FTC Staff Recommends Repeal of Trade Regulation Rule on Games of Chance in the Food Retailing and Gasoline Industries

The staff of the Federal Trade Commission has recommended that the Commission repeal its trade regulation rule on Games of Chance in the Food Retailing and Gasoline Industries, basing its conclusion on the fact that the costs of the rule outweigh its benefits and the abuses that led to the rule are not likely to recur. Today’s Federal Register announces the issuance of the Final Staff Report and the concurring recommendation of the Presiding Officer. (The FTC’s Presiding Officer oversees Commission rulemakings.) The Federal Register notice invites public comment on both reports. Comments may be submitted until August 6.

With the FTC staff and Presiding Officer Henry B. Cabell now issuing their reports for public comment, the rulemaking process is nearing its final stage -- review by the five Commissioners -- following the receipt of comments on both reports.

The FTC's Games of Chance Rule, promulgated in 1969, establishes requirements for food and gasoline retailers in conducting and advertising games of chance. The rule requires game promoters, in advertising for games of chance, to provide detailed information on the number of prizes available, the odds of winning each prize, the geographic area covered by the game and the number of participating retailers. Additionally, the rule, which applies only to games conducted by food stores and gasoline stations, also regulates various aspects of a game's operation and the procedure for posting lists of winners.

In 1981, the Commission granted an exemption to the rule's disclosure requirements for broadcast advertising. Subsequently, the Commission issued an Advance Notice of Proposed Rulemaking (ANPR) to request comments on whether the FTC should make the exemption for broadcasting permanent and whether to revise other aspects of the rule.

After analyzing comments submitted in response to the ANPR, the FTC published a Notice of Proposed Rulemaking seeking comment on whether to amend the rule by (1) dropping certain disclosures in advertising and promotional materials; (2) dropping all disclosures for broadcast advertising; (3) raising the threshold for winners lists disclosures to prizes of $50.00 and over; (4) permitting replenishment of prize game pieces; and (5) dropping the waiting period required between games. A public hearing was not scheduled because none of the interested parties who submitted written comments expressed interest in participating.

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(Games of Chance repeal--06/07/96)

In 1995, the Presiding Officer reopened the record for additional comments on whether a need for this rule continues to exist. In their respective reports, the FTC staff and the Presiding Officer recommend that the Commission repeal the Games of Chance Rule. The record shows that the unfair and deceptive acts and practices which led to adoption of the rule in 1969 are no longer being used. The rule is no longer needed to prevent or correct marketplace abuses in connection with games of chance. According to both staff and the Presiding Officer, the rule has served its purpose in correcting the abusive practices that were prevalent 30 years ago. The disparate treatment imposed upon grocery and gasoline retailers is no longer necessary or warranted.

The Final Staff Report contains an analysis of the rulemaking record and the staff's recommendation to the Commission to repeal the rule. The Presiding Officer's recommended decision is contained in his Report. The recommendation is based upon his findings and conclusions as to all relevant and material evidence, including the Final Staff Report. The Commissioners have not reviewed either report. The Commission's determination in the matter will be made following review of the rulemaking record, the two reports and the public comments received on both reports.

Written comments on the two reports must be confined to information already in the rulemaking record and will be received for 60 days, until August 6. They should be sent to Henry B. Cabell, Presiding Officer, FTC, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. (Those in excess of four pages should be accompanied by four copies).

Limited copies of the two reports are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202- 326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov