Are tenant raffles/incentives legal?

Question

I was talking to a local investor recently and he mentioned that he gives $50 once in a while to his tenants that pay on time. He was clear that this was random and that tenants don't have to "buy a ticket" to enter this random drawing. Tenants are entered into this random drawing simply for paying rent on time. I was just wondering if this is legal because a lot of states have strict lottery/raffle laws.

Thanks

Zach Scheer · Answer

Just because they are supposed to do it doesn't mean they will do it.  Rent is DUE on the first of the month but in CT they get a grace period till midnight on tenth.  I get probably 15% of the rent on the first even though they are supposed to pay of the first of the month.

Everyone has an opinion on the whether to use incentive or not.  When we stopped, some of the residents were upset but no one has talked about it since.

Ray Harrell · Answer

I'm not sure I'm in favor of rewarding people for something they are SUPPOSED to do anyway! Why do I have to incentivize you to pay your rent on time?

Zach Scheer · Answer

We used to have punch card system set up for our residents. If they paid before the 5th every month they would get a punch on their card.  Each punch was worth $10, so at the end of their lease they would get the sum of the punches as a discount on that months rent.  I say the 5th because CT gives tenants a 10 day grace period.

Kathryn Daniel · Answer

I used to do this at an apartment community that I managed in Lake Bluff.  Each month we'd raffle off a themed basket of goodies to residents who paid on time.  In exchange for the rent payment the resident would receive a raffle ticket entered into the drawing.  Residents loved it and I think it was a fun touch that got people excited, made them feel appreciated and assisted with coaxing them to pay on time.

John Wanberg · Answer

Usually raffle laws only come into play when you are taking in money in exchange for the opportunity to win (i.e. selling tickets).  Check with a lawyer, but if they are not purchasing an extra ticket to win the raffle, it is just a random giveaway, not a raffle. This is why charitable causes that give away trips, etc. say that you do not have to donate to win, you can enter the random drawing.  By not having to purchase tickets to be entered, it is not really a raffle.