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#1959046 - 09/03/14 07:22 PM Lottery or not?
brandih Offline
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Joined: Aug 2011
Posts: 26
Oklahoma
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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General Discussion
#1959098 - 09/03/14 09:08 PM Re: Lottery or not? brandih
David Dickinson Offline
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Central City, NE
#1) I'm not certain this is a lottery since you open it to non-customers, but having it only for Realtor's makes me nervous (Think RESPA Section 8). Why are you doing this? You're giving things of value (dinner, door prizes, etc.) for the hope of referrals.

#2): Section 20(a)(3) of the FDI Act says you can't "announce, advertise or publicize the existence of any lottery. It doesn't matter if it's the Booster Club, your bank can't be involved.
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#1959102 - 09/03/14 09:17 PM Re: Lottery or not? brandih
brandih Offline
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Joined: Aug 2011
Posts: 26
Oklahoma
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
John Burnett Offline
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Cape Cod
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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#1960545 - 09/09/14 07:59 PM Re: Lottery or not? brandih
brandih Offline
Junior Member
Joined: Aug 2011
Posts: 26
Oklahoma
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
rlcarey Online
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rlcarey
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Galveston, TX
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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#1995385 - 02/11/15 07:25 PM Re: Lottery or not? rlcarey
Jodi Offline
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Jodi
Joined: Jun 2002
Posts: 87
I've said NO to employees asking if they can hold a raffle to raise money for a non-profit cause in one of the branch offices. Now I'm being asked if they can hold this same raffle outside of the bank. After reading Section 20 of the FDIA, I'm pretty certain this is not permitted either, but wanted some backup. Is it permitted outside the bank?

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#1995391 - 02/11/15 07:34 PM Re: Lottery or not? brandih
edAudit Offline
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edAudit
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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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#1995407 - 02/11/15 07:54 PM Re: Lottery or not? edAudit
Jodi Offline
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Jodi
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Posts: 87
Let me clarify what I mean by "outide the bank office" - this would be completely away from a bank office at/in front of for example Wal-mart or some other retail establishment (that permits this to take place).

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#1995703 - 02/12/15 07:17 PM Re: Lottery or not? brandih
edAudit Offline
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edAudit
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You are here
I would refer back to David and Johns response in this thread.
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#1995709 - 02/12/15 07:26 PM Re: Lottery or not? brandih
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
So if bank employees are acting on their own and have no bank signs, bank identification, etc., and act as individuals, they can be involved in a lottery. But if they are presenting the bank, then Section 20(a)(3) of the FDI Act prohibit this. I don't think the location of the activity matters.
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#1995712 - 02/12/15 07:27 PM Re: Lottery or not? brandih
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
The intent of this rule is to not let the public associate banks with any types of games, gambling, lotteries, etc. Banks are supposed to be seen as safe places to secure money. Not a gambling casino.
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#1995983 - 02/13/15 05:27 PM Re: Lottery or not? David Dickinson
Jodi Offline
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Jodi
Joined: Jun 2002
Posts: 87
David thank you for the clarification.....it is just as I thought.

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