Did a Kentucky charity need an alcohol license to raffle or auction a bottle of liquor?

Plain-English summary

In 1996, Kentucky's Attorney General said a charity or other nonprofit group needed a special temporary alcohol license to auction alcoholic beverages. The opinion also addressed raffles and other games of chance that awarded alcohol as a prize. A dinner surrounding the auction did not remove the licensing requirement, and the AG said the Alcoholic Beverage Control Board had authority to regulate the activity.

The AG read the statutory definition of a sale to include a transfer for consideration, including the sale of chances on alcoholic beverages. He identified the board's special-license authority under KRS 243.030(28) and the temporary-license regulation, 804 KAR 4:320, as the route available to nonprofit organizations.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Charities holding fundraisers

The opinion considered a charitable organization's raffle, game of chance or auction with a bottle of alcohol as the prize. The AG said the group needed a license to sell chances on alcohol and concluded that a special temporary license applied to nonprofit auctions. Compliance with the charitable-gaming requirements mentioned in the question did not change the alcohol-licensing conclusion.

Private clubs and fraternal organizations

The AG considered a club's alcohol-prize event held on or off its premises and accompanied by dinner or other activities. He said the surrounding event made no difference to the need for a special temporary license to auction alcoholic beverages.

Alcoholic Beverage Control Board

The opinion said KRS 243.030(28) authorized the board to issue special licenses for proper regulation. It identified 804 KAR 4:320 as authorizing charitable and nonprofit corporations holding the special license to acquire and sell distilled spirits and wine at auction.

Common questions

Could a Kentucky charity auction donated wine without an alcohol license under this opinion?
The AG said a charitable or nonprofit group had to obtain a special temporary license to auction alcoholic beverages. The regulation he quoted allowed the group to accept donated distilled spirits and wine.

Did serving dinner with the auction change the answer?
No. The AG said the license requirement was the same for a stand-alone auction and an auction held during a larger dinner event.

Did the opinion address alcohol given away through a raffle?
Yes. The request covered raffles and other games of chance awarding alcohol, and the AG said the board had authority to restrict those activities. His closing explanation specifically stated the special-license rule for auctions.

Background and statutory framework

The AG relied on KRS 243.020's alcohol-license requirement and KRS 241.010(29)'s definition of a sale. He found no ordinary license in KRS 243.030 suited to the fundraising scenarios, then pointed to KRS 243.030(28)'s special-license authority and 804 KAR 4:320's temporary license for charitable and nonprofit corporations.

Citations and references

• KRS 243.020
• KRS 241.010(29)
• KRS 243.030(28)
• 804 KAR 4:320

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG96-011.htm

Original opinion text

OAG 96-11

January 30, 1996

Subject: Regulation of alcoholic beverages as prizes

Written By: Diane Schuler Fleming

Requested By: Don Cetrulo

Syllabus: A charitable or nonprofit organization that wishes to auction, raffle or award alcoholic beverages as prizes in games of chance must obtain a special temporary license.

Statutes Construed: KRS 243.020(1)(3); KRS 241.010(29); KRS 243.030

OPINION OF THE ATTORNEY GENERAL

The following question has been presented for our review:

Does the Alcoholic Beverage Control Board have the statutory authority to restrict auctioning, raffling, or awarding of alcoholic beverages as prizes in games of chance, if the activity is conducted by a nonprofit organization for fundraising purposes?

In addition, we have been asked if the following situations are permissible:

1. A charitable organization that meets and complies with the requirements of KRS Chapter 238 awards as a prize at a raffle, a game of chance, or an auction, a bottle of alcohol to the winner; and

2. A private club or a fraternal organization conducts a raffle, auction or game of chance in which a bottle of alcohol is given to the winner or the highest bidder. The raffle, auction, or game of chance is part of an evening of activities which includes dinner, etc., and may occur on or off the club or organization's premises.

KRS 243.020 states in part:

(1) No person shall do any act authorized by any kind of license with respect to the manufacture, storage, sale, purchase, transporting or other traffic in alcoholic beverages unless he holds the kind of license that authorizes such act.

(3) No person, conducting a place of business patronized by the public, who does not hold a license to sell distilled spirits and wine by the drink, shall permit any person to sell, barter, loan, give away or drink distilled spirits or wine on the premises of his place of business.

Thus, anyone engaged in the sale of alcoholic beverages must obtain a license. Pursuant to KRS 241.010(29):

`Sale' means any transfer, exchange or barter for consideration, and includes all sales made by any person, whether principal, proprietor, agent, servant or employee, of any alcoholic beverage.

Applying these statutes to the present situation, a nonprofit group would be required to obtain a license to sell chances on alcoholic beverages. A list of the kinds of licenses for distilled spirits and wine, along with their fees, can be found in KRS 243.030. Our review of this statute, however, reveals no license which would be appropriate to the current scenario.

Anticipating such situations, the General Assembly provided for the issuance of special licenses, as the board finds necessary for proper regulation and control. KRS 243.030(28). Thus, acting within the scope of their authority, the board enacted 804 KAR 4:320 to provide for the issuance of a special temporary license to charitable and nonprofit corporations. This regulation specifically authorizes charitable and nonprofit organizations to:

(1) Purchase, transport, receive, possess, store, and sell distilled spirits and wine to be sold at auction; and

(2) Purchase distilled spirits and wine from distillers, vintners, wholesalers, retailers, or accept by gift or donation from individuals.

804 KAR 4:320, Section 2(1) and (2).

In conclusion, the Alcoholic Beverage Control Board has the statutory authority to restrict the auctioning, raffling, or awarding of alcoholic beverages as prizes in games of chance conducted by nonprofit organizations. Application of this regulation to the two scenarios yields identical results - a charitable or nonprofit organization must obtain a special temporary license to auction alcoholic beverages regardless of the surrounding circumstances. Therefore, whether the auction of the alcoholic beverages is a singular activity, or part of a larger dinner event, is irrelevant - a special license must be obtained.

A. B. CHANDLER III

ATTORNEY GENERAL

DIANE SCHULER FLEMING

ASSISTANT ATTORNEY GENERAL