IBA Compliance Connection

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We are planning a “lunch-and-learn” program at a local high school. Any interested student can attend, and we will give a free lunch to all students who attend a certain number of the sessions. Would this be considered a lottery? Are we required to offer a free lunch to those who do not attend the minimum number of sessions?

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No, we do not believe that this program would be considered a lottery, and your bank is not required to provide a free lunch to program participants who fail to attend the minimum number of sessions.

The National Bank Act defines a “lottery” as an arrangement in which participants “advance money or credit to another in exchange for the possibility or expectation that one or more” will win a prize. The Illinois Criminal Code defines a prohibited lottery as a scheme in which “one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prizes.” Here, the free lunches are provided not by chance, but rather will be given to any participants who attend the minimum number of sessions. Additionally, the participants have not paid or promised any consideration in return for a chance to win the free lunch.

Because the program fits neither the state nor the federal definitions of “lottery,” we do not believe that it would be considered a lottery. In our view, your bank may set a condition for providing free lunches by requiring attendance at a minimum number of sessions, provided the participants are not required to pay or promise consideration in exchange for a chance to win the free lunch.

For resources related to our guidance, please see:

  • 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(c)(2) (“The term ‘lottery’ includes 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.”)