Can a Texas charity give away bottles of liquor as a raffle prize?

Plain-English summary

A district attorney asked the AG whether a nonprofit charity that is qualified to hold a raffle under the Charitable Raffle Enabling Act may give away bottles of donated alcohol as the prize. In the scenario described, there was no event or premises where the prize would be consumed; the winner simply "wins a wagon of liquor" delivered to them, and the raffle was meant to help build a shelter for victims of domestic violence. The DA noted that the Alcoholic Beverage Code already lets alcohol be auctioned for charity if consumed off-premises, and reasoned that if it can be auctioned, it should be able to be raffled.

The AG worked through two statutes. The Charitable Raffle Enabling Act lets qualified entities, including charitable nonprofits, conduct raffles subject to its conditions, and it does regulate prizes (for instance, it bars cash as a prize). But nothing in the Act prohibits alcohol as a prize, so the Act itself did not stand in the way. That left the Alcoholic Beverage Code, which exclusively governs the manufacture, sale, distribution, transportation, and possession of alcoholic beverages and tasks the Texas Alcoholic Beverage Commission with regulating the alcohol business. The Commission told the AG it treats a raffle for alcohol as a sale, because the participant pays money for the ticket and a chance at the liquor.

The AG disagreed with treating it as a sale. The Code does not define "sale," so the AG used the ordinary meaning, a transfer of property or title for a price. In a raffle, the charity sells tickets, and a raffle-ticket sale is complete once the buyer gets the ticket in exchange for payment; the charity does not sell the alcohol itself to each ticket buyer. So a raffle for a prize does not fit the traditional meaning of a sale. The AG then asked whether the activity was otherwise regulated by the Code. Assuming the charity is not in the business of any regulated part of the alcohol industry and uses raffle proceeds only for its charitable purposes, the Code did not appear to require a license or permit for merely possessing alcohol that is not for sale. On that reasoning, the AG concluded a court would likely hold that current law did not prohibit a charitable raffle awarding alcohol as a prize. The AG noted in a footnote that the Legislature had recently considered, but not passed, a bill to regulate charitable alcohol raffles through a temporary permit.

Currency note

This opinion was issued in 2017. 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. The opinion itself noted pending legislation on charitable alcohol raffles, so the rules may have changed since.

What the opinion meant for those who asked

The requesting district attorney (as the opinion described it): The opinion answered that because the award of alcohol as a raffle prize by a nonprofit is not prohibited by the Act and is not a sale or otherwise an activity regulated by the Alcoholic Beverage Code, a court would likely conclude that current law did not prohibit such a raffle prize.

Charitable nonprofits holding raffles (as the opinion described them): The opinion explained that the analysis assumed the organization is not in the business of any regulated part of the alcohol industry and uses raffle proceeds only for its charitable purposes, and that merely possessing donated alcohol not for sale did not appear to require a license or permit.

The Texas Alcoholic Beverage Commission (as the opinion described it): The opinion declined to adopt the Commission's view that a raffle for alcohol is a sale, reasoning that the ticket buyer pays for the chance to win, not for a direct sale of the alcohol.

Common questions

Can a Texas charity raffle off donated alcohol?
Under this opinion, likely yes. The AG concluded that current law did not prohibit a qualified nonprofit from awarding donated alcohol as a raffle prize, because the Act does not bar it and the raffle is not a sale of alcohol.

Why isn't a raffle a "sale" of the alcohol?
The opinion used the ordinary meaning of "sale," a transfer of property or title for a price. In a raffle the buyer pays for a ticket and a chance to win, and the ticket sale is complete on receipt of the ticket, so the charity is not selling the alcohol itself to each buyer.

Does the charity need a liquor license to do this?
The opinion said the Code did not appear to require a license or permit if the organization merely possesses alcohol that is not for the purpose of sale and is not in the business of a regulated part of the alcohol industry.

What can the charity do with the raffle money?
The opinion noted that a nonprofit conducting a raffle under the Act may use the proceeds only for the charitable purposes of the qualified organization.

Does it matter that cash cannot be a raffle prize?
The opinion pointed out the Act bars money as a raffle prize but does not bar alcohol, which is part of why the Act itself did not prohibit the alcohol prize.

Background and statutory framework

The Charitable Raffle Enabling Act authorizes certain qualified entities, including charitable nonprofits, to conduct a raffle subject to the Act's conditions (Tex. Occ. Code § 2002.051; Tex. Const. art. III, § 47(a), (d)). The Act defines a raffle as the award of one or more prizes by chance at a single occasion among a pool of persons who have paid or promised a thing of value for a ticket representing a chance to win (Tex. Occ. Code § 2002.002(6)), and it regulates aspects of a raffle including frequency, use of proceeds, promotion, ticket sales, and prizes (Tex. Occ. Code §§ 2002.052, 2002.053, 2002.054, 2002.055, 2002.056). The Act restricts what may be offered as a prize, for example prohibiting money (Tex. Occ. Code § 2002.056(a)), but nothing in it prohibits an alcohol prize, so the Act itself did not bar the raffle.

The Alcoholic Beverage Code exclusively governs the manufacture, sale, distribution, transportation, and possession of alcoholic beverages unless it provides otherwise (Tex. Alco. Bev. Code § 1.06), and requires the Texas Alcoholic Beverage Commission to regulate every phase of the alcoholic beverage business and the possession of alcohol for the purpose of sale or otherwise (Tex. Alco. Bev. Code §§ 5.31, 5.31(a)). The Commission considered a raffle for alcohol to be a sale. The Code does not define "sale," so the AG applied the ordinary meaning, a transfer of property or title for a price (Sw. Royalties, Inc. v. Hegar, 500 S.W.3d 400, 405 (Tex. 2016); Beeman v. Livingston, 468 S.W.3d 534, 539 (Tex. 2015)). In a raffle, the participant pays for a ticket representing a chance to win (Tex. Occ. Code § 2002.002(6)), and a raffle-ticket sale is complete once the buyer receives title and possession of the ticket in exchange for the consideration (Tex. Att'y Gen. Op. No. JC-0480 (2002) at 7), so a raffle for a prize does not comport with a traditional sale.

Because the award was not a sale, the AG considered whether it was otherwise regulated by the Code, which requires the Commission to regulate the alcoholic beverage business and the possession of alcohol for the purpose of sale or otherwise (Tex. Alco. Bev. Code § 5.31(a)). Assuming the charity was not in the business of any regulated aspect of the alcohol industry and used proceeds only for its charitable purposes (Tex. Occ. Code § 2002.053), the Code did not appear to require a license or permit for merely possessing alcohol not for the purpose of sale (Tex. Alco. Bev. Code §§ 11.01(a)(1), 61.01, 1.04(6)). The AG concluded a court would likely hold current law did not prohibit such a raffle prize, noting the Legislature had recently considered but not passed a bill to regulate charitable alcohol raffles through a temporary permit (Tex. S.B. 1974, 85th Leg., R.S. (2017)). A footnote also observed that, to the extent section 11.01 restricts Texas residents from ordering out-of-state wines shipped directly to their homes for personal consumption, that provision had been declared unconstitutional (Dickerson v. Bailey, 336 F.3d 388, 409-10 (5th Cir. 2003)).

Citations

Statutes:

• Tex. Occ. Code §§ 2002.051, 2002.002(6), 2002.052, 2002.053, 2002.054, 2002.055, 2002.056, 2002.056(a)
• Tex. Const. art. III, § 47(a), (d)
• Tex. Alco. Bev. Code §§ 1.06, 5.31, 5.31(a), 53.001, 11.01(a)(1), 61.01, 1.04(6)
• Tex. S.B. 1974, 85th Leg., R.S. (2017)
• Tex. Att'y Gen. Op. No. JC-0480 (2002)

Cases:

• Sw. Royalties, Inc. v. Hegar, 500 S.W.3d 400 (Tex. 2016)
• Beeman v. Livingston, 468 S.W.3d 534 (Tex. 2015)
• Dickerson v. Bailey, 336 F.3d 388 (5th Cir. 2003)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0153
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2017/kp0153.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

June 13, 2017

The Honorable Audrey Louis Opinion No. KP-0153
District Attorney
81st Judicial District Re: Whether charitable organizations may
1327 3rd Street conduct raffles that award alcoholic beverages
Floresville, Texas 78114 as the prize (RQ-0146-KP)

Dear Ms. Louis:

    You ask whether a nonprofit charitable organization qualified to conduct a raffle under the Charitable Raffle Enabling Act (the "Act") may award bottles of donated alcohol as a raffle prize. [1] You describe the scenario forming the context of your inquiry, explaining that "there is no event or premises where the raffle prize ... would be consumed" but, instead, the winner of the drawing "wins a wagon of liquor which is delivered to them." Request Letter at 1. Noting that section 53.001 of the Alcoholic Beverage Code permits alcoholic beverages to be auctioned for charity if they are consumed off-premises, you state that "[i]f alcohol may be auctioned, it would seem it may also be raffled." Id.

    The Act authorizes certain qualified entities, including charitable nonprofit organizations, to "conduct a raffle subject to the conditions imposed by" the Act. TEX. OCC. CODE § 2002.051; TEX. CONST. art. III, § 47(a), (d) (authorizing the Legislature to enact the Act). The Act defines a raffle as "the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize." TEX. OCC. CODE § 2002.002(6). Moreover, the Act regulates certain aspects of a raffle's operation, including its frequency, use of proceeds, promotion, ticket sales, and prizes. [2] Relevant here, the Act imposes certain restrictions on what an entity may offer as a prize, but nothing in the Act prohibits the prize from consisting of alcoholic beverages. Cf. id. § 2002.056(a) (prohibiting money as a raffle prize). Thus, the Act itself does not prohibit a nonprofit organization from awarding bottles of donated alcohol as a raffle prize.

   However, analysis under the Act does not end the inquiry. We must also consider whether the Alcoholic Beverage Code (the "Code") prohibits the award of alcohol as a raffle prize. The Code "exclusively" governs "the manufacture, sale, distribution, transportation, and possession of alcoholic beverages" unless the Code specifically provides otherwise. TEX. ALCO. BEV. CODE § 1.06. The Code requires the Texas Alcoholic Beverage Commission (the "Commission") to "regulate every phase of the business of manufacturing, importing, exporting, transporting, storing, selling, advertising, labeling, and distributing alcoholic beverages, and the possession of alcoholic beverages for the purpose of sale or otherwise." Id. § 5.31.

    The Commission informs us that it "considers a raffle [for alcohol] a sale of alcohol" because the individual offers consideration in the form of "money ... used to purchase the ticket for the chance to obtain (in this case) a 'wagon of liquor'" (emphasis omitted). [3] The Code does not define the term "sale." When a statute does not define a term, courts typically use its ordinary meaning. Sw. Royalties, Inc. v. Hegar, 500 S.W.3d 400, 405 (Tex. 2016). Courts will often look to dictionary definitions to find the ordinary meaning of an undefined term. Beeman v. Livingston, 468 S.W.3d 534, 539 (Tex. 2015). A common understanding of the term "sale" is a "transfer of property or title for a price." BLACK'S LAW DICTIONARY 1537 (10th ed. 2014). In the context you describe, the nonprofit organization sells tickets for a raffle. A participant in a raffle has "paid or promised a thing of value for a ticket that represents a chance to win a prize." TEX. OCC. CODE § 2002.002(6) (defining "raffle"). The organization does not directly sell alcohol to each consumer that purchases a raffle ticket. As this office explained in a different context, a "raffle-ticket sale is completed once the buyer has received title and possession of the ticket in exchange for the consideration." Tex. Att'y Gen. Op. No. JC-0480 (2002) at 7 (emphasis added). Thus, a raffle for a prize does not comport with a traditional understanding of a sale.

     Because the award of alcohol as a raffle prize under the Act is not a sale, we consider whether it is otherwise subject to regulation under the Code. The Code requires the Commission to regulate "every phase of the business of manufacturing, importing, exporting, transporting, storing, selling, advertising, labeling, and distributing alcoholic beverages, and the possession of alcoholic beverages for the purpose of sale or otherwise." TEX. ALCO. BEV. CODE § 5.31(a). You tell us that "[t]he raffle is to further the building of a shelter for victims of domestic violence." Request Letter at 1. A nonprofit charitable organization conducting a raffle under the Act may use raffle proceeds only "for the charitable purposes of the qualified organization." TEX. OCC. CODE § 2002.053. Based on your information, we assume that the nonprofit charitable organization is not "in the business of" any regulated aspect of the alcoholic beverage industry. Further, the Code does not appear to require the organization to obtain a license or permit if it merely possesses alcohol that is not for the purpose of sale. TEX. ALCO. BEV. CODE §§ 11.01(a)(1) [4] (prohibiting a person "who has not first obtained a permit of the type required for the privilege" to "possess for the purpose of sale ... liquor" (emphasis added)), 61.01 (providing that "[n]o person may ... possess [beer] for the purpose of sale without having first obtained an appropriate license or permit as provided in" the Code (emphasis added)), 1.04(6) (defining "person" to include a "corporation").

    Because the award of alcohol as a raffle prize by a nonprofit charitable organization is not prohibited by the Act and is not a sale or otherwise an activity regulated by the Code, a court would likely conclude that current law does not prohibit such a raffle prize. [5]

                                 SUMMARY

                  Because the award of alcohol as a raffle prize by a nonprofit charitable organization is not prohibited by the Charitable Raffle Enabling Act and is not a sale or otherwise an activity regulated by the Alcoholic Beverage Code, a court would likely conclude that current law does not prohibit such a raffle prize.

                                        Very truly yours,

                                        KEN PAXTON
                                        Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

BECKY P. CASARES
Assistant Attorney General, Opinion Committee

[1] See Letter from Honorable Audrey Louis, Dist. Att'y, 81st Jud. Dist., to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Jan. 17, 2017), https://www.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter").

[2] See, e.g., TEX. OCC. CODE §§ 2002.052 (governing time and frequency), 2002.053 (regulating use of proceeds), 2002.054 (restricting raffle promotion and ticket sales), 2002.055 (specifying ticket disclosures), 2002.056 (restricting prizes).

[3] Brief from Emily Helm, Gen. Counsel, Tex. Alco. Bev. Comm'n at 1 (Feb. 10, 2017) (on file with the Op. Comm.) ("Brief").

[4] To the extent section 11.01 restricts the right of Texas residents not otherwise prohibited from possessing alcoholic beverages to order out-of-state wines to be shipped directly to their homes for personal consumption, this provision has been declared unconstitutional. See Dickerson v. Bailey, 336 F.3d 388, 409-10 (5th Cir. 2003).

[5] The Legislature recently considered, but did not pass, legislation to regulate the raffle of alcoholic beverages by charitable organizations through the expansion of a temporary permit that currently encompasses certain auctions of alcoholic beverages. See Tex. S.B. 1974, 85th Leg., R.S. (2017).