Request By:
Ms. Catherine C. Staib
General Counsel
Department of Alcoholic Beverage Control
123 Walnut Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Suzanne Guss, Assistant Attorney General
This is in response to your request for an opinion of this office whether tournaments conducted by malt beverage manufacturers and sponsored by malt beverage licensees within the Commonwealth violate KRS 244.500. The particular factual situation supporting your request may be described as follows. Miller Brewing conducts a national bowling tournament and desires participation in the tournament by Kentucky bowlers. To participate in the tournament, a bowler need only sign up at his/her local bowling establishment and pay the entry fee. Winners will participate in the state championship for which a $500 prize will be awarded. The state champion will participate in the national championship in Nevada where a $10,000 prize will be awarded. Neither purchase nor consumption of alcoholic beverages is required to participate in, win or be a spectator at any stage of the event.
KRS 244.500 provides:
Malt beverage premiums prohibited
(1) No person holding a license to sell malt beverages shall offer or give anything tangible of value as a premium for the return of caps, stoppers, corks, stamps, wrappers, coupons or labels taken from any bottle, case, barrel or package containing malt beverages or to offer or give anything of value as a premium, gift or prize for any purpose in connection with the sale of malt beverages.
(2) Subsection (1) shall not apply to the return of moneys specifically deposited for the return of the original containers to the owners.
The specific issue presented is whether the proposed tournament places a Kentucky licensee in the position of giving "anything of value as a . . . prize for any purpose in connection with the sale of malt beverages. " It is the opinion of this office that local bowling establishments may sponsor such tournaments without violating KRS 244.500. Several reasons support this conclusion. First, it is the manufacturer and not the malt beverage licensee which is offering or giving the "premium, gift or prize. " Second, the event does not occur "in connection with the sale of malt beverages" inasmuch as the purchase of such beverages is not required of persons who wish to participate in or observe the tournament.
Two cases illustrate the type of activity which falls within the purview of KRS 244.500. In Milgram Food Stores, Inc. v. Ketchum, Mo., 384 S.W.2d 510 (1964), the Supreme Court of Missouri held that an advertisement by a licensee offering a free bottle cover to anyone who purchased certain brands of scotch whiskey violated state Regulation 15(f)(5) which prohibited any advertisement offering a coupon, premium or prize as an inducement to purchase liquor. The situation in Milgram is clearly distinguishable from the proposal at hand since the licensed sponsor is, at most, inducing the public to bowl rather than purchase Miller malt beverages. Similarly, in International Breweries, Inc. v. Crouch, Ohio App., 193 N.E.2d 734 (1963), the Court held that a plan by breweries to pay non-profit organizations one-half cent for each bottle cap of its beer and malt beverages which was to be turned over to the breweries by the organizations fell within the regulation prohibiting gift merchandising in connection with the sale or advertisement of alcoholic beverages. The Court held that the relationship between the gift and the purchase or consumption of the product was not so indirect as to take the plan outside the regulation. The court also noted that:
[T]he mere fact of a premium or gift, and the fact that it is in connection with merchandising beer, is not enough to make the regulation applicable. For example, a gift of $100,000 to charity, and the will for the company and indirectly contribute to the sale of its product. However, the relationship between the gift, and the purchase or consumption of the products, would be so remote that the application of the regulation is arguable. Id., at 735.
In the event Miller tournaments are sponsored by licensees in Kentucky, the prize and its advertisement might build good will thereby indirectly increasing sales for Miller Breweries and the sponsor, but the relationship between the prize and the purchase of Miller products is so remote as to remove the event from the scope of KRS 244.500.
I trust this information sufficiently answers your questions. If I can provide additional assistance in this area, please contact me.