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Sponsor of Ironman Contest Agrees to Forfeit $2.7 Million in Lottery Fees

The U.S. Attorney's Office in Florida announced that World Triathlon Corporation (WTC) has agreed to turn over $2.7 million in lottery receipts to settle charges that the triathlon organizer engaged in illegal gambling by conducting lotteries for spaces in the Ironman World Championship contest.

According to the complaint, every year WTC conducts an Ironman Lottery. The lottery allows athletes who did not qualify for the Ironman World Championship to pay $50 for a chance to compete in the Ironman competition in Hawaii. Athletes could also pay another $50 "membership" fee which allowed them one additional entry to the lottery. In 2015, the Ironman Lottery received 14,254 entries and 6,889 membership registrations. WTC awarded 100 winners the opportunity to compete in the competition. (Lottery winners had to pay the $850 competition entrance fee to compete.)

The U.S. Attorney calculated that WTC received $2,761,910.00 in lottery fees in 2013, 2014, and 2015.

Florida law prohibits lotteries that contain three elements: consideration, chance and a prize. The U.S. Attorney claimed that the Ironman Lottery violated Florida law because it contained consideration (an entry fee of between $35 and $50, depending on the year), chance (winners are randomly selected), and a prize (the opportunity to compete in the Ironman World Championship). The lottery also violated federal law (18 U.S.C. § 1955) because WTC conducted illegal gambling in violation of a state law, remained in continuous operation in Florida since at least 2008, employed more than five persons during that time, and had more than $2,000 in revenue.

As the U.S. Attorney noted, WTC would have been permitted to give away the opportunity to compete in the race, but it violated the law when it charged athletes money for the chance to win.

This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.