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Midwest Television, Inc. v. Waaler

DECEMBER 19, 1963.




Appeal from the Circuit Court of Champaign County; the Hon. CHARLES E. KELLER, Judge, presiding. Reversed.


This is a declaratory judgment action in which plaintiff, a television broadcaster, sought to have the Circuit Court declare that a certain advertising project consisting of the distribution of gift certificates by merchants is not a lottery as defined by the Illinois Criminal Code, and to further declare that prosecution of plaintiff by the State's Attorney of Champaign County for broadcasting such advertising would violate the United States Constitution.

Pursuant to Supreme Court Rule 48, the cause was submitted as an agreed case and a statement of the facts and points of law at issue between the parties was filed with the trial court.

Plaintiff is engaged in commercial television broadcasting in the State of Illinois, and is licensed by the Federal Communications Commission. Defendant is the State's Attorney of Champaign County, Illinois. From time to time, plaintiff broadcasts material from the national networks which may originate in other states. On December 1, 1962, the Richard Newman Associates, Inc., an advertising agency referred to herein as, "the Agency," offered to purchase advertising time from plaintiff on certain days in the year 1963; that during the period from January 10, to January 19, 1963, a client of the Agency was to hold an event called a January "Clean-Sweep Sweepstakes." A description of the material which the agency proposed to have plaintiff broadcast as the same appears in the statement of facts is as follows:

"Each day, beginning January 10 and extending through January 19, 1963, participants of said event will be able to pick up tickets in any of the participating stores from desks or boxes located in a convenient place of said stores. The desks or boxes will be located in the front portion of each of said stores, and not in the primary selling area of said stores, nor in the primary area for advertising display for said stores. It will not be necessary for the participants to make a purchase in order to secure said tickets, nor will they have to pass the cash register to secure the tickets. The tickets can be secured by merely walking into the participating store and picking them up. The tickets will consist of two sections, each with an identical number imprinted thereon. The participant will then tear the ticket in half, separating the two sections, and deposit one section in a box located at the source of said tickets. At 4:30 p.m., each day during the term of the event, the boxes containing the unretained sections of the ticket will be collected and the contents of each box placed in a large container; then a person, selected at random, would reach into the box, without seeing the numbers or the tickets in the box, and draw five tickets out of the box. These tickets would be designated the winning tickets for that day, and would be posted in a convenient place located in front of the participating stores; in addition, the numbers of the winning tickets would be published in the Champaign News-Gazette and the Champaign-Urbana Courier daily. The holder of a winning ticket would then be required to present the ticket on or before January 26, 1963, at a central location, and upon presentation of the proper ticket, the holder thereof would then be presented with a gift certificate good for $10 worth of merchandise, which can be redeemed in any of the participating stores."

The Agency had also offered to purchase commercial advertising time from plaintiff to advertise other events to be held in 1963 from time to time. These other events would be conducted the same as the January, 1963 event, with the exception of date, amount, and kind of prizes awarded. Plaintiff, after advising defendant of the rules and procedures of the events which were to be advertised, was advised by the latter that if it advertised any of the proposed events, it would be prosecuted for advertising a lottery in violation of Sec 28-1, Chap 38, Illinois Revised Statutes 1961.

The points of law at issue between the parties are:

(1) Whether persons participating in the events which plaintiff proposes to advertise will have paid or promised consideration so as to render such an event "lottery," under Sec 28-2(b) Chap 38, Illinois Revised Statutes 1961.

(2) Whether plaintiff's advertising of such events would violate Sec 28-1(a)(9) Chap 38, Illinois Revised Statutes 1961.

(3) Whether plaintiff has the legal right to broadcast advertising of such events. Other points involving only constitutional questions are omitted.

The trial court held that the event or events described in the statement of facts do not constitute a lottery; that plaintiff in advertising said events would not violate the statute prohibiting the advertising of a lottery; that prosecution of plaintiff by defendant would violate the constitution of the United States; that plaintiff has a legal right to broadcast advertisements of such events and judgment was entered accordingly. Upon the theory that constitutional questions were involved, defendant's appeal from such judgment was taken directly to the Supreme Court. However the Supreme Court found the appeal to have been wrongfully taken to that court, and ordered the same transferred here.

The Supreme Court having indicated by its transfer order that no constitutional issues are involved, the question remaining for decision is whether the distribution of gift certificates in accordance with the plan outlined in the agreed statement of facts is a lottery, as defined in the 1961 Illinois Criminal Code. If the answer to such question be in the affirmative, then plaintiff's proposed advertising of such distribution of gift certificates would violate Illinois law.

Sec 28-1(a), Chap 38, Illinois Revised Statutes 1961 is in pertinent part as follows: "A person commits gambling when he . . . (9) Knowingly advertises any lottery or policy game or drafts, prints or publishes any lottery ticket or share, or any policy ticket or similar device, or any advertisement of any lottery or policy game; . . ." Sec 28-2(b) of said Chap 38 defines a lottery as: ". . . any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prizes, whether such scheme or procedure is called a lottery, raffle, gift, sale or some other name." As indicated by its statutory definition, the essential elements of a lottery are (1) a prize, (2) a chance, (3) a consideration. That two of these elements, namely prize and chance, are present in the instant case is not disputed. Whether the third element, that of consideration, is likewise present constitutes the sole dispute between the parties. The defendant contends that the visit to the sponsoring store required in obtaining a ticket representing a chance on the gift certificate constitutes consideration as the term is used in the lottery statute. Plaintiff's counter argument is that the element of consideration is lacking because nothing of measurable value passes from the participants to the sponsor of the drawing.

Defendant relies principally upon Iris Amusement Corp. v. Kelly, 366 Ill. 256, 8 N.E.2d 648; and Jones v. Smith Oil & Refining Co., 295 Ill. App. 519, 15 N.E.2d 42. The Iris case involved an advertising plan known as "Bank Night." Under such plan, any person could register for a prize at plaintiff's theatre. This could be done without paying admission or giving any consideration of any kind. All persons who had registered were notified that on certain days during the performance at a certain hour there would be a drawing for a cash prize. The winner was announced to the audience and persons outside the theatre. The winner need not be inside the theatre, but any winner was required to reach the stage to claim his prize within three minutes. A winner who was outside when his name was announced might enter the theatre free of charge to claim his prize. The main question presented to the Supreme Court was whether such a scheme constituted a lottery and was designed to evade the lottery statute. Plaintiff there conceded the existence of two of the essential parts of a lottery, namely a chance and a prize; but contended the element of consideration was lacking because persons not attending the theatre and who paid no admission fee had a chance to win. The court observed that there appeared to be some diversity of opinion among courts of different states as to the merits of the plaintiff's contention. However after reviewing a number of cases from other jurisdictions, it reached the conclusion that operation of the "Bank Night" scheme was a lottery, and rejected the plaintiff's argument that the element of consideration was lacking in this language: . . . "the object of the theatre owner is not to fill the lobby or the sidewalk, but to fill the theatre, and that those who paid to come in, did so, at least in part, because they had, or reasonably believed they had, a better chance to win the prize than if they had ...

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