Brief Description: Concerning promotional contests of chance.

Sponsors: Representatives Pflug, Wood, Conway and Chandler.

Hearing Date: 1/27/03

Staff: Matt Cooper (786-7106).

Background:

Promotional contests are games or contests to promote a business activity where a part of the outcome is determined by chance. Promotional contests are regulated by consumer protection laws and are exempt from gambling regulations. Sponsors of promotional contests may not require a person to pay for the chance to participate in a contest. Sponsors may give additional chances to participate in contests when a person makes a purchase of goods or services. However, sponsors must offer alternate methods for additional chances that do not require a purchase. (This requirement does not apply to sponsors of contests conducted through direct mail solicitations.)

Recently, a distributor of a particular type of vending machine sought a declaratory judgment that its vending machine was a promotional contest. The administrative law judge held that the vending machine was not a promotional contest, but a gambling device. As such, the vending machine was subject to gambling laws and regulation by the Gambling Commission.

Summary of Bill:

Sponsors of promotional contests may give additional chances to enter a contest with a purchase, as long as the purchase is not made through a vending machine.

Appropriation: None.

Fiscal Note: Not requested.

Effective Date: Ninety days after adjournment of session in which bill is passed.