,         they will noltheless    be handed
               the prize or prizes        provided    they contact  one of the par-
               ticipating     me,rchants    within 7 days from date of the draw-
               ing, and exhibit the stub or stubs to the winning ticket or
               tickets.     Should they not make such exhibition         within such
               time, the prize or prizes          are placed back in the ‘pot’ for
               redistribution       after another    drawing.

                      “Purpose    of this arrangement     is to encourage
               people  in the particular    town to trade ‘at home’ - but
               not with any particular     merchant.    Tickets   are available
               for purchase    by ANY MERCHANT          OR BUSINESS MAN
               in the particular    town.”

                      Section     47, Article        III, Constitution      of Texas,    provides     as
fol.lows   :

                       “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 en-
               terprises    or other evasions       involving    the lottery    princi-
               ple, established    or existing     in other States.”

                      Article     654,    Vernon’s      Annotated        Penal   Code,   reads   as
follows    :

                        “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 thou-
               sand 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.”

               Chief Justice Cureton, speaking    for the Supreme     Court
of Texas, in the case of City of Wink v. Griffith   Amusement     Co., 129
Tex. 40, 100 S.W.2d 695, said:

                  “The State Penal Code does not define a lottery,
           but our courts  have interpreted    it in accordance  with pub-
           lic usage, to mean a scheme      or plan which provides   for a
Mr.   A. G. Mueller,       page   3 (WW-355)




                  In this case the plan clearly       contains   two of the elements
of a lottery,   to wit, “a prize”     and distribution     by “chance”,     and the only
question    is whether    the plan contains    the third element,       that is, payment
of ‘*a consideration     for the right to participate.”        We think that under the
facts you have submitted        in this case there was a payment           of a consider-
ation for the right to participate       in the plan for the distribution        of the
prizes   by chance;    and, therefore,     the plan is a lottery.

                   The facts given show that the merchants                who participated
in the plan gave for each one-dollar’s             worth of merchandise            purchased      a
tick,et, constituting      a chance    on the drawing;       and also some tickets         were
given away free to customers,              who apparently      came in the store and who
made no purchases.           There was *a consi~deration           pai.d” to participate,      be-
cause    in return for giv~ing out the chances           in the form of the tickets         and
the giving away of the prizes the merchants                received     the good will and
patronage      of the persons      favored    with the tickets.      All of the persons        re-
ceiving    tick~ets c3me into the store and the merchant                thereby     had an op-
portunity     to display    his merchandise.        It is a fundamental        rule of mer-
chandising      that the first step in selling       is to bring customers           to where
the merchandise         is on display.      Merchants     pay money for advertising
merely     to get customers        in their place of business,         because     if customers
come into the place a part of them usually                buy.    The fact that the cus-
tomer went to the merchant’s             place of business       was of value to the mer-
chant, and constituted         a consideration.       This point is illustrated         in the
case of Smith v. State, 136 Tex. Cr. R. 611, 127 S.W.2d                   297, in which the
defendant      was convicted      of operating    a lottery,    the facts being that cards
were issued       by merchants       and a drawing      held in a theatre,       and although
most of the card holders           had bought merchandise           in order    to obtain cards
and participate       some had not paid anything.            The Court held the plan was
a lottery,     and on motion for rehearing          it was said:

                   Ir . . . It is obvious      that the dealer,    merchant      or
          business      establishment       not contributing     to the prize,    did
          not receive       any card or stamp for distribution.             Conse-
          quently,     parties    desiring    to secure    a chance    at the prize
          would necessarily          have to go to such merchant          or business
          establishment        as had contributed       to the general     fund.     As
          a result,     the good will and patronage          of the person     favored
          with the cards        is secured.      This patronage,      whatever      it may
          be, is given in exchange           for cards    and stamps,     which is an
Mr.   A. G. Mueller,      page     4 (WW-355)




          indirect   benefit  to the operator  of the :;cheme,    znd ens-
          ables hrm to conti,nue his game of chance.         It ic. 2 b:l!~,i.
          handed out to the gullible     as an inducement     to become
          customers     of the dealers   or me,rch:>nts  ewbscribi,ng     to
          the plan.”

                   A similar      holding     was     made   nn the c3se   of Featherstone
v. Independent      Service      Station    Ass’n,     (Ct.Civ.App.j    10 S.W.Zd   124, in
which theourt         said:

                   u . * I While dealers,       under the new plan, dis-
          tributed    t,xkets to noncustomers         as well as to customers,
          it seems     that the scheme      was to distribute        tickets,     in the
          main to customers,         as the evidence      discloses       that only a
          few, negligible      in number,     were given to persons           other
          than customers.         That the giving of tlck.ets, and the draw-
          ings :3nd distribution      of prizes,    were inducements           to pa-
          tronage     and unquestionably       lured customers,          IS shown
          from the very satisfactory           business    results     that, followed.
          Patronage      thus induced was the consideration               that passed
          from thei ticket holder for the chance             received,      in that the
          price pnid. whatr,?er        it was, the amount being knm;ikrial,
          constituted      thr aggregate     price for the merchandise             or se’r-
          vice and the ticket that represented            a chance       to win the
          prize;    in othtr words,      for one undivided       price both were
          purchased,       the merchandise,       or service,     and ticket, the
          ticket being as much bought as though priced                   separately.
          State v. Danz, 140 Wash. 546, 250 P. 37, and annotations
           48 A.L.R.     1109, 1122. We are of the opinion,            therefore,
           that the court did not err in concluding             that the facts con-
           stituted d lottery within the meaning            of the law.”       (Em-
           phasis    ours)

                Another  reason   why there was “a consideration     paid” in
this case 1s thst we must look at the whole plan or scheme        and if the per-
son or persons    who give the prizes,   that are distributed  by chance,    re-
ceive a consideration,    it makes no difference   that such consideration      is
paid by only a part of the participants.     This reasoning   was recognized
by the Supreme     Court of Texas in the case of City of Wink v. Griffith
Amusement     Co,, supra, in which the Court said:

                   641 . . We are unable             to see in what manner     the
          giving    of free registration             numbers   to those outside    of
Mr.   A. G. Mueller,                  page   5 (WW-355)




         the theater would change the l.egal effect          of what was
         done inside the theater,      for which a charge       was made;
         nor does the fact that a claimant’s         right ta the prize
         was evidenced     by a registration     book instead of a tick-
         et, as is usual in lotteries,     change the legal result.
         The registration    numbers      represented     ‘chances’   at the
         prize just as effectively      as would tickets     to the draw-
         ing . ” (Emphasis    by the Court)

The Court of Criminal                    Appeals    of Texas approved    this reasoning    in the
case of Cole v. State,                  133 Tex.Cr.R.     548, 112 S,W.2d 725, in which     it
said:

                   61 .
                          .They paid a valuable
                              .   .                      consideration       to
         participate.      The fact that they paid the same prince
         c.harged     on other nights when the theater             was running
         a more popular         play without an added attraction             is not
         conclusive      or controlling      in favor of the appel,lants.           A
         valuable     consideration      was paid.       What did the purchas-
         er get?      Not simply      a ticket for the screen         show, but a
         ticket to that, and to the chance            drawing.      The appellants
         and their patrons         so understood      and intended       it. That
         was the plan and purpose            for which the consideration             was
         paid.    Nor is the fact that free tickets were offered                  to
         outsiders      material     in any controlling       sense.    None such
         were given out as a matter             of fact    and, if there had been,
         it would not of itself have made any difference.                    If in the
         flourishmg      days of the Louisiana          lottery   its management
         had advertised        that it would give a free ticket to the presi-
         dent of every bank in the city of New Orleans,                    that would
         not have changed         the scheme      from a lottery,       whether      or
         not any one or all of such free tickets were accepted.’
         (Emphasis       ours)

                   L.. . .


                   “In &rt,   we think it does not materially               affect the
         scheme       that there be a possibility that some               one might get
         a prize     who had not paid for a ticket.   . . .”

                 Although   some jurisdictions   hold to the contrary,  we be-
lieve a majority     of the States follow the rule stated in the case of Cole
v. State, supra,    and which is well expressed     in the case of McFadden    v.
Bain, 126 Ore. 250, 91 Pac. 2d 292, in which the Supreme          Court of Oregon
said:
Mr.   A. G. Mueller,               page   6 (WW-355)




                  “To constitute    a lottery,    it is not necessary     for
          all participants    to pay for their chances,       but it is suffi-
          cient if some do, though many do not pay a valuable                con-
          sideration.     The l,egal effect    of the transaction     is not
          changed     by the fact that some do not pay.         If it is a lot-
          tery as to those who do pay, it necessarily            is a lottery
          as to those who do not pay for their chances.”

Other tames     to the same effect   are Commonwealth              v. Wall, 295 Mass.
70, 3 N.E.2d   28; Glover  V. Malloska,     238 Mich.216,          213 N.W. 107, 52
A.L.R.  77; Iris Amusement      Corporation     v. Kelly,        366 Ill. 256, 8 N.E.2d
648; and State v. Omaha Motion Picture         Exhibitors         Ass’*,   139 Neb. 312,
297 N.W. 547.

                We are advised    that those who contend that this plan is
legal rely on the c15e of Brice     v. State, 156 Tex.Cr.R.     372, 242 S.W.2d
433, in which the Court held that a certain      scheme    for giving away prizes
at a ticket drawing    was not a lottery.    We think that case is distinguish-
able by the fact that the State failed to show payment        of a consideration
in that it did not show that any money was paid for any of the tickets           and
did not show that the participants     were prospective     customers     who went
into the place of business.    The correctness      of the holding   in the case of
Cole v. State, supra, was recognized       by the Court in the Brice      case in
language   as follows:

                 “As we construe     the Cole case, affirmance        was
          based upon the holding     that the scheme     called   ‘Bank
          Nite’ was but a subterfuge;      that it was the purpose      and
          plan of the accused    to increase    the patronage    of his show;
          that the cost of the ticket constituted     a consideration     also
          for the chance,   and the fact that others     might get chances
          at the drawing   without consideration      did not materiaily     af-
          fect such scheme.‘”     (Emphasis     ours)

                 We think it appropriate  to conclude    this opinion   in the
words    of the Court in the case of Hoffman    v. State, (Ct.Civ.App.)     219
S.W.2d    539. as follows

                  ,a
                       . Our Constitutional
                           .   .                 provision     against    lot-
          teries   ‘or other evasions    involving     the lottery     principle’
          (Sec. 47, Art. 3) is strongly     worded,      the same or similar
          language    appearing  in all preceding       Constitutions;       being
          uniformly    construed   ‘with a view to remedying            the mis-
A..   _-




           Mr.   A. G. Mueller,      page   7 (WW-355)




                     chief intended to be prevented,           and to suppress       all eva-
                     sions for the continuance         of the mischief.’        54 C. J. S.,
                     Lotteries,   g 19, p. 862.      ‘Where     the question     presented
                     is one of enforcing      criminal     responsibility,      or of refus-
                     ing to aid in a transaction        alleged    to be within the statu-
                     tory prohibition,     the courts     will ordinarily      construe    lib-
                     erally   the provisions     relating    to lotteries     so as to include
                     all schemes     which appeal to the gambling             propensities      of
                     men. * State ex rel. Beck V. Fox Kansas                Theatre    Co., 144
                     Kan. 687 62 P.2d 929, 933, 109A.L.R.                 698.

                             “Man’s     ingenuity    has been fertile       in the inven-
                     tion of schemes       and devices      for the purpose        of satisfy-
                     ing at least the letter of these enactments                (Const.    sec.
                     47, Art. 3; Art. 654, Penal Code).              But considering        the
                     liberal  construction       heretofore     accorded      to them, and,
                     in slight paraphrase         of the oft-quoted      statement      from
                     Long V. State, 74 Md. 565, 22 A.4, 12 L.R.A.425,                    28 Am.
                     St.Rep.   268, we venture        the following     assertion.       That
                     we believe     it almost     impossible     for the most ingenious
                     and subtle mind to devise           any scheme      or plan, short of
                     a gratuitous     distribution     of his own property,          that will
                     not be held by the courts   of this State as in violation              of
                     the foregoing statute.”   (Emphasis    by the Court)



                                                    SUMMARY



                              A plan by which a group of merchants       in a town
                     give away numbered       tickets,  giving a ticket for each one-
                     dollar’s   worth of merchandise       purchased,  and also giving
                     some tickets     free to customers     who do not make purchases,
                     and the stubs of such tickets      from all of said merchants
                     are deposited      by the recipients     in a receptacle,     and a draw-
                     ing held at one central       place in the town at a certain       time,
                     and the holders      of the ticket halving the number        drawn given
                     a prize,   constitutes    a lottery   in violation   of Section   47, Ar-
                     ticle III. Constitution     of Texas,    and Article    654, Penal Code
Mr.   A.   G. Mueller,    page    8 (WW-355)




           of Texas,   even though some        of the ticket     holders           re-
           ceived  their tickets  free.

APPROVED:                                      Yours      very   truly,
OPINION COMMITTEE             :
                                               WILL WILSON
George   P. Blackburn,                         Attorney General              of Texas
Chairman                                                                  ,:, ,,      . ,_..L..~.
                                                    ;/ :I,,~,                      ,,f
Jack Goodman                                   BY
Mark McLaughlin                                     Cecil C. Rotsch
Ralph R. Rash                                          Assistant

Reviewed     for   the Attorney    General

By:   W. V. GEPPERT
