Although we cannot offer legal advice, we believe that a promotional drawing can be structured by the bank to comply with federal law’s prohibition against banks conducting lotteries and the Illinois Criminal Code’s general prohibitions on gambling.

Regarding federal law, the National Bank Act, the Federal Reserve Act, and the Federal Deposit Insurance Act state that a bank may not (among other things) “announce, advertise, or publicize the existence of any lottery.” These laws define a “lottery” as an arrangement in which participants “advance money or credit to another in exchange for” a chance to win. 12 USC 25a12 USC 33912 USC 1829a(c)(2). Accordingly, provided that the drawing is open to the public (and not limited to customers of the bank), and provided that participants are not required to advance any money or credit in order to participate, we believe the drawing should not be deemed to be a lottery.

Regarding Illinois law, the 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). There is an exemption, however, for drawings in which “money or other things of value can be won but no payment or purchase is required to participate.” Again, provided that the drawing is open to the public, and provided that no payments or purchases are required to enter, we believe the drawing should fall into that exception. 720 ILCS 5/28-1(b)(13).

Any advertising and disclosures must meet the following requirements:

• 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 while neither the Illinois nor federal laws require a bank to advertise a giveaway outside of its customer base (in order to qualify for the exceptions discussed above), we recommend that there should be some amount of advertising accessible to noncustomers as well as to customers. While advertising the giveaway in statement stuffers may not suffice (as they would be seen only by bank customers), advertising the giveaway on outside signs at branch locations would likely suffice.