Legal Hotline: Lottery Santa

  • Dec 15, 2016

Melissa Melewsky, Media Law Counsel

Q:   A local business wants to advertise a holiday promotion.  They want the ad to say “Buy $25 worth of merchandise and get a chance to win a giant inflatable Santa and $500 gift card!”  Does this raise any legal issues? 

A:  Yes. It raises an illegal lottery issue and could impact the newspaper’s periodicals mailing privileges. 

Pennsylvania and federal law prohibit private lotteries.  The traditional elements of a lottery are: prize, chance and consideration (pay to play). Clearly, the suggested promotion awards prizes and the winner is chosen by chance.  The requirement to buy $25 worth of merchandise for a chance to win is consideration because individuals must buy merchandise for a chance to win.  Because all three elements of a lottery are present, this ad creates risk related to an illegal lottery. 

In addition to state and federal laws that make private lotteries illegal, federal postal regulations prohibit advertising illegal lotteries in any mailed matter, including newspapers sent through the mail. Newspapers risk losing the periodicals mailing classification if they advertise an illegal lottery, and this classification is important for placement of legal advertising.

Nonprofit organizations, and some bars and restaurants, may hold and advertise small games of chance in Pennsylvania. However, even if a nonprofit organization or business is licensed to conduct small games of chance, it is unlawful to advertise the prizes or the dollar value of such prizes in newspaper ads.

As always, this is not intended to be, nor should it be construed as, legal advice.  Please contact your newspaper’s attorney or the Legal Hotline at (717) 703-3080 with questions.

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