OAG 96-11

January 30, 1996

Subject: Regulation of alcoholic beverages as prizes

Written By: Diane Schuler Fleming

Requested By: Don Cetrulo

Syllabus: A charitable or nonprofit organization that wishes to auction, raffle or award alcoholic beverages as prizes in games of chance must obtain a special temporary license.

Statutes Construed: KRS 243.020(1)(3); KRS 241.010(29); KRS 243.030


The following question has been presented for our review:

Does the Alcoholic Beverage Control Board have the statutory authority to restrict auctioning, raffling, or awarding of alcoholic beverages as prizes in games of chance, if the activity is conducted by a nonprofit organization for fundraising purposes?

In addition, we have been asked if the following situations are permissible:

1. A charitable organization that meets and complies with the requirements of KRS Chapter 238 awards as a prize at a raffle, a game of chance, or an auction, a bottle of alcohol to the winner; and

2. A private club or a fraternal organization conducts a raffle, auction or game of chance in which a bottle of alcohol is given to the winner or the highest bidder. The raffle, auction, or game of chance is part of an evening of activities which includes dinner, etc., and may occur on or off the club or organization's premises.

KRS 243.020 states in part:

(1) No person shall do any act authorized by any kind of license with respect to the manufacture, storage, sale, purchase, transporting or other traffic in alcoholic beverages unless he holds the kind of license that authorizes such act.

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(3) No person, conducting a place of business patronized by the public, who does not hold a license to sell distilled spirits and wine by the drink, shall permit any person to sell, barter, loan, give away or drink distilled spirits or wine on the premises of his place of business.

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Thus, anyone engaged in the sale of alcoholic beverages must obtain a license. Pursuant to KRS 241.010(29):

`Sale' means any transfer, exchange or barter for consideration, and includes all sales made by any person, whether principal, proprietor, agent, servant or employee, of any alcoholic beverage.

Applying these statutes to the present situation, a nonprofit group would be required to obtain a license to sell chances on alcoholic beverages. A list of the kinds of licenses for distilled spirits and wine, along with their fees, can be found in KRS 243.030. Our review of this statute, however, reveals no license which would be appropriate to the current scenario.

Anticipating such situations, the General Assembly provided for the issuance of special licenses, as the board finds necessary for proper regulation and control. KRS 243.030(28). Thus, acting within the scope of their authority, the board enacted 804 KAR 4:320 to provide for the issuance of a special temporary license to charitable and nonprofit corporations. This regulation specifically authorizes charitable and nonprofit organizations to:

(1) Purchase, transport, receive, possess, store, and sell distilled spirits and wine to be sold at auction; and

(2) Purchase distilled spirits and wine from distillers, vintners, wholesalers, retailers, or accept by gift or donation from individuals.

804 KAR 4:320, Section 2(1) and (2).

In conclusion, the Alcoholic Beverage Control Board has the statutory authority to restrict the auctioning, raffling, or awarding of alcoholic beverages as prizes in games of chance conducted by nonprofit organizations. Application of this regulation to the two scenarios yields identical results - a charitable or nonprofit organization must obtain a special temporary license to auction alcoholic beverages regardless of the surrounding circumstances. Therefore, whether the auction of the alcoholic beverages is a singular activity, or part of a larger dinner event, is irrelevant - a special license must be obtained.