We are struggling with this one. We would like to have an organization sell raffle tickets in our vestibule. The FDIC regs prohibits us from selling lottery tickets. But are raffle tickets really lottery tickets? And the fact that WE are not actually selling them does in make it permissible? This is what we are trying to interpret: FDIC Reg Pertaining to Lottery Tickets
Our compliance consultant replied as follows (Like you, I donít understand the basis for this regulation when the Bank is trying to serve the community, but such as it is, we have to comply):
There are really two parts to this:
∑ Are raffle tickets lottery tickets?
∑ Is the Bankís level of involvement in the process enough to come under the prohibition?
As to the first, the sale of raffle tickets have been consistently viewed by the regulatory as a lottery within the prohibition you cited.
As to the second, even though the bank will not be selling lottery tickets, it is providing space and it could be viewed as being within the ďannounce, advertise, or publicize the existenceĒ prohibition., I have never see this specific issue raised on an exam. However, I can tell you for sure, that even mentioning a non-profit organizationís raffle on a bank web site recently has raised an issue with the regulators.
We plan to raise money for a local organization that helps abused children. In addition to having bake sales, employees paying for "jean day", we hoped to get an item donated from a local company and sell tickets on a chance to win that item. Am I to understand that this is prohibited by the FDIC?
Loc: Richmond, VA
Originally Posted By: Gandalf
Like you, I donít understand the basis for this regulation when the Bank is trying to serve the community
If memory serves, this prohibition goes back to the beginning of the FDIC. At that time, the only concern was protecting the life savings of depositors. As is still the case, some depositors would consider a lottery ticket a better "investment" than a deposit in the bank. If the same teller sells both, it encourages behavior that is contrary to the purpose of the FDI Act. Even though raffles for charities don't rob depositors of their life savings, the prohibition was written in the strongest terms possible & the edges stretch far enough to cover anything that looks or smells like a lottery.
(1) The term "deal in" includes making, taking, buying, selling, redeeming, or collecting.
(2) 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--
Specifically, I'm interested in the phrase "receive by reason of their advances more than the amounts they have advanced".
I just walked through our lobby and discovered that we are selling raffle tickets for a Quilt made by a local Seniors Group. The quilt does not have any monetary value ... it's a quilt. So is the winner really receiving 'more than the amount they advanced'?
I don't know about the anonymously part, but in Georgia door prizes are restricted:
'Raffle' means any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prize. Such term shall also include door prizes which are awarded to persons attending meetings or activities provided that the cost of admission to such meetings or activities does not exceed the usual cost of similar activities where such prizes are not awarded.
My opinion only. Not legal advice.
IBA and ABA told us this. ABA said that the Federal Deposit Insurance Act Section 20 is very broad and covers everything. We usually donate to a function where community eateries get together and for the price of a ticket, anyone can sample the different foods. We would donate a basket (other banks did this as well)that said it was donated by us and usually included bank promotional items, that would be part of a silent auction.