Request By:
Mr. James E. Parsons
President
Boone County Jaycees
P.O. Box 71
Florence, Kentucky 41042
Opinion
Opinion By: Steven L. Beshear, Attorney General; Linda Carnes Wimberly, Assistant Attorney General
You have written to ask whether a proposed fund raising project your organization is considering is violative of any laws. Specifically, you desire to raffle off the farm of a local resident. The Club would attempt to sell 2000, $100.00 raffle tickets. The proceeds from the raffle would first be applied to the costs incurred in sponsoring the raffle, and also to pay off liens or mortgages against the property. The remaining proceeds would then be divided between the current owner and the Jaycees.
The Constitution of Kentucky, at Section 226, explicitly prohibits lotteries by providing that:
"Lotteries and gift enterprises are forbidden, and no privileges shall be granted for such purposes, and none shall be exercised, and no schemes for similar purposes shall be allowed . . ."
A raffle is the purest and simplest form of a lottery. See United States v. Baker, 364 F.2d 107 (3rd Cir. 1966), cert.den., 385 U.S. 986, 87 S. Ct. 596, 17 L. Ed. 2d 448 (1966). In such instances, all the elements necessary for a lottery are present. Those elements are a prize, an award thereof by chance, and consideration. A.B. Long Music Company v. Commonwealth, Ky., 429 S.W.2d 391, 394 (1968).
KRS 528.010(10) attempts to exempt charities from the penalties which such groups might otherwise incur under KRS 528.020 or 528.030. However, it is the opinion of this office that KRS 528.010(10) is unconstitutional, and void abinitio. See OAG 80-408, copy enclosed. We thus take the position that even if a charity alone were involved in such a raffle, it would still be illegal for them to do so. 1
However, your case has an added problem. Since a private individual is so entwined in the whole transaction, this raffle would not even qualify as a true charitable game under KRS 528.010. See KRS 528.010(10)(a) 3,4 which mandates that for the exemption to apply (though we continue to insist that constitutionally it cannot):
"Any proceeds resulting from the operation of charitable gaming activity shall be utilized solely for purposes consistent with the charitable or religious functions and objectives for which the operating organization or institution received and maintained federal tax exempt status." (Emphasis added).
The practical effect of this individual's involvement is that both he and your organization could well be subject to criminal penalties. See KRS 528.020(1); KRS 528.020(2); KRS 528.030.
Footnotes
Footnotes
1 We assume that you meet the requirements of KRS 528.010(10)(a) 1,2. If not, this attempted exemption would not extend to you, and the constitutional ban would directly apply to this raffle.