Request By:
Mr. William H. Allison, Jr.
Allison, Soreff & Garber
Attorneys at Law
3208 West Broadway
Lousville, Kentucky 40211
Opinion
Opinion By: Steven L. Beshear, Attorney General; Elizabeth E. Blackford, Assistant Attorney General
You have written, on behalf of an institution of higher learning to inquire as to the legality of a proposed fund raising scheme for the booster club. Under the proposed scheme, patrons would be solicited to buy one or more memberships in the booster club. Each membership costs $25.00 and any person may buy as many memberships as he wants. Once the membership fee of $25.00 is paid in full, the owner of the membership is eligible to participate in a series of weekly drawings. For each membership owned, two numbers assigned to that membership are placed in a drum. Each week two numbers are drawn from the drum. A cash prize of $25.00 is awarded to the first number drawn, and a cash prize of $50.00 is awarded for the second number drawn. No single member may win both prizes in the same week. In the final week of drawings the prize awarded the first number drawn is $500 and for the second number drawn $1,000.
It is obvious that the proposed scheme involves two of the three elements to a lottery, that being that the winners are determined by pure chance and that a prize is awarded. The only question then, is whether the membership fees constitute consideration paid to obtain a chance or chances to win the prize. If so, the scheme is a lottery and is prohibited under Kentucky Constitution § 226 and KRS Chap. 528.
It is the opinion of this office that the membership fees go constitute consideration or something or value given in order to obtain a chance or chances to win a prize for prepayment of the full $25.00 fee as a prerequisite to eligibility. Compare, Commonwealth v. Malco-Memphis Theaters, 293 Ky. 531, 169 S.W.2d 596 (1943), wherein the Court held that when all tickets purchased for admission to the theater were placed in a box and a door prize was awarded to one person based upon drawing a ticket from that box, the scheme involved was a lottery even though the purchase price of the tickets was the same as it would have been if there were no drawings and though the theater patrons received full value by gaining admission to the theater for the price of the ticket for, so long as the payment of money is a prerequisite to eligibility for participation in the drawing, the element of consideration is present. Therefore, the proposed fund raising scheme is a lottery and is illegal. KRS Chap. 525. This would be true even if the particular institution is qualified as a charitable organization under KRS 508.010(1), because the defense provided by that statute is unconstitutional and this does not change the fact that the conduct is illegal. See OAG 80-408 (copy enclosed).