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)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6755

March 29, 1993

LOTTERIES:

Licensed racetrack in Michigan providing lottery tickets to individuals at the racetrack

Sections 372 and 373 of the Michigan Penal Code prohibit a Michigan pari-mutuel racetrack, which is not licensed as a Michigan lottery sales agent, from using a promotion which would provide Michigan lottery tickets to individuals at no monetary cost, as a means of advancing the racetrack's business, where the recipients of the lottery tickets are required to come to the racetrack in order to receive the lottery tickets.

Honorable Phil Arthurhultz

State Senator

The Capitol

Lansing, Michigan

You have asked whether a licensed pari-mutuel racetrack in Michigan may provide Michigan lottery tickets to individuals at no monetary cost as a means of advancing the racetrack's business, where recipients are required to come to the racetrack in order to register and receive the lottery tickets. Under the envisioned scheme, attendance at an actual race event would not be required. However, the racetrack operators would require that identification be presented at the racetrack by each recipient in order to preclude an individual from obtaining more than one lottery ticket. Thus, it is clear that the racetrack would have to promote the availability of the tickets in some manner to achieve its avowed business purpose.

The general policy of the state, as expressed in Chapter 55 of the Michigan Penal Code, 1931 PA 328, MCL 750.372 et seq; MSA 28.604 et seq, is to prohibit the conduct of lotteries. Section 372 of the Michigan Penal Code also makes it a crime to "promote" a lottery and section 373 of the same statute makes it a crime to sell lottery tickets. See, Miller v Radikopf, 394 Mich 83, 87, n 2 and n 3; 228 NW2d 386 (1975).

While the statutory provisions do not define what constitutes a lottery, our Supreme Court has interpreted the statute to prohibit any gaming activity that involves the presence of three elements: Consideration, chance, and prize. United-Detroit Theatre Corp v Colonial Theatrical Enterprise, Inc, 280 Mich 425, 428; 273 NW 756 (1937). Where any one of these three elements is lacking, the activity is not a prohibited lottery under the Michigan Penal Code.

The Michigan Supreme Court has, on two separate occasions, found that consideration exists, as part of an illegal lottery, when movie houses run business promotional schemes in which persons are required to be at or in the immediate vicinity of the theaters to have a chance to win the prize. The consideration to the theaters is the attendance of persons who would not otherwise be there. Sproat-Temple Theatre Corp v Colonial Theatrical Enterprise, Inc, 276 Mich 127, 130-131; 267 NW 602 (1936); United-Detroit Theatre Corp, supra, 280 Mich, at 428-429.

In AFC Wrigley Stores, Inc v Wayne Prosecuting Attorney, 359 Mich 215, 223; 102 NW2d 545 (1960), our Supreme Court ruled that a television drawing, in which viewers were offered a chance to win prizes if the numbers on their cards matched the numbers drawn on the screen, was not a lottery. A participant could obtain a card distributed by the plaintiff store or prepare his own card and register it by mail with the television station. In determining that consideration was not present, the Court distinguished the two theater cases cited above because "these cases required the participants' presence, either in the theater or in the immediate vicinity, and presented an entirely different combination of facts than are presented in this appeal."

Subsequently, in People v Brundage, 381 Mich 399, 408; 162 NW2d 659 (1968), the Michigan Supreme Court found that a retail store program in which persons were afforded a chance to win prizes at a drawing was a prohibited lottery. The Court found there was ample consideration in the requirement that a person must be present in the store to sign up for the drawing and to win the drawing.

Applying the foregoing authorities, it is clear that although the racetrack, under the circumstances you have posed, would not itself actually be conducting a lottery, it would be promoting a lottery and receiving consideration therefrom because of the enhanced attendance which such promotion would presumably produce.

The fact that the racetrack would be promoting an otherwise legal lottery, established by the Legislature in the McCauley-Traxler-Law-Bowman-McNeely Lottery Act, 1972 PA 239, MCL 432.1 et seq; MSA 18.969(1) et seq, under the authority of Const 1963, art 4, Sec. 41, does not remove this proposed lottery ticket giveaway from sections 372 and 373 of the Michigan Penal Code. Section 37 of the Lottery Act only exempts the promotion or sale of tickets pursuant to that statute from the proscriptions of the Michigan Penal Code:

Any other law providing any penalty or disability for the sale of lottery tickets or any acts done in connection with a lottery shall not apply to the sale of tickets or shares performed pursuant to this act. [ Emphasis added.]

In that regard, section 27(1) of the Lottery Act provides:

A person shall not sell a ticket or share at a price greater than that fixed by rule of the commissioner. A person other than a licensed lottery sales agent shall not sell lottery tickets or shares. This section shall not be construed to prevent a person from giving lottery tickets or shares to another as a gift. [ Emphasis added.]

There is no indication in your opinion request that the racetrack is licensed as a lottery sales agent, and only those agents or the Lottery Bureau itself may sell Michigan lottery tickets or receive compensation or consideration therefore, under the foregoing provision.

OAG, 1985-1986, No 6392, p 382, 385 (October 7, 1986), concluded that a Michigan resident may not act as an agent for out-of-state Lotto players by purchasing Lotto tickets from authorized state agents for out-of-state players and charging a fee for this service. In reaching that result, the opinion concluded:

This provision [section 27(1) of the Lottery Act] prohibits the sale of lottery tickets at a price higher than that fixed by the Commissioner and, further, absolutely prohibits ticket sales by any person other than a licensed lottery sales agent. The final sentence of this provision, exempting gifts of lottery tickets, is of particular significance and indicates a clear legislative intent that the prohibition against sales by persons who are not licensed agents is to be read broadly. The fact that the Legislature expressly excluded gift transactions from the prohibition set forth in Sec. 27(1) demonstrates that the Legislature viewed this prohibition as being sufficiently broad so as to include even gifts had they not been expressly excluded by that final sentence. If third-party transfers in the form of gifts would be barred in the absence of the express exemption in Sec. 27(1), certainly for-profit third-party transfers would also be barred.

 

In short, a review of the McCauley-Traxler-Law-Bowman Lottery Act discloses no provisions which expressly authorize the type of for-profit third-party transactions described in your question. Relying upon the standard employed in State, ex rel Schillberg v Safeway Stores, Inc, 450 P2d 949, 953 (Wash, 1969), and Mobil Oil Corp v Danforth, 455 SW3d 505, 509 (Mo, En Banc, 1970), and looking into, through, and around the business enterprise you have described, it is clear that the "businessman" would be an unlicensed person selling lottery tickets to persons residing in other states. Because such third-party sales are not expressly authorized by the McCauley-Traxler-Law-Bowman Lottery Act, they remain within the prohibition set forth in MCL 750.372; MSA 28.604, and MCL 750.373; MSA 28.605. [ Emphasis added.]

OAG, 1985-1985, No 6392, supra, p 384.

Likewise, it is clear that the exemption for gifts of Michigan lottery tickets would not encompass the racetrack promotion in question. The law is settled in Michigan that a gift is the transfer between persons of something of value without consideration. Loomis v Mack, 183 Mich 674, 685-686; 150 NW 370 (1915); Meade v Robinson, 234 Mich 322, 326-327; 208 NW 41 (1926); Buell v Orion State Bank, 327 Mich 43, 55; 41 NW2d 472 (1950).

It is clear that a person may give a lottery ticket to another. However, when the lottery tickets are provided as part of a business promotion in which persons must come to the place of business or its immediate vicinity to obtain the lottery tickets, the element of consideration would be present. Thus, the transfer of the lottery tickets at the racetrack would not be a gift authorized by section 27(1) of the Lottery Act. Rather, the transfer of lottery tickets at the racetrack for consideration would constitute promoting a lottery and the sale of lottery tickets within the prohibitions of sections 372 and 373 of the Michigan Penal Code.

It is my opinion, therefore, that sections 372 and 373 of the Michigan Penal Code prohibit a Michigan licensed pari-mutuel racetrack, which is not licensed as a Michigan lottery sales agent, from using a promotion which would provide Michigan lottery tickets to individuals at no monetary cost, as a means of advancing the racetrack's business, where the recipients of the lottery tickets are required to come to the racetrack in order to receive the lottery tickets.

Frank J. Kelley

Attorney General