Legal Question in Administrative Law in California

private auction with random selection of winner

Question raised by students in my college class that I could not answer:

Club is formed to permit dues paying members to bid on products at bargain prices ranging from 20 to 50 percent of prduct's fair value. Club collects a small fee as percentage of each bid, selects a winner by random drawing without considering bid amount. Fees plus winning bid pays for product which the winner buys for amount of his bid. Does this violate laws against holding private lotteries?

The primary differences are:

1. Bidders pay a fee as percentage of bid rather than buy a lottery ticket.

2. Winner does not win the product but buys it for amount of his bid.

1 Answer from Attorneys

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