LOTTERY LAW
Analysis: Did the Court Get It Right?
that the element of chance was absent is largely defensible, but likely not unassailable in all jurisdictions, particularly those which have not adopted the Dominant Factor Test. Lastly, the court’s restrictive interpretation of “consideration” invites more than a few reasonable objections, the most pragmatic of which being the floodgates it potentially opens to illegal lotteries. If consideration must involve money, could an online, bitcoin-only lottery be considered legal? As with the prize element, the court’s reasoning would appear to leave open some undesirable possibilities. The court’s total rejection of the contract law conception of consideration is likewise questionable. To be sure, “consideration” necessarily carries a different meaning in contracts than it does in the lottery context – one’s personal information mailed in pursuant to an AMOE for a chance to win a sweepstake is, at once, “consideration” for the unilateral contract for a chance to win, and not “consideration” in the lottery context lest the sweepstake be deemed an illegal lottery. 10 This does not, however, justify the a priori presumption that the definition of “consideration” in the lottery context is a closed set containing only “money”, which presumption the court appears to have adopted by noting that Pennsylvania had failed to cite cases applying the contract law definition of “consideration” to the lottery context. As noted above, insisting on this unitary definition would lead to absurd results. All in all, the court was likely correct in finding that the giveaway did not constitute an illegal lottery – if only because the element of chance was lacking. It bears noting, however, that this conclusion rested on the most lenient of the three tests for chance. In jurisdictions that do not apply the Dominant Factor Test, courts could reasonably have come to different conclusions. Canada legal framework The architecture of the legal framework governing lotteries is much simpler in Canada. Unlike the fragmented regulation seen in the U.S., there is a federal prohibition against lotteries set out in subsection 206(1) of the Criminal Code. That subsection
On the question of prize, the court’s reasoning is immediately questionable. It concluded that no prize was offered because recipients had to agree to serve as paid spokespersons in order to receive the US$1 million. But this raises an obvious question: was the opportunity to become a paid spokesperson for US$1 million not a prize per se? After all, a prize need not be limited to money. Pennsylvania’s own statutory definition of the word, in the context of its state-run lottery, begins with the phrase “the item or money that can be won…” 9 It is unclear whether Pennsylvania advanced this argument, as the court’s reasons focus solely on the contention that the US$1 million payment constituted the prize. Nevertheless, this point seems difficult to ignore. If the opportunity to enter into the US$1 million contract in this instance does not amount to a prize, then it would arguably be open to otherwise illegal lottery operators to sidestep the prize element simply by conditioning payment on some nominal obligation, such as standing on stage or participating in a brief promotional appearance. The court’s reasoning would seem to leave open that possibility. On the question of chance, the court’s reasoning is agreeable. Given that recipients were selected through a multi-step vetting process, it is difficult to argue that selection was left entirely to chance. That said, the conclusion is not entirely foregone, particularly if this case had been decided in another state. While the result is consistent with the Dominant Factor Test – under which chance must be the primary determinant of outcome – it is less obviously correct under alternative approaches. For instance, under the Material Element Test, where chance need only play a meaningful role, or the Any Chance Test, where even minimal randomness may suffice, the presence of some discretionary or non-formalized elements in the selection process could have supported a different outcome. Although the process used by America PAC was not random in the colloquial sense, it was also not mechanical. It involved human judgment and subjective evaluation. That the process was structured and purposeful does not eliminate the possibility that chance played a role in the outcome. The court’s finding
9 61 Pa. Code § 876.2 (2020). 10 See generally Anthony N. Cabot et al., Economic Value, Equal Dignity and the Future of Sweepstakes , 1 UNLV Gaming L.J. 1 (2010), for a discussion of the various legal tests used to determine whether consideration exists in a gambling context—notably the “Simple Contract Consider- ation” test that was historically the norm.
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IMGL MAGAZINE | SEPTEMBER 2025
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