We believe each of these promotions would be permissible and would not be considered illegal lotteries under federal or Illinois law since no fees are required to enter. However, we believe that any online posts advertising these promotions would be considered written promotional prize offers subject to the requirements of the Illinois Prizes and Gifts Act. Further, while we are not familiar with Indiana law, we believe these posts also may be subject to Title 24, Article 8 of the Indiana Code, which addresses promotional gifts and contests. As such, we recommend consulting with your bank counsel or other authority on Indiana law regarding Indiana’s requirements for such promotions.

Under federal law, banks generally are prohibited from dealing in lottery-related activities (other than savings promotion raffles) where participants advance money or credit in exchange for the possibility of winning more than the amounts advanced. We do not believe that any of your promotions would constitute a lottery because participants would not be advancing money or credit to your bank.

Lotteries also are prohibited by the Illinois Criminal Code. The Illinois Supreme Court has held that three elements are essential to a lottery — (1) chance, (2) consideration, and (3) a prize — and that no lottery exists if one of these elements is missing. The Criminal Code also exempts “games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate.” Consequently, we do not believe your promotions would be considered illegal lotteries under Illinois law since there is no cost to participate.

The Illinois Prizes and Gifts Act requires certain disclosures to be made when making written promotional prize offers. The law defines “prize” as “a gift, award, or other item or service of value that is offered or awarded to a participant in a real or purported contest, competition, sweepstakes, scheme, plan, or other selection process that involves an element of chance.” Since each of your promotions involves an element of chance, we believe the online notices for these promotions must contain the nine specific disclosures outlined in the resources below in a clear and conspicuous statement at the outset of each offer. We also believe these promotions would trigger the disclosure requirements in the Consumer Fraud and Deceptive Business Practices Act, which states that advertisements offering free prizes to consumers must clearly and conspicuously disclose all material terms and conditions relating to the offer.

Additionally, we note that since the prizes being awarded are valued at less than $600, you are not required to issue an IRS Form 1099-MISC to the winners.

For resources related to our guidance, please see:

• Ind. Code § 24-8-1, et seq. (Article 8. Promotional Gifts and Contests)

• Ind. Code § 24-8-1-1(a)(2) (“This article applies to a promotion offer made: . . . to a person in Indiana”)

• Ind. Code § 24-8-2-2 (“‘Person’ means an individual, corporation, the state or its subdivisions or agencies, business trust, estate, trust, partnership, association, cooperative, or any other legal entity.”)

• Ind. Code § 24-8-2-5 (“‘Promotion’ means a written notice offering: (1) Property; or (2) A chance to obtain property; to a person based on a representation that the person has been awarded or may have been awarded a prize.”)

• National Bank Act, 12 USC 25a (Prohibiting national 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 Deposit Insurance Act, 12 USC 1829a (Lottery prohibition of state nonmember banks.)

• Federal Reserve Act, 12 USC 339 (Lottery prohibition for state member banks.)

• 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 . . .”)

• People v. Eagle Food Centers, Inc., 31 Ill. 2d 535 (1964) (“[T]here are three elements essential to the existence of a lottery, viz., chance, consideration and a prize; and . . . there is no lottery if any one of these elements or ingredients is missing.”)

• Illinois Criminal Code, 720 ILCS 5/28-1(b)(13) (“Participants in any of the following activities shall not be convicted of gambling: . . . Games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate.”)

• Illinois Prizes and Gifts Act, 815 ILCS 525/10 (“‘Prize’ means a gift, award, or other item or service of value that is offered or awarded to a participant in a real or purported contest, competition, sweepstakes, scheme, plan, or other selection process that involves an element of chance.”)

• Illinois Prizes and Gifts Act, 815 ILCS 525/25 (“A written promotional prize offer must contain each of the following in a clear and conspicuous statement at the onset of the offer:

(1) the true name or names of the sponsor and the address of the sponsor’s actual principal place of business;

(2) the retail value of each prize the person receiving the notice has been selected to receive or may be eligible to receive;

(3) a disclosure that no purchase is necessary to enter such written promotional offer;

(4) a disclosure that a purchase will not improve the person’s chances of winning with an entry;

(5) a statement of the person’s odds of receiving each prize identified in the notice;

(6) any requirement that the person pay the actual shipping or handling fees or any other charges to obtain or use a prize, including the nature and amount of the charges;

(7) if receipt of the prize is subject to a restriction, a description of the restriction;

(8) any limitations on eligibility; and

(9) if a sponsor represents that the person is a ‘finalist’, has been ‘specially selected’, is in ‘first place’, or is otherwise among a limited group of persons with an enhanced likelihood of receiving a prize, the written prize notice must contain a statement of the maximum number of persons in the group or purported group with this enhanced likelihood of receiving a prize.”)

• Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2P (“It is an unlawful practice for any person to promote or advertise any business . . . by means of offering free prizes, gifts, or gratuities to any consumer, unless all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer so as to leave no reasonable probability that the offering might be misunderstood.”)

• Illinois Prizes and Gifts Act, 815 ILCS 525/15 (“Except as otherwise provided in this Act, this Act applies only to a written promotional offer that is: (1) made to a person in this State; (2) used to induce or invite a person to come to this State to claim a prize, attend a sales presentation, meet a promoter, sponsor, salesperson, or agent, or conduct any business in this State; or (3) used to induce or invite a person to contact by any means a promoter, sponsor, salesperson, or agent in this State.”)

• IRS Webpage, Form 1099-MISC (“File Form 1099-MISC for each person to whom you have paid during the year: . . . at least $600 in: . . . prizes and awards; . . .”)