§73.1211 and the federal laws that guide it
§73.1211 of the FCC Rules addresses lotteries, which a raffle would fall under. Under the rules, this would apply to lotteries, gift enterprises or similar schemes, offering prizes dependent on whole or in part upon lot or chance and related to the braodcast of any list of prizes drawn or awarded by means of such lottery, gift enterprise or scheme and whether the said list contains all or part of such prizes.
This type of activity is normally prohibited, but is permitted under certain circumstances:
- An official state lottery.
- A fishing contest not conducted for profit wherein prizes are awarded for the specie, size, weight, or quality of fish caught by contestants in any bona fide fishing or recreational event. (see also 18 USC §1305).
- Any gaming conducted by a Tribe pursuant to the Indian Gaming Regulatory Act.
- A lottery, gift enterprise or similar scheme, other than an official state lottery which is conducted by:
- A non-profit organization or governmental organization.
- A for-profit entity, conducted as a promotional activity by a commercial organization and is clearly "occasional and ancillary to the primary business of that organization.".
The rules to permit lotteries/raffles/gift enterprises came from Congress in the Chairty Games Advertising Clarification Act of 1988.
For the purposes of these rules, a non-profit organization is defined as one that qualifies for tax exempt status under Section 501 of the Internal Revenue Code of 1986. (§73.1211(d)(2))
How this applies to NCE/LPFM
For not-for-profit entities with a verifiable §501(c)(3) status, the rules and law would suggest that the announcements are permitted. Because not-for-profit organizations are exempt from the definition of a commercial in §399b of the Communications Act, it would suggest the announcements would be permitted in exchange for remuneration.
For for-profit entities where there is remuneration (i.e., they are an underwriter), the mention of a raffle would be prohibited as it would be considered an incitement to patronize a business. The raffle may violate state law, which the FCC and federal law will recognize. If there is no remuneration involved, REC would strongly suggest against carrying such an announcement, because the listener and your competition will not necessarily know whether remuneration was involved or not. Doing this will mean that you will have to keep records to the fact that no remuneration is involved and you may end up needing an attorney in the long run. It's just not worth it.
The legal gray area is not-for-profit entities that are considered a non-profit by the state but does not have a §501 federal tax-exempt status as a charity as these may not be recognized by the Criminal Code (Title 18).
The easiest way for LPFM/NCEs to handle this is to request any organization seeking to rebroadcast information on a raffle on your station to provide a copy of their §501(c) certification letter from the IRS and that the station keeps it in their records until at least 30 days after their next license renewal is granted. If there is no §501(c) certification letter, then stations should not do it.
This material is based on our analysis of only the instant rule and law and was not prepared by, nor reviewed by a qualified attorney that handles FCC matters and is offered for information only. Use at your own risk. For legal advice, please consult a qualified attorney.
