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One of our branches would like to hold a bingo game event for account holders who are age 55 or older and maintain a required minimum balance, with a prize awarded at the conclusion of the event. What Illinois state laws would apply, and can the bank conduct a bingo game onsite?

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We believe your bank branch could hold a bingo game event for this subset of account holders, provided that no consideration is required to participate.

In Illinois, the Bingo License and Tax Act regulates the licensure of entities authorized to conduct legal bingo games. However, if no consideration is required to obtain a bingo card, the game is not “bingo” for the purposes of this Act, and no license is required. The Illinois Criminal Code’s prohibitions against gambling also exempt games of chance where money or prizes can be won but no payment or purchase is required to participate.

Similarly, a game of chance is not considered a prohibited “lottery” if no consideration is required for a chance to win, even if participants are required to maintain an average minimum balance. The OCC’s interpretive guidance (applicable because your bank is a national bank) provides that where a banking transaction is required to enter a contest, there is no consideration if the customer pays the normal fee for the banking service and does not pay anything extra to enter the contest.

Note that the Illinois Consumer Fraud and Deceptive Business Practices Act requires a business that is offering a free prize to clearly and conspicuously disclose the giveaway’s material terms and conditions. Additionally, if the prize is valued at $600 or more, you must issue an IRS Form 1099-MISC to the prizewinner.

Moreover, we are not aware of any prohibition against conducting a permissible game of chance (when no consideration is required) on the bank’s premises.

For resources related to our guidance, please see:

  • Bingo License and Tax Act, 230 ILCS 25/1.1, (“‘Bingo’ means a game in which each player has a card or board for which a consideration has been paid, containing 5 horizontal rows of spaces, with each row except the central one containing 5 figures. . . .”)
  • Illinois Criminal Code, 720 ILCS 5/28-1(b) (“Participants in any of the following activities shall not be convicted of gambling:. . . . (13) Games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate.”)
  • Illinois Criminal Code, 720 ILCS 5/28-2(b) (“A ‘lottery’ is 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, whether such scheme or procedure is called a lottery, raffle, gift, sale or some other name, excluding savings promotion raffles. . . .”)
  • National Bank Act, 12 USC 25a (Prohibiting national banks from involvement with a “lottery,” defined as “any arrangement, other than a savings promotion raffle, whereby three or more persons (the “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, the identity of the winners being determined by any means which includes (A) a random selection; (B) a game, race, or contest; or (C) any record or tabulation of the result of one or more events in which any participant has no interest except for its bearing upon the possibility that he may become a winner.”)
  • Federal Reserve Act, 12 USC 339 (Lottery prohibition for state member banks.)
  • Federal Deposit Insurance Act, 12 USC 1829a (Lottery prohibition for state nonmember banks.)
  • OCC Interpretive Letter 1153 (May 11, 2015) (“OCC precedent has taken the position that where a banking transaction is required in order to enter a contest, there is no consideration if the customer pays the normal fee for the banking service and does not pay anything extra to enter the contest.”)
  • Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2P (“It is an unlawful practice for any person to promote or advertise any business . . . by means of offering free prizes, gifts, or gratuities to any consumer, unless all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer so as to leave no reasonable probability that the offering might be misunderstood.”)