Legal Q&A: Drawings, Raffles, Prizes, and Promotions

Q: Are Certain Drawings, Raffles, and other Promotions Involving Prizes Illegal?

A: Yes. If a promotion meets the definition of a lottery under Wisconsin Statute Section 945.01 it is illegal.

While this law is not new, WBA has recently received many inquiries as to whether a bank can run various types of promotions from a marketing standpoint. WBA recommends working carefully with the bank’s own counsel to determine whether any prize based promotion is legal.

Wisconsin law prohibits illegal lotteries. The three elements of a lottery are a prize, a winner determined at least in part by chance, and consideration. This applies even where only banks employees are participating. The most debated element is that of consideration. Consideration in this context is defined as anything which is a commercial or financial advantage to the promoter. As this term is quite broad, we recommend caution when determining whether to run a promotion. 

Furthermore, Federal law prohibits any arrangement whereby three (3) or more persons advance money or credit to another in exchange for the possibility or expectation that one or more (but not all of the participants) will receive by reason of their advance more than the amounts they have advanced, the identity of the winner being determined by any means—including a random selection, a game/race/contest, or any record or tabulation of a result of one or more events in which any participant has no interest except for its bearing upon the possibility he/she may become a winner.

By, Scott Birrenkott