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#1959046 - 09/03/14 07:22 PM
Lottery or not?
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Junior Member
Joined: Aug 2011
Posts: 26
Oklahoma
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We are looking for opinion on whether a couple of specific situations would qualify as a lottery.
I know that three things are required to qualify as a lottery: 1) Consideration to enter, 2) Chance, and 3) a Prize.
Situation 1) Door Prizes We occasionally hold a dinner for a group of people generally by occupation (i.e. Realtor’s Dinner). All of the Realtor’s in a given area are invited whether they are customers or not, have provided referrals or not, or whether we even expect them to ever be customers or not. We would like to be able to give out a door prize at the end of the evening. Would the fact that we invite customers and non-customers be enough to eliminate the element of consideration? There really isn’t another way to enter other than to receive an invitation and attend, but entry is not based on being a customer just on being a realtor.
Situation 2) High School Hoop Shoot At the local high school basketball game the Booster Club sells tickets for a chance to shoot free throws at halftime. The Booster Club selects the ticket and runs the hoop shoot. We give a gift certificate to the person who shoots ($1 per basket) which the person redeems at the bank. We have been under the impression that since the consideration is not to us and we are only supplying the prize this is a lottery but not one by us. Is that correct?
If either of these situations is a lottery can you see any way that we can adjust the situation to not be a lottery?
Thanks!
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#1959102 - 09/03/14 09:17 PM
Re: Lottery or not?
brandih
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Junior Member
Joined: Aug 2011
Posts: 26
Oklahoma
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Thank you for your response! I'm glad you mentioned RESPA - that hadn't crossed our minds.
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#1959244 - 09/04/14 02:47 PM
Re: Lottery or not?
brandih
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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On scenario #2, there's no problem donating the prize for the event. Just don't advertise the event, or promote it at all within the bank or elsewhere.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#1960545 - 09/09/14 07:59 PM
Re: Lottery or not?
brandih
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Junior Member
Joined: Aug 2011
Posts: 26
Oklahoma
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Thank you John. I appreciate your input also.
Back to situation #1 (the realtor's dinner): These events have an educational aspect to them. We inform the realtors of the types of loans we offer as well as some of the compliance restrictions that go into making residential real estate loans. Would this affect the possible violation of RESPA?
Also, is there a de minimis on the RESPA violation when it comes to referrals?
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#1960562 - 09/09/14 08:14 PM
Re: Lottery or not?
brandih
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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There is no de minimis under RESPA. Realtors dinners - done at your own risk. You need to be comfortable justifying the marketing and educational aspects.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1995391 - 02/11/15 07:34 PM
Re: Lottery or not?
brandih
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Power Poster
Joined: Jul 2008
Posts: 4,796
You are here
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I would say that the parking lot is part of the bank office (I posted FDIC not sure which regulatory you follow)
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.
[Codified to 12 U.S.C. 1829a(a)]
[Source: Section 2[20(a)] of the Act of September 21, 1950 (Pub. L. No. 797), as added by section 3 of the Act of December 15, 1967 (Pub. L. No. 90--203; 81 Stat. 610), effective April 1, 1968; as amended by section 602(a)(51) of title VI of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2290), effective September 23,1994]
(b) USE OF BANKING PREMISES PROHIBITED.--A State nonmember insured bank may not permit--
(1) the use of any part of any of its banking offices by any person for any purpose forbidden to the bank under subsection (a), or
(2) direct access by the public from any of its banking offices to any premises used by any person for any purpose forbidden to the bank under subsection (a).
Last edited by edAudit; 02/11/15 07:35 PM.
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#1995703 - 02/12/15 07:17 PM
Re: Lottery or not?
brandih
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Power Poster
Joined: Jul 2008
Posts: 4,796
You are here
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I would refer back to David and Johns response in this thread.
_________________________
Opinions can be considered as coming from anywhere but my employer.
CAMS
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