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#1207959 - 06/25/09 06:55 PM
Can an FDIC regulated bank sell raffle tickets?
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New Poster
Joined: Jan 2006
Posts: 7
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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
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#1208931 - 06/26/09 08:18 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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New Poster
Joined: Jan 2006
Posts: 7
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Our compliance consultant replied as follows (Like you, I don’t 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 Bank’s 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 “announce, advertise, or publicize the existence” 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 organization’s raffle on a bank web site recently has raised an issue with the regulators.
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#1208948 - 06/26/09 08:33 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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Power Poster
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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Bottom line is you CANNOT allow the sale of raffle tickets on the bank property ..."may not permit-- (1) the use of any part of any of its banking offices".
If you want to help out the organization you can contribute a savings bond or other item to be raffled.
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Life without Jesus is like an unsharpened pencil - it has no point.
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#1208959 - 06/26/09 08:45 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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Diamond Poster
Joined: Feb 2001
Posts: 2,245
US of A
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Like you, I don’t understand the basis for this regulation when the Bank is trying to serve the community, but such as it is, we have to comply. I think you should just realize that not everyone is as honest as you and a few bad actors spoil it for everyone.
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"If you want to tell people the truth, make them laugh, otherwise they'll kill you." ~ Oscar Wilde
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#1210466 - 07/01/09 12:32 AM
Re: Can an FDIC regulated bank sell raffle tickets?
EdieT
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Diamond Poster
Joined: Oct 2002
Posts: 1,027
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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?
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#1210527 - 07/01/09 12:40 PM
Re: Can an FDIC regulated bank sell raffle tickets?
HR Banker
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10K Club
Joined: Sep 2002
Posts: 13,965
TN
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Yes, that is a raffle and is prohibited.
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My Opinions Only
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#1211042 - 07/01/09 10:55 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Oct 2000
Posts: 10,204
Toano, VA
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Like you, I don’t 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.
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...gone fishing.
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#1213581 - 07/07/09 06:07 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Andy_Z
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Diamond Poster
Joined: May 2006
Posts: 1,168
Texas
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Has an institution been sited for such participation? A lot of members of our community are NOT happy that we don't particpate in such "fundraising/community events".
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Work less, play more.....why not????
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#1213674 - 07/07/09 07:28 PM
Re: Can an FDIC regulated bank sell raffle tickets?
mck401
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Power Poster
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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Find a different way to participate, such as providing items to be raffled, auctioned, used as door prizes, etc.
_________________________
Life without Jesus is like an unsharpened pencil - it has no point.
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#1903521 - 03/07/14 08:25 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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Gold Star
Joined: Jul 2007
Posts: 320
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Resurrecting this:
I'm looking at this definition: (c) Definitions
As used in this section--
(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'?
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#1903523 - 03/07/14 08:26 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Dec 2000
Posts: 21,293
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#1903528 - 03/07/14 08:35 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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Gold Star
Joined: Jul 2007
Posts: 320
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The staff is going to hate me. Ugh.
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#1903639 - 03/09/14 12:22 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Jul 2001
Posts: 84,360
Galveston, TX
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Plus, who's raffles do you decide to sponsor? Local Seniors Group, PETA (People who Eat Tasty Animals) fund raiser, XYZ Motorcycle Club (raising bail money for Joe)?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1903670 - 03/10/14 12:52 PM
Re: Can an FDIC regulated bank sell raffle tickets?
athomas@bankcsb.com
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Brenda C "Find a different way to participate, such as providing items to be raffled, auctioned, used as door prizes, etc."
Our bank was told this was considered participating in a lottery too unless it was done anonymously Your bank was provided erroneous information. "Our bank was told" -- by whom, and did he or she provide any citation to a regulation or law backing up the statement?
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#1903700 - 03/10/14 02:00 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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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.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2090080 - 07/27/16 01:03 PM
Re: Can an FDIC regulated bank sell raffle tickets?
John Burnett
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Diamond Poster
Joined: Jan 2003
Posts: 1,058
Dallas, TX
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If a local fair is wanting to auction off two items to raise money for scholarships, are we prohibited from displaying them in one of our lobbies?
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"Remember no man is a failure who has friends." - Clarence (the Angel) Oddbody - It's a Wonderful Life
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#2090095 - 07/27/16 02:17 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Jul 2001
Posts: 84,360
Galveston, TX
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1000 - Federal Deposit Insurance Act
SEC. 20. PARTICIPATION BY STATE NONMEMBER INSURED BANKS IN LOTTERIES AND RELATED ACTIVITIES.--
(a) PROHIBITED ACTIVITIES.--A State nonmember insured bank may not--
(1) deal in lottery tickets;
(2) deal in bets used as a means or substitute for participation in a lottery;
(3) announce, advertise, or publicize the existence of any lottery; or
(4) announce, advertise, or publicize the existence or identity of any participant or winner, as such, in a lottery.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2090125 - 07/27/16 03:20 PM
Re: Can an FDIC regulated bank sell raffle tickets?
Gandalf
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10K Club
Joined: Oct 2000
Posts: 27,763
On the Net
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There is one "new" exception to the lottery rule but it is meant to promote savings deposit growth and to my knowledge has been used very little by banks. It would not apply to this case.
If this is a true auction, multiple people bid and one will win the bid and pay, that isn't a lottery. "The term "lottery" includes any arrangement, other than a savings promotion raffle, 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..."
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#2090129 - 07/27/16 03:29 PM
Re: Can an FDIC regulated bank sell raffle tickets?
rlcarey
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Diamond Poster
Joined: Jan 2003
Posts: 1,058
Dallas, TX
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Under FDIA, Section 20, subsection (c) "Definitions "
(2) The term "lottery" includes any arrangement, other than a savings promotion raffle, 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.
Okay, so...
1. I can see where an auction could meet the definition of a lottery, because "bidding" could be considered a competition AKA a contest, but what if there are only two bidders (one for each item)? (I know, I know...what if frogs had wings?)
2. No one (and certainly not "three or more') "advance[s any] money" until they wind up being the highest bidder. Then, that single individual makes/arranges payment.
3. Finally, we are a state member bank (FRB regulated). Does the Fed have a similar "rule"? Or, does FDIA apply universally?
_________________________
"Remember no man is a failure who has friends." - Clarence (the Angel) Oddbody - It's a Wonderful Life
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