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People v. Miller

New York Court of Appeals
1936 N.Y. LEXIS 1162, 2 N.E.2d 38, 271 N.Y. 44 (1936)
ELI5:

Rule of Law:

A scheme for the distribution of property by chance constitutes a lottery where valuable consideration for the chance is included in the price of a product or service, even if no separate or additional fee is charged for the chance itself.


Facts:

  • The defendants operated a motion picture theatre in Brooklyn.
  • A patron would purchase a single ticket of admission to view a motion picture.
  • Upon purchasing the admission ticket, the patron also received a second, numbered ticket for a prize drawing.
  • This second ticket was torn in half; one half was given to the patron and the other was placed into a box.
  • During the event, a winning number was selected by chance from the box on stage.
  • The patron holding the matching ticket half won a cash prize.

Procedural Posture:

  • The defendants were charged with maintaining a lottery in violation of the New York Penal Law.
  • At trial, the defendants presented evidence that non-paying individuals could participate, but the trial court found this testimony not credible.
  • The defendants were convicted in the trial court.
  • The defendants appealed their conviction to a higher court, which ultimately reached the New York Court of Appeals.

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Issue:

Does a movie theater's promotional drawing, where patrons who purchase an admission ticket automatically receive a chance to win a cash prize, constitute a 'lottery' under a statute that requires 'valuable consideration' be paid for the chance?


Opinions:

Majority - O’Brien, J.

Yes. A movie theater's promotional drawing where an admission ticket also provides a chance to win a prize constitutes a lottery because the price of admission serves as valuable consideration for the chance. The three elements of a lottery are a prize, chance, and consideration. The defendants' scheme clearly involved a prize (money) distributed by chance. The central dispute is over consideration. The court reasoned that when a patron paid the price of admission, the consideration paid was for the entire package: the right to view the film plus the chance to win the prize. The court analogized this to previous cases, like People ex rel. Ellison v. Lavin, where purchasing cigars with bands that entitled the buyer to a chance at a prize was deemed a lottery. It is irrelevant that no separate fee was charged for the chance; the consideration is bundled into the single price of the admission ticket, and the patron pays for both what is certain (the movie) and what is contingent (the prize).



Analysis:

This decision solidifies the 'bundled consideration' doctrine in lottery law, clarifying that consideration for a chance to win a prize need not be separate or explicit. It can be embedded within the price of another good or service. This ruling has had a significant and lasting impact on promotional giveaways and sweepstakes, establishing the legal necessity for a 'no purchase necessary' or alternative free method of entry. Without such a free entry option, any promotion requiring a purchase to participate would likely be classified as an illegal lottery in jurisdictions with similar statutes.

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