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Can I offer contests that involve both skill and chance in Tennessee? What are the requirements?

Yes, you can offer contests that involve both skill and chance in Tennessee, but they are considered lotteries and are subject to regulation by the state. To offer such contests, you must comply with the requirements set forth in TNCO 3-17-104 and TNCO 3-17-103.

Requirements for Annual Event Applications

To operate an annual event in Tennessee, you must submit an annual event application to the Secretary of State between July 1 and January 31 for the annual event period beginning July 1 following the close of the application period and ending June 30 of the subsequent calendar year [1.1][1.3]. The application must be signed by the nonprofit organization’s chair, president, or chief administrative officer and the preparer of the application. These individuals must certify under oath and subject to criminal penalties, including perjury, that the information contained in the annual event application is true and accurate [1.1].

The annual event application must include the following information [1.1]:

  • The name, mailing address, and physical address of the nonprofit organization
  • The name of the event
  • The date and location of the event
  • A description of the type of lottery game to be conducted, including the estimated number of tickets, shares, chances, or other similar records to be offered and the actual dollar amount at which a ticket, share, chance, or other similar record shall be sold
  • A description of the charitable use of the proceeds from the event
  • The name and telephone number of a contact person for the event
  • A copy of the organization’s determination letter from the Internal Revenue Service showing that the organization is exempt from federal income taxation under § 501(a) of the Internal Revenue Code as an organization described in § 501(c)(3) or § 501(c)(19) of the Internal Revenue Code
  • The names and addresses of any officers, directors, trustees, and the principal salaried executive staff officer of the nonprofit organization
  • A sworn statement that the organization has been in continuous and active existence as a nonprofit organization located in Tennessee as defined by § 3-17-102
  • A sworn statement that no officer, director, trustee, or the principal salaried executive staff officer of the nonprofit organization has been convicted of a violation of § 39-14-103, § 39-14-104, § 39-14-105, § 39-16-702, § 39-16-703, title 39, chapter 17, parts 5 or 6, or a similar offense in another jurisdiction
  • A sworn statement that the board, or functional equivalent, of the nonprofit organization has approved the filing of an annual event application and intends to operate an annual event if authorized by the general assembly

Fees and Proceeds

An initial application fee of fifty dollars ($50.00) must be paid at the time of submission of an annual event application. An annual event application must not be accepted by the secretary unless accompanied by the initial application fee. The secretary shall collect a reasonable fee for annual event applications. The secretary may establish a fee schedule for annual event applications based on the gross revenue of the annual event. No fee shall exceed seven hundred dollars ($700). Funds collected under this chapter shall be used by the secretary and the Tennessee bureau of investigation to defray the cost of administering this chapter, including, but not limited to, the cost of investigations pursuant to § 3-17-113. Annual event application fees are nonrefundable [1.1].

The proceeds from the annual event must be used for charitable purposes as described in the annual event application [1.1].

Name of organization on ticket, share, chance or similar record — Method of payment of prizes and awards — Limitations on prices and awards.

The ticket, share, chance or other similar record shall bear on its face the name of the nonprofit organization on whose behalf the event is being conducted. All cash prizes or awards exceeding fifty dollars ($50.00) shall be paid by check from a designated account of the organization to a named individual. In the case of non-cash prizes or awards, payment shall be in the form of goods or services and, if applicable, by an appropriate legal instrument including, but not limited to, deeds, titles and gift certificates. Checks or other legal instruments payable to “cash” or “bearer” are expressly prohibited. For single location annual events, the total value of all prizes awarded per annual event shall not exceed two hundred fifty thousand dollars ($250,000); provided, that such limitation shall not apply to prizes of real property. For multiple location annual events, the total value of all prizes awarded per annual event location shall not exceed one hundred fifty thousand dollars ($150,000); provided, that such limitation shall not apply to prizes of real property. Notwithstanding subdivisions (c)(1) and (2), for annual events conducted by a nonprofit organization that does not intend to raise gross revenue from the annual event exceeding five thousand dollars ($5,000), the total value of all prizes awarded per annual event shall not exceed twenty-five thousand dollars ($25,000). Authorized nonprofit organizations offering a prize of real property pursuant to subsection (c) may offer a cash equivalent prize not to exceed the fair market value of the real property; provided, that any such cash equivalent prize shall be disclosed in the rules of the specific annual event prior to the sale of any ticket, share, chance or other similar record for such annual event and, if a cash equivalent prize is awarded, shall comply with subsection (b) [1.2].

Conclusion

To offer contests that involve both skill and chance in Tennessee, you must comply with the requirements set forth in TNCO 3-17-104 and TNCO 3-17-103. These requirements include submitting an annual event application, paying an initial application fee, using the proceeds for charitable purposes, and complying with limitations on annual events. Additionally, the name of the organization must be on the ticket, share, chance, or similar record, and there are limitations on the method of payment of prizes and awards, as well as limitations on prices and awards.

Source(s):
Jurisdiction

Tennessee