The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site -



Opinion No. 5258

January 25, 1978


Fund raising events


Fund raising events pursuant to Campaign Contributions & Expenditures Act

The fact that proceeds from the sale of chances for prizes at a political fund-raising event must be reported does not have the effect of making it legal for political candidates to conduct a lottery.

Honorable Paul A. Rosenbaum

State Representative

The Capitol

Lansing, Michigan 48901

Because section 7(4) of the campaign finance act, 1976 PA 388, Sec. 7(4); MCLA 169.207(4); MSA 4.1703(7)(4), defines a 'fund raising event' to include 'donations or chances for prizes', you have requested my opinion as to whether it is legal for a political candidate to conduct a lottery.

1976 PA 388, Sec. 7(4), supra, states:

"Fund raising event' means an event such as a dinner, reception, testimonial rally, auction, bingo, or similar affair through which contributions are solicited or received by purchase of a ticket, payment of an attendance fee, donations or chances for prizes, or through purchase of goods or services.' [Emphasis added]

The provisions of the Penal Code which prohibit conducting a lottery are contained in Section 372 and Section 372a, 1931 PA 328, Secs. 372 and 372a; MCLA 750.372 and 750.372a; MSA 28.604a and 28.604a. These provisions prohibit any person from establishing or promoting a lottery or gift enterprise for money. Section 372 makes it a criminal offense to 'dispose of any property, real or personal, goods, chattels or merchandise or valuable thing by the way of lottery or gift enterprise . . .'.

In Miller v Radikopf, 51 Mich App 393; 214 NW2d 897 (1974), the Court of Appeals noted that the general policy of this State is against the holding of lotteries and, therefore, would not permit a lottery winner to bring a successful suit for a private lottery prize. Responding to the contention that the 1970 constitutional amendment authorizing the legislature to establish lotteries (Const 1963, art 4, Sec. 41) and the enactment of the lottery act, 1972 PA 239; MCLA 432.1 et seq; MSA 18.969(1) et seq, evinces a public policy in favor of lotteries, the Court of Appeals noted that the specific exemption does not apply to any lottery other than that conducted by the State. In so holding, the Court stated:

'. . . This is especially true since the state lottery has as its purpose the raising of revenue for the state, and it would seem incongruous that the Legislature would allow private lotteries to compete with the public lottery and thereby reduce the revenues earned for the state. We therefore hold that the state lottery established by the McCauley-Traxler-Law-Bowman Lottery Act is the only legal lottery conducted in this state, and that the maintenance of other lotteries is contrary to statute and public policy.' 51 Mich App at 395-396; 214 NW2d at 898

Although the Supreme Court reversed the Court of Appeals in Miller v Radikopf, 394 Mich 83; 228 NW2d 386 (1975), the reversal did not indicate any dissent from the conclusion that the public policy of the State did not preclude the plaintiff from enforcing his claim; the Supreme Court did not indicate any dissent with the above statement of the Court of Appeals concerning lotteries. In fact, in its opinion the Supreme Court noted:

'It is a crime to 'set up or promote' a lottery in this state. It is similarly a crime for a person to 'sell', 'offer for sale', or 'have in his possession with intent to sell or offer for sale' lottery tickets.' 394 Mich at 87; 228 NW2d at 387

Thus, the Supreme Court only took exception to the decision of the Court of Appeals that there is a bar to enforcement of a contractual claim for a lottery prize against a person who did not promote the lottery because, the Supreme Court reasoned, it is consistent with the public policy of the State to encourage the performance of legal contracts and to foster the just resolution of disputes.

It is therefore clear that Michigan law prohibits a person from conducting a fund raising event which involves the sale of a chance for a prize unless authorized by statute.

The issue then becomes: Does the fact that 1976 PA 388, Sec. 7(4), supra, requires that the proceeds of a lottery be reported have the effect of legalizing the activity? In my opinion, the answer is, 'No'.

The concept of having a statute that requires that monies illegally obtained be reported is not without precedent. For example, the Internal Revenue Code of 1954, Sec. 4412 requires the filing of a special return and a registration application by persons engaged in the business of accepting wagers although this activity is prohibited. In United States v Knox, 396 US 77; 24 L Ed 2d 275; 90 S Ct 363 (1969), the person indicated for making a fraudulent statement to the government asserted that the wagering tax law that required him to file a special return be held invalid. However, a majority of the United States Supreme Court held that the Fifth Amendment gave the defendant no privileges of filing a false return when faced with the charge of prosecution for failure to file an accurate return or filing incriminating statements in a truthful return.

Thus, the fact that the legislature requires a person to report lottery income which is illegally obtained does not have the effect of legalizing the lottery that produces the income.

Nor is there any basis to conclude that the legislature intended by the enactment of 1976 PA 388, Sec. 7(4), supra, to authorize political candidates to hold lotteries. The title to 1976 PA 388, supra, clearly identifies its purposes as the regulation of political activity, campaign financing, contributions, expenditures, and reporting. There is nothing in the title to suggest to legislators and to the people that lotteries were to be authorized. Const 1963, art 4, Sec. 24, requires such notice to permit legislators to fully understand statutes before they approve them and second, that the public be made aware of the laws enacted. Adams v Treasurer of Wayne County, 71 Mich App 275; 248 NW2d 232 (1976).

It is therefore, my opinion that the fact that proceeds from the sale of chances for prizes at a political fund raising event must be reported does not have the effect of making it legal for political candidates to conduct a lottery.

Frank J. Kelley

Attorney General