We do not see any problem with a bank holding a promotional drawing and requiring participants to fill out a form to make an entry, but it should be open to any participants — not just to bank customers. If all entries are free, and no other requirements are imposed on entries, we do not believe that the bank would violate either federal or state prohibitions on lotteries by holding a promotional drawing. 

• 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. 
• 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). Further, the Criminal Code exempts drawings in which “money or other things of value can be won but no payment or purchase is required to participate.” 720 ILCS 5/28-1(b)(13). Note that other Illinois laws impose further restrictions on promotional giveaways, even if no payment or purchase is required for a chance to win:
  • The Prizes and Gifts Act prohibits any requirement of payment as a condition to winning, competing for, or obtaining information about a prize. 815 ILCS 525/20(a). It specifies nine disclosures which must be made in a written promotional prize offer. 815 ILCS 525/25. 
  • The Consumer Fraud and Deceptive Practices Act prohibits advertising any business by offering free prizes to a consumer unless all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer. 815 ILCS 505/2P. 
• Note that even requiring a customer to come out to the bank and fill out a form for a chance to win could be regarded as requiring consideration, making your game fall into the definition of lottery. See Midwest Television, Inc. v. Waaler, 44 Ill. App. 2d 401, 409–410 (3rd Dist. 1963). However, as stated above, your promotion likely falls into the “no payment or purchase required” exception to the general prohibition of lotteries. 

Also, note that due to the high value of some of the prizes, you may have to report winnings to the IRS. Any prizes that are worth $600 or more should be reported under “Other Income” on a 1099-MISC form (see the instructions here).