Raffles, Lotteries and Merchant Give-Aways Under the Louisiana Gaming Laws

A question that often comes up is whether a merchant may conduct a raffle or lottery as a way to increase business or raise money for a charity. Examples of questions typically raised are:

• May a store conduct a raffle by which a customer that makes a purchase is automatically entered into a raffle for four 50 yard line seats to the LSU/Alabama game?
• May a store sell a raffle or lottery ticket to a customer for $1.00 for a raffle of five hundred dollars worth of fishing supplies sold at the store with the store keeping the proceeds from the raffle?
• May the merchant conduct a raffle of a prize worth more than $250.00 if the proceeds from the sale of the raffle tickets are all to be donated to a charity? 

The answer to each of these questions under the current Louisiana gaming laws is no.[1] 

Generally, a merchant must obtain a license to conduct a raffle from the Office of Charitable Gaming. A license will only be granted to charitable organizations qualified as such by the Internal Revenue Service via a 501(c) tax exemption, or certain other organizations such as Mardi Gras carnival organizations, civic or services associations, voluntary fire companies, booster clubs, and parent-teacher associations. See La. R.S. §§ 4:703 and 4:707; La. Atty. Gen. Op. No. 01-0263, 2001 WL 1044459. A for profit business does not qualify to obtain a license to conduct a raffle. Id. Louisiana law generally does not permit unlicensed parties to sell raffle tickets. La. R. S. § 4:715. The Louisiana Office of Charitable Gaming’s website provides a process to apply for exemption to licensing to conduct a raffle but none of the exemptions apply to a for profit business. See www.ocg.louisiana.gov.

A business that would like to raise money for a charity through selling raffle tickets for one of its products as the prize needs to donate the product to the charity with the charity obtaining the license (or the exemption) and conducting the raffle.

However, there is an exemption for raffles for prizes under $250.00. Louisiana Revised Statute §27:502(A) provides that “[n]otwithstanding any provision of law to the contrary, a raffle or raffles may be conducted by any person twenty-one years of age or older for any purpose provided that the value of the prize paid does not exceed two hundred fifty dollars.”  A business could possibly rely on this statute in conducting a raffle for a prize worth less than $250.00 but it is not clear if the statute would protect a company as opposed to an individual selling raffle tickets. One Attorney General Opinion in dicta states that “[t]he language of this provision indicates that its intent is to address the activities of real persons, not juridical persons such as corporate entities or organizations.”  La. Atty. Gen. Op. No. 01-0263, 2001 WL 1044459.

Finally, a business may conduct a raffle or lottery or what could be called a merchant give-away if anyone may participate at no cost and without being required to first purchase anything. The Louisiana Legislature has defined gambling as “the intentional conducting, or directly assisting in the conducting, as a business, of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit.”  See La. R.S. § 14:90(A)(1)(a) (emphasis added). Merchant give-aways through a raffle or a lottery neither involve the business or risk of loss elements to constitute gambling. See, e.g. La. Atty. Gen. Op. No. 77-438, 1977 WL 34710 (providing merchant give-away plan in which participants registering for prizes did not risk loss of anything of value and were not obligated to make purchases as a condition for registering for prizes did not violate Louisiana’s gambling statute or gaming laws); La. Atty. Gen. Op. No. 78-177, 1978 WL 32677 (opining a “bingo type game” conducted by a local supermarket was not gambling where the player risks nothing of value in an attempt to win a prize and where the supermarket was not conducting the game as a business).

A business may therefore use a promotion whereby anyone entering the store and without purchasing anything or paying for the raffle tickets may participate in the raffle. But the business should not sell the raffle tickets or condition participation in the raffle on making a purchase.[2]