We are a state nonmember bank. Can we hold a raffle for a local school in which our bank would donate the prize and sell raffle chances, and all proceeds would go to the school?

No, we believe such a raffle would violate both federal and state law, regardless of whether the proceeds are donated to a school or other charitable cause.

The Federal Deposit Insurance Act prohibits state nonmember banks from holding “lotteries” in which participants advance money in exchange for a possibility to be randomly selected to receive more than the amount they advanced.

Similarly, the Illinois Criminal Code prohibits schemes or procedures in which “prizes are distributed by chance among persons who have paid . . . for a chance to win such prizes, whether such scheme or procedure is called a lottery, raffle . . . or some other name.” Although Illinois permits certain organizations to obtain raffle licenses (such as charities and not-for-profits), no such exception exists for banks.

Consequently, we believe your bank is prohibited from conducting a raffle on behalf of a local school.

For resources related to our guidance, please see:

Federal Deposit Insurance Act, 12 USC 1829a (Prohibiting state nonmember 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.)

National Bank Act, 12 USC 25a (Lottery prohibition for national banks.)

Illinois Criminal Code, 720 ILCS 5/28-1(c) (“Gambling is a Class A misdemeanor. A second or subsequent conviction under subsections (a)(3) through (a)(12), is a Class 4 felony.”)

Illinois Criminal Code, 720 ILCS 5/28-1(a)(7) (“A person commits gambling when he or she: . . . knowingly sets up or promotes any lottery or sells, offers to sell or transfers any ticket or share for any lottery; . . .”)

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. . . .”)

Raffles and Poker Runs Act, 230 ILCS 15/2(b) (“Raffle licenses shall be issued only to bona fide religious, charitable, labor, business, fraternal, educational, veterans', or other bona fide not-for-profit organizations that operate without profit to their members and which have been in existence continuously for a period of 5 years immediately before making application for a raffle license and which have during that entire 5-year period been engaged in carrying out their objects . . .”)

Raffles and Poker Runs Act, 230 ILCS 15/2(b) (“For purposes of this Act, the following definitions apply. . . . Business: A voluntary organization composed of individuals and businesses who have joined together to advance the commercial, financial, industrial and civic interests of a community.”)