Merchandising by means of a chance or gaming device
69 F.T.C. 1223 · May 18, 1966 · Digest No. 45
source volume section (69 F.T.C. 1223)
Text is machine-OCR of the printed volume and may contain errors. Advisory opinions are the Commission's views on proposed conduct, not binding orders.
No. 45. Merchandising by means of a chance or gaming device. The Commission was recently requested to furnish an advisory opinion with respect to a proposal to distribute prizes to users of trading stamp books. Under this proposal, distributors of trading stamps would receive from the stamp company not only trading stamps that are to be pasted in the books but the books as well. The books wou1d bear a seal which when broken after the book is completely filled and presented to the store manager wou1d revea1 a prize ranging from $1.50 to $100.00. Books carrying prizes larger than $1.50 would represent approximately 10 percent of the total books distributed. The stamp user wou1d a1so have the option of not breaking the seal and receiving $2.00 in cash or $2. 15 in merchandise.
It was contended that of the three essential elements of a lottery, namely, consideration, chance and prize, the first would be missing since merchants would distribute the stamps not on1y to their customers in proportion to purchases made, as is norma1 for trading stamp operations , but also to anyone who would register in the merchant's store whether a purchase was made or not. Extensive advertising would inform the general pubJic that they may receive eighty stamps per week by just registering with the merchants without the necessity of making a purchase.
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The Commission advised that it did not need to decide the question of whether or not consideration would exist, so that the proposal could be held to constitute a technical lottery, for it was still of the view that the plan would involve an ilegaJ effort to sell or dispose of merchandise by means of a chance or gaming device. In the Commission s view, 10tteries are not the only method by which the public s gamb1ing instinct may be aroused, for other methods are comprehended within the genera1 concept of merchandising by gambling. This proposa1 appeared to fall into that category, for even though each participant wou1d a1ways receive something of value if he persisted 10ng enough to fill the book with stamps, the amount of his return would vary greatly with his wilingness to "take a chance. " Consequently, the Commission declined to give its approva1 to the proposed plan.
Commissioner Elman did not concur. (FiJe No. 663 7049 , released May 18, 1966.