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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 - www.ag.state.mi.us)



Opinion No. 5692

April 23, 1980


Presence of consideration in game promotion


'Consideration' in game promotion

A promotional scheme which provides that in order for an individual to be eligible for a drawing for a prize, he or she must deposit funds in his or her credit union account or open a new account with the credit union constitutes a lottery prohibited by law.

Honorable Doug Ross

State Senator

The Senate

State Capitol

Lansing, Michigan 48902

You have requested my opinion on the following question:

'Whether a promotional scheme which requires an individual to be eligible for a drawing for a prize to (1) deposit funds in his/her own credit union account or (2) to open a new account with said credit union is a legitimate promotional scheme allowable under Michigan statutes, specificaly 1968 PA 348; MCLA 750.372a?'

The statute in question, 1968 PA 348, amended the penal code, 1931 PA 328, MCLA 750.372a; MSA 28.604(1), by adding Sec. 372a to permit the operation of certain game promotions. 1931 PA 328, Sec. 372a(a), supra, defines a game promotion in the following terms:

'For purposes of this section, the term game promotion shall mean any game or contest in which the elements of chance and prize are present but in which the element of consideration is not present.'

Your question indicates that the promotional scheme has a drawing for a prize; therefore, the elements of chance and prize are present. The question remaining is whether the element of consideration is also present. The absence of consideration would make the promotional scheme a game promotion and, therefore, permissible under Michigan law as long as the promoter complies with the other requirements of the statute. However, if the element of consideration is present, the scheme is not a game promotion but a lottery.

In Michigan, lotteries are prohibited by 1931 PA 328, Sec. 372, as amended, MCLA 750.372; MSA 28.604, which provides:

'Any person who shall set up or promote within this state any lottery or gift enterprise for money, or shall dispose of any property, real or personal, goods, chattels or merchandise or valuable thing, by the way of lottery or gift enterprise, and any person who shall aid, either by printing or writing, or shall in any way be concerned in the setting up, managing or drawing of any such lottery or gift enterprise, or who shall in any house, shop or building owned or occupied by him or under his control, knowingly permit the setting up, managing or drawing of any such lottery or gift enterprise, or the sale of any lottery ticket or share of a ticket, or any other writing, certificate, bill, goods, chattels or merchandise, token or other device purporting or intended to entitle the holder or bearer or other person to any prize or gift, or to any share of or interest in any prize or gift to be drawn in any such lottery or gift enterprise, or who shall knowingly suffer money or other property to be raffled for in such house, shop or building, or to be there won by throwing or using dice, or by any other game or course of chance, shall for every such offense be guilty of a misdemeanor, punishable by imprisonment in the state prison not more than two (2) years or by a fine of not more than one thousand (1,000) dollars.'

While the statute does not define the term 'lottery', the Michigan Supreme Court in Sproat-Temple Corp v Colonial Theatrical Enterprise, Inc, 276 Mich 127, 129; 267 NW 602 (1936), held:

'. . . (o)ur statutes do not attempt to define what a lottery is, but our court has said that the essentials of a lottery are consideration, prize and chance.'

Thus, the difference between a lottery and a permissible game promotion is that consideration is present in a lottery and absent from a game promotion.

The general rule regarding 'consideration' was set forth by the Michigan Supreme Court in Sanford v Huxford, 32 Mich 313, 315; 20 AR 646 (1875), as follows:

'. . . The rule seems to be well determined, that there must be a benefit on one side, or a detriment suffered or service done on the other. . . .'

With particular regard to promotional games, consideration need not involve a specific payment of money. Conferring a benefit as indirect consideration has been found sufficient for purposes of determining that an illegal lottery exists. In Sproat-Temple Theatre Corp, supra, the Court reviewed a scheme for the giving away of cash prizes to theatre patrons without cost to them. Participation was limited to persons attending the theatre. The Court noted that the result of the drawing and giving away of money prizes diminished the business of other theatres and increased the business of defendant's theatres. In finding that consideration was present, the Court quoted Society Theatre v City of Seattle, 118 Wash 258; 203 P 21 (1922):

'. . . it is argued that the element of consideration does not appear because the patrons of the theatres pay no additional consideration for entrance thereto, and pay nothing whatever for tickets which may entitle them to prizes. But while the patrons may not pay, and the respondents may not receive, any direct consideration, there is an indirect consideration paid and received. The fact that prizes of more or less value are to be distributed will attract persons to the theatres who would not otherwise attend. In this manner those obtaining prizes pay considerations for them, and the theatres reap a direct financial benefit." Sproat-Temple Theatre Corp, supra, 276 Mich 127, 130-131; 267 NW 602 (1936)

In United-Detroit Theatres Corp v Colonial Theatrical Enterprise, Inc, 280 Mich 425, 427, 429; 273 NW 756 (1937), the Court rendered a similar ruling regarding a game described as follows:

'. . . The 'screeno' cards are given to patrons of the theater with each admission ticket sold. The cards are not confined to purchasers of admission tickets, but are given upon request to any person in the foyer of the theater or to persons on the sidewalk in front of the theater. The game is played in the following manner: On the screen is a dial, upon which appear successive numbers, with a pointer to indicate the numbers thereon as the dial is turned from time to time. The card contains corresponding numbers arranged in five rows and columns. The person holding a card upon which the five numbers in any row, horizontally, vertically, or diagonally through the middle of the card, first check with the numbers appearing on the dial wins the prize.'

The Court then held:

'In the instant case the distribution of the tickets unquestionably attracted others to the theater who otherwise would not have attended and in this way the theater owner profited thereby. This is a sufficient consideration.'

More recently, in People v Brundage, 381 Mich 399; 162 NW2d 659 (1968), the Court considered a scheme wherein a participant was required to go to the store, have a card punched on a day other than the day of the drawing, be present at the drawing and use the registration and weekly qualification card printed and furnished by the store. Although no purchase was necessary to participate in the drawings, the Court held that the scheme was intended to attract persons to the store and in that way enhance the store's profits. The Court found sufficient indirect consideration so that the scheme was not a 'game promotion', but instead was an illegal lottery.

In the promotional scheme you describe, credit union members become eligible for the drawing by either (1) depositing funds in their account, or (2) opening a new account. Either action requires a participant to forego other uses of the deposited funds and enhances the assets of the credit union. Based upon the authorities herein cited, it is my opinion that such a promotional scheme includes the element of consideration.

It is, therefore, my opinion that a promotional scheme which requires an individual to be eligible for a drawing for a prize to (1) deposit funds in his or her credit union, or (2) open a new account with the credit union is not a game promotion, but constitutes a lottery prohibited by law.

Frank J. Kelley

Attorney General

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