No Raffle for You!

By: Robert Procter & Judd Genda | Axley Attorneys

In the world of insurance marketing, nothing seems to be easy. One question that came to us was whether an agency could hold a “raffle” at a golf hole that it was sponsoring where there would be no charge to enter, anyone could enter, and there would be no obligation to entertain a quote, to buy a policy, or to terminate an existing policy to win a prize. The prize would be something of nominal value like a box of golf balls. The only requirement to enter was that the person must provide a business card or contact information so that the agent could develop a list of prospects.

Technically, the proposed giveaway is not a “raffle.” Wisconsin’s law strictly regulates raffles. A “raffle” is a game of chance where tickets are sold and drawings for prizes are held. Raffles are regulated as gambling, and licenses can only be granted to local religious, charitable, service, fraternal, veterans, or 501(c)(3) organizations. As a general matter, insurance agents and agencies cannot conduct raffles.

Free contests like the above-described drawing, however, are different. Free contests are generally permissible and largely unregulated under Wisconsin law, provided there are no hidden costs to enter and no entry requirements beyond filling out a form. A standard “golf course drawing” that is open to all participants without charge, in which participants need only fill out a form to receive an opportunity to win a prize, is permissible for many businesses due to a lack of consideration—the person does not have to pay or give other consideration to enter the contest.

Insurance agents, however, are not most businesses. Enter Wisconsin Administrative Code ch. Ins 20 – Insurance Marketing. This administrative rule governs “the solicitation or the offering for sale of insurance where the solicitation or sale is either personally solicited or consummated by the agent at the residence or place of business or employment of the buyer or away from the agent's regular place of business.” Under chapter Ins 20, an insurance agent soliciting or selling insurance away from the agent’s regular place of business (like on a golf course) shall not engage in a “contest or other venture to win a cash award, scholarship, vacation or similar prize, when in fact the principal objective is to make an insurance sale or obtain information to help identify sales prospects.” Accordingly, if the point of the contest is to sell insurance or identify sales prospects and the drawing takes place away from the agent’s place of business, it likely violates the insurance marketing rules.

There may be some circumstance where an agent could possibly do a free contest without running afoul of the rules regarding raffles and insurance marketing. In such cases, there are other rules prohibiting agents from influencing another person to buy an insurance policy or to terminate an existing policy by offering benefits (e.g., the law on unfair inducements and rebating) that may also come into play. In this case, however, if the purpose of the drawing at the sponsored golf hole is to identify sales prospects, the insurance agent should not conduct the drawing.

In other words: No raffle or contest for you!

This information is provided for the convenience of PIAW members, but cannot be construed as legal advice. Members of PIAW may call (608) 200-4221, or email their questions to insurancehotline@axley.com, to work with an attorney and receive legal information specific to your situation.