Fundraising Ticket Sales for Prize (In Bank) Answer by David Dickinson and Andy Zavoina, BOL Gurus Guru BIOS
Question: Our bank has a Relay for Life Team and we are planning fundraisers. Can the team sell tickets/chances for a prize? Not tied to any banking product and not paid for by bank. This is strictly a charitable fundraiser but would be conducted within the bank. We are a state member bank of the Federal Reserve.
Answer by David Dickinson: Federal law prohibits banks from participating in or promoting any type of lottery or chance to win.
Answer by Andy Zavoina: Unfortunately the term lottery and the prohibition of being involved with one is nondiscriminatory and doesn't matter if the cause is for profit or nonprofit. About the only thing you may do in this, is collect deposits from your customers who do sell tickets.
The term “lottery” includes any arrangement whereby three or more persons (the “participants”) advance money or credit to another in exchange for the possibility or expectation that one or more but not all of the participants (the “winners”) will receive by reason of their advances more than the amounts they have advanced, the identity of the winners being determined by any means which includes —
(A) a random selection;
(B) a game, race, or contest; or
(C) any record or tabulation of the result of one or more events in which any participant has no interest except for its bearing upon the possibility that he may become a winner.
And the penalties can be severe: Whoever knowingly violates Section 5136A of the Revised Statutes of the United States, Section 9A of the Federal Reserve Act or Section 20 of the Federal Deposit Insurance Act shall be fined under this title or imprisoned not more than one year, or both.
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