We believe it is possible to structure a silent auction so that it does not violate the lottery restrictions. 

• The Federal Reserve Act prohibits banks from dealing in any lottery, defined as an arrangement in which participants “advance money or credit to another in exchange for the possibility or expectation that one or more but not all of the participants (the ‘winners’) will receive by reason of their advances more than the amounts they have advanced.” 12 USC 339(c)(2). 

• And the Illinois Criminal Code defines lotteries as “any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prizes . . . .” 720 ILCS 5/28-1(a)(9), (1)720 ILCS 5/28-2(b). 

A silent auction that does not involve any chance of winning a prize would not likely be considered an illegal lottery. We do recommend allowing any member of the public to participate rather than restricting the participation to customers of the bank. 

We also recommend that you consult with the your FRB examiners or bank counsel before going ahead with the auction, as we cannot provide any legal advice.