Liquor License Lotteries Across the Country

Liquor License LotteriesIn states with liquor license quota systems, those quotas are based on population counts. When populations increase, mathematically more liquor licenses can be issued, and that is done with liquor license lotteries in some states.

Many of the complaints regarding quota systems stem from the fact that the supply-and-demand economics that these systems create artificially drive liquor licenses to exorbitant prices… prices that deter would-be some small restaurateurs and tavern owners. In some cases, the prices even deter national chains from opening in certain areas.

When census results indicate that greater numbers of licenses can be issued in a particular city or municipality, a liquor license lottery is used rather than allowing licenses to go to the highest bidder.

Florida Liquor License Lottery

In the liquor license lottery in Florida, based on the 2010 census, the state Division of Alcoholic Beverages and Tobacco offered 36 additional quota liquor licenses across 17 counties in the state, according to Tampa Bay Business Journal’sLottery gives individuals, businesses a shot at liquor license.”

A $100 fee is required to be eligible for the drawing, and multiple entries are permitted as long as they are for different counties. While that regulation works to avoid a particular individual or business from attempting to increase the odds of cornering a particular geographic market, there are speculators who participate with the goal of re-selling a winning license for a profit.

Montana Liquor License Lottery

Montana provides new licenses based on census results with an annual lottery. It also conducts lotteries for licenses that are lapsed or going out of business if that creates a “last available” license. Montanta.gov states: “The liquor lottery is a process used to determine a successful applicant for a new city beer license, ‘floater’ all-beverages license, new all-beverages license, new restaurant beer and wine license or last available license by drawing secured envelopes out of a manually operated raffle ticket cage.”

Unlike Florida, however, after names are drawn, they’re ranked. Preference is given to restaurant owners in business for more than a year as opposed to those simply making a speculative investment. (See NewwestThe Strange World of Montana Alcohol Law.”)

Arizona Liquor License Lottery

Arizona’s liquor license lottery is annual and also based on a census increase: one additional bar, beer and wine bar, or liquor store license for each additional ten thousand person increase. Those drawn by random selection “shall pay an additional issuance fee equal to the license’s fair market value…. The fair market value shall be defined to mean the mean value of licenses of the same type sold on the open market in the same county during the prior 12 months….” according to the A.R.S. 4-206.01.

Although there’s obvious the element of chance in securing a license through a liquor license lottery system, there is a certain fairness about this approach in order to prevent prices from skyrocketing beyond reason.