IBA Compliance Connection

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Can we engage in bank promotions that involve games of chance without violating the lottery prohibition for banks?

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Yes, it is possible to design a game of chance that does not conflict with Illinois and federal prohibitions of lotteries, provided that you do not impose any requirements for entries (such as a purchase or deposit). 

To comply with state and federal law, a promotional game of chance should be open to customers and noncustomers, and participants should not be required to advance any money or credit in order to participate. In addition, the Illinois Prizes and Gifts Act requires nine specific disclosure to be made with any written promotional prize offer, and the Consumer Fraud and Deceptive Business Practices Act requires you to clearly and conspicuously disclose all material terms and conditions relating to the prize at the outset of the offer. 

Notwithstanding the Illinois and federal lottery prohibitions described above, a depository institution also may now offer savings promotion raffles — also known as “prized-linked savings accounts” — in Illinois. Congress authorized savings promotion raffles last year in the American Savings Promotion Act, and recent Illinois legislation makes similar changes to corresponding Illinois laws. 

For resources related to our guidance, please see:

  • Federal Deposit Insurance Act — 12 USC 1829a(c)(2) (lottery prohibition, defining “lottery” as an arrangement (other than a savings promotion raffle) where participants advance money or credit in exchange for a chance to win)
  • Federal Deposit Insurance Act — 12 USC 1829a(c)(4) (defines “savings promotion raffle” as “a contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a savings account or other savings program, where each ticket or entry has an equal chance of being drawn . . . .”)
  • Illinois Criminal Code
  • 720 ILCS 5/28-1(b)(13) (exemption for drawings where money or things of value can be won but no payment or purchase is required to enter)
  • Illinois Prizes and Gifts Act — 815 ILCS 525/25 (disclosure requirements for written promotional prize offers)
  • Consumer Fraud and Deceptive Business Practices Act — 815 ILCS 505/2P (requires all material terms and conditions to be clearly and conspicuously disclosed)