Topic: Lotteries and Promotions
-
Does Illinois have a law similar to the federal American Savings Promotion Act that authorizes state chartered banks to conduct savings promotion raffles?
—
by
Yes. Illinois has enacted a law that essentially mirrors the American Savings Promotion Act. Illinois Public Act 99-149, effective January 1, 2016, authorizes state-chartered banks, savings banks and credit unions to conduct savings promotion raffles and to promote prize-linked savings accounts. Specifically, the Illinois legislation amended the Illinois Banking Act, Savings Bank Act and Credit…
-
Our bank would like to sell raffle tickets to raise funds for different charity groups. All proceeds would be donated. Anyone could buy a raffle ticket and would not have to be a bank customer. Would that be considered gambling? If the prize is worth $250, would that trigger a 1099 form?
—
by
We believe the fundraiser that you described is prohibited under state and federal law as a form of impermissible gambling. In general, the Illinois Criminal Code prohibits the conduct of lotteries and raffles, including “any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration…
-
Can we engage in bank promotions that involve games of chance without violating the lottery prohibition for banks?
—
by
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…
-
Does the Shankar v. Commissioner of Internal Revenue case require us to report on IRS Form 1099-MISC the reward points that we give to deposit customers? We intend to provide either a cash back option or rewards points that would be redeemable for noncash gift cards or merchandise.
—
by
The Shankar case does not change the reporting requirements for interest paid on deposit accounts, including non-cash account rewards. In Shankar, the bank issued a 1099-MISC to report that its customer had traded in rewards points for airline tickets with a value of $668 (exceeding the $600 threshold for 1099-MISC reporting), and the court held…
-
We would like to encourage check writers to use their debit cards more by rewarding them by depositing a certain amount into their accounts after they have incurred 20 debit card transactions in a month. Can we do this under Illinois law? Do we need to report this to the IRS?
—
by
Yes, we believe you may create such a rewards program – we are not aware of any law or regulation that would prohibit it. If rewards paid to a particular customer exceed $10 in value in a calendar year, you will have to report the rewards on the 1099-INT Form. For resources related to our…
-
Are savings promotion raffles now permitted in Illinois in light of the new American Savings Promotion Act that was signed into law on December 18, 2014?
—
by
No, savings promotion raffles remain prohibited under current Illinois law. The American Savings Promotion Act amended federal law to exempt “savings promotion raffles” from the prohibition on lotteries under federal law. (Savings promotion raffles are defined as a contest in which customers who deposit a specified amount of money into savings accounts are entered into…
-
We would like to hold a giveaway for an iPad Mini. It would be open to anyone who comes into the bank on the day of our anniversary celebration, but we will have a minimum age to enter. Is that permitted? And do we need to issue a Form 1099 to the winner?
—
by
Yes, we believe that you may impose a minimum age for entries into the giveaway, provided that you do not impose any other requirements for entries. And we do not believe you will need to issue an IRS Form 1099-MISC for the prize, since its value is below $600. To comply with state and federal…
-
Our marketing department wants to hold a drawing that will be open to customers and noncustomers. We would like to use the information we receive, such as names and addresses, for marketing purposes. Is that possible, and are there any privacy concerns?
—
by
We believe you may use the information you receive from the drawing participants for marketing purposes, provided that you clearly and conspicuously disclose that you are collecting the participants’ contact information for marketing purposes. Because you will not be disclosing the contact information to third parties, the drawing should not trigger federal or Illinois privacy…
-
Can we hold a promotional drawing in our bank lobby that is open to children under age 12 only? The drawing would be open to non-customers, and there would be no other requirements to enter.
—
by
Although we cannot offer legal advice, we believe that this promotional drawing could be structured to comply with federal law’s prohibition against banks conducting lotteries and the Illinois Criminal Code’s general prohibitions on gambling. We do not believe that limiting participants based on age will pose any problems, provided that no other requirements apply. Federal…