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A lottery is defined by N.Y. Penal Law § 323 as a scheme for the distribution of property by chance, among persons who have paid or have agreed to pay a valuable consideration for the chance, whether it is called a lottery, raffle, or gift enterprise or by some other name. N.Y. Penal Law § 327 makes advertising a lottery a misdemeanor.
Relator was a publisher of a trades newspaper known as the "United States Tobacco Journal" in which he published an advertisement asking readers to enter a contest to win money if they guessed how many cigars of all brands the United States would collect taxes on during a particular month. In order to guess, the reader had to send in bands from cigars and each band gave the reader one guess to enter in the contest. The advertisement also gave information regarding the number of cigars bearing the tax at the time of publishing the advertisement. The advertisement stated that the winner was to be announced as soon as the figures were obtainable from the Internal Revenue Service. The relator was charged with a violation of section 327 of the Penal Code in having advertised a lottery within the state. Relator was arrested on a warrant. Relator filed a writ of habeas corpus, which was sustained by the district court. The court discharged the relator, finding that an advertisement published by the relator was not a lottery. The Appellate Division of the Supreme Court in the First Judicial Department (New York) affirmed the order. The state appealed.
Was the advertisement published by the relator a lottery within the ambit of section 327 of the Penal Code?
The court reversed, ordered that relator be returned to custody for the charge under § 327, and held that the fact that relator's dominant purpose in advertising the contest was merely to increase the advertiser's business did not save the relator from the charges. The court further held that the dominating and controlling factor in the award of prizes was chance and fit the definition of a lottery under N.Y. Penal Law § 323.