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#2303315 - 11/15/24 03:17 PM Silent Auction
frumpette Offline
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Joined: Sep 2009
Posts: 49
The bank is hosting a silent auction for charity. Team members have donated prizes where employees and customers enter secret bids to acquire the prize basket. All proceeds are given to local charities. Is this prohibited as a 'lottery'? I

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#2303319 - 11/15/24 03:23 PM Re: Silent Auction frumpette
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,032
Galveston, TX
An auction is not a lottery - only the winner provides consideration.
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#2303326 - 11/15/24 06:09 PM Re: Silent Auction frumpette
frumpette Offline
Junior Member
Joined: Sep 2009
Posts: 49
Thanks - Now another question:

Can bank employees be entered in to a prize drawing where their "entry" must be a receipt for a donation to any charity? For example a receipt for a cash donation to a church, or a receipt for a donation of household goods at a GoodWill? Or is that going to be a 'consideration'?

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#2303327 - 11/15/24 06:14 PM Re: Silent Auction frumpette
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,806
Bloomington, IN
The employees are having to provide consideration (the receipts) for a chance to win. This would be a lottery.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2303328 - 11/15/24 06:21 PM Re: Silent Auction frumpette
frumpette Offline
Junior Member
Joined: Sep 2009
Posts: 49
That's what I thought.

So many strict prohibitions when we're trying to do good.

I've reviewed the OCC's 2015 IL 1153. THat has to do with a weight loss incentive for bank employees, but the author of the IL offers the following:

“The policy rationale behind the lottery prohibition is that financial institutions should not be used to encourage vulnerable members of society to waste their money through gambling. The legislative history shows that Congress was focused on the sale of state lottery tickets at financial institutions and the evils of gambling. In a May 11, 1967, letter to Comptroller of the Currency William B. Camp, one congressman complained that it was “inconceivable to permit the use of thrift institutions as bookie parlors.” Congressman Patman, the primary sponsor of the legislation, stated that it “was brought about in response to the dangers arising from a new lottery voted into existence by the State of New York.”

Clearly, trying to raise money for charity is not 'evils of gambling' as seen through the lens of 1967 legislators ...

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#2303329 - 11/15/24 06:32 PM Re: Silent Auction frumpette
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,806
Bloomington, IN
Section 20. Participation by State Nonmember Insured Banks in Lotteries and Related Activities

https://www.fdic.gov/federal-deposi...te-nonmember-insured-banks-lotteries-and


12 U.S. Code § 25a - Participation by national banks in lotteries and related activities

https://www.law.cornell.edu/uscode/text/12/25a


This is most likely going to boil down to risk/reward decision by your management team. But the bottom lines the 2 above citations prohibits banks participating in or managing a lottery.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#2303363 - 11/15/24 10:59 PM Re: Silent Auction frumpette
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,032
Galveston, TX
Nothing prevents a bank from providing employee benefits or incentives. Those are not lotteries. You get a chance at winning a gift card for every account that you open. Or as a health incentive, you get an entry into a drawing for every pound that you lose. Those would be considered a benefit or incentive. If the employee has to spend their own money by donating to a charity in order to win, that is neither a benefit nor an incentive.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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