Avoiding Running Afoul of Pay-to-Play Alcohol Regulations at Your Restaurant

Restaurant owners and operators face a question each time a producer or distributor of an alcoholic beverage comes to them with a financial offer: Are we about to break state and federal rules and open ourselves to fines and license suspensions?

The danger has become more tangible in the past year because the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) has received $5 million in special funding for investigations. The TTB is working hand in hand with state alcohol regulators to identify and penalize not just those that offer illegal enticements but those that accept them.

These prohibited trade practices are also known as pay-to-play or tied-house violations. As the names imply, a restaurant or other seller of alcoholic beverages provides exclusivity or some other form of preference for a producer or distributor’s products in exchange for payments, gifts, equipment, chargebacks or other unlawful form of financial reward.

Any arrangement, whether…