Page 1 of 2 1 2
Thread Options Tools
#1207959 - 06/25/09 06:55 PM Can an FDIC regulated bank sell raffle tickets?
Gandalf Offline
New Poster
Joined: Jan 2006
Posts: 7
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

Return to Top
General Discussion
#1208931 - 06/26/09 08:18 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
Gandalf Offline
New Poster
Joined: Jan 2006
Posts: 7
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.

Return to Top
#1208948 - 06/26/09 08:33 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
BrendaC Offline
Power Poster
BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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.
_________________________
Life without Jesus is like an unsharpened pencil - it has no point.

Return to Top
#1208959 - 06/26/09 08:45 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
homestar Offline
Diamond Poster
Joined: Feb 2001
Posts: 2,245
US of A
Originally Posted By: Gandalf
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.

I think you should just realize that not everyone is as honest as you and a few bad actors spoil it for everyone.
_________________________
"If you want to tell people the truth, make them laugh, otherwise they'll kill you." ~ Oscar Wilde

Return to Top
#1209552 - 06/29/09 08:14 PM Re: Can an FDIC regulated bank sell raffle tickets? homestar
EdieT Offline
Member
EdieT
Joined: May 2009
Posts: 76
PA
We will not allow this on bank property.
They may set up the table on the sidewalk outside the bank.

Return to Top
#1210466 - 07/01/09 12:32 AM Re: Can an FDIC regulated bank sell raffle tickets? EdieT
HR Banker Offline
Diamond Poster
Joined: Oct 2002
Posts: 1,026
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?

Return to Top
#1210527 - 07/01/09 12:40 PM Re: Can an FDIC regulated bank sell raffle tickets? HR Banker
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
Yes, that is a raffle and is prohibited.
_________________________
My Opinions Only

Return to Top
#1211042 - 07/01/09 10:55 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,007
Toano, 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.
_________________________
...gone fishing.

Return to Top
#1211954 - 07/03/09 03:02 PM Re: Can an FDIC regulated bank sell raffle tickets? Richard Insley
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,378
On the Net
http://calendar.bollearningconnect.com/main.php?view=event&eventid=1243968900993

You can call it what you want and you can say it is for a good cause, but the ends doesn't justify the means, nor does it change the definition of a lottery.
_________________________
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

Return to Top
#1213581 - 07/07/09 06:07 PM Re: Can an FDIC regulated bank sell raffle tickets? Andy_Z
mck401 Offline
Diamond Poster
Joined: May 2006
Posts: 1,168
Texas
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".
_________________________
Work less, play more.....why not????

Return to Top
#1213674 - 07/07/09 07:28 PM Re: Can an FDIC regulated bank sell raffle tickets? mck401
BrendaC Offline
Power Poster
BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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.

Return to Top
#1903521 - 03/07/14 08:25 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
pacar Offline
Gold Star
Joined: Jul 2007
Posts: 320
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'?

Return to Top
#1903523 - 03/07/14 08:26 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
Have you priced quilts?
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#1903524 - 03/07/14 08:28 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
pacar Offline
Gold Star
Joined: Jul 2007
Posts: 320
smile Yes ... but I can't take the quilt to the gas station and buy a soda. smile

I don't want to be the bad-guy (again).

Return to Top
#1903526 - 03/07/14 08:31 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
I am not saying shut it down, but if I buy a ticket for $1 or $5, whatever, and I win the quilt, it is certainly worth more than what I paid. It has a value. I could sell it.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#1903528 - 03/07/14 08:35 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
pacar Offline
Gold Star
Joined: Jul 2007
Posts: 320
The staff is going to hate me. Ugh.

Return to Top
#1903546 - 03/07/14 09:17 PM Re: Can an FDIC regulated bank sell raffle tickets? BrendaC
athomas@bankcsb.com Offline
Junior Member
athomas@bankcsb.com
Joined: Sep 2013
Posts: 28
Midwest
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
Last edited by BankerAndi82; 03/07/14 09:19 PM.
Return to Top
#1903639 - 03/09/14 12:22 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,548
Galveston, TX
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)?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1903670 - 03/10/14 12:52 PM Re: Can an FDIC regulated bank sell raffle tickets? athomas@bankcsb.com
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,408
Cape Cod
Originally Posted By: BankerAndi82
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?
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1903700 - 03/10/14 02:00 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,644
The Swamp
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.

Say you'll haunt me - Stone Sour

Return to Top
#1903756 - 03/10/14 03:43 PM Re: Can an FDIC regulated bank sell raffle tickets? John Burnett
athomas@bankcsb.com Offline
Junior Member
athomas@bankcsb.com
Joined: Sep 2013
Posts: 28
Midwest
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.
Last edited by BankerAndi82; 03/10/14 03:51 PM.
Return to Top
#2090080 - 07/27/16 01:03 PM Re: Can an FDIC regulated bank sell raffle tickets? John Burnett
M Cockrell Offline
Diamond Poster
M Cockrell
Joined: Jan 2003
Posts: 1,017
Dallas, TX
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?
_________________________
"Remember no man is a failure who has friends." - Clarence (the Angel) Oddbody - It's a Wonderful Life

Return to Top
#2090095 - 07/27/16 02:17 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,548
Galveston, TX
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

Return to Top
#2090125 - 07/27/16 03:20 PM Re: Can an FDIC regulated bank sell raffle tickets? Gandalf
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,378
On the Net
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..."
_________________________
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

Return to Top
#2090129 - 07/27/16 03:29 PM Re: Can an FDIC regulated bank sell raffle tickets? rlcarey
M Cockrell Offline
Diamond Poster
M Cockrell
Joined: Jan 2003
Posts: 1,017
Dallas, TX
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

Return to Top
Page 1 of 2 1 2