Published in Business First of Louisville | July 11, 2014
Before you throw your next big party in Kentucky, here are a few things to consider.
• If you host a private party at your house or some other unlicensed private premises and no admission tickets are sold, you, as the host, may provide free alcoholic drinks to your guests so long as the party is located in wet territory.
• If you are located in moist territory and host a private party at your house or some other unlicensed premises, you can only (technically) provide free alcoholic drinks to your guests if the sale of alcoholic beverages has been specifically authorized in that moist territory. “Moist” has been defined by the new legislation to mean “a territory in which a majority of the electorate vote is to permit limited alcohol sales by one or a combination of special limited location option elections.”
• The host is not allowed to charge guests for the alcohol at a private party because the host does not have a license to sell alcohol at that location. So, no, you cannot charge an entrance fee to your book club to defray the cost of the wine.
• If you host a private party in dry territory, you may consume the alcohol you purchased, but you are not legally allowed to give any alcohol to guests. Does that mean if it’s your wife’s party and she bought the booze, you can’t have one of her beers? Technically, yes.
• A host can hire a licensed caterer to provide food and alcohol at a private party. At this point, the venue (for example, your home) becomes what is known as the caterer’s “licensed premises.” By law, whenever a caterer is selling alcohol, the caterer’s total sales at that party must include a certain percentage of food sales as well. Of course, you can hire a caterer to just serve food at a private party, and you can provide the alcohol, so long as the caterer does not provide any alcohol and you are located in wet territory.
• The percentage of food sales, and whether the caterer can even sell alcohol, depends upon the location of the party. Seventy percent, 50 percent or 35 percent of the gross receipts from the catering of food and alcoholic beverages must come from food sales depending on your location. If the party is held in dry territory, then a caterer may not serve alcohol whatsoever.
• A caterer can sell food and alcohol at an event for which admission tickets are sold, which generally would not be considered a private party — but of course, not in dry territory.
• Regardless of the location of the party, it is illegal for a caterer to give away free alcohol to guests or the host. A caterer must either operate a cash bar, where the guests pay by the drink, or charge the host on a by-the-drink or by-the-event basis.
Special event licenses
There are two types of special event licenses in Kentucky.
• A Special Temporary Distilled Spirits and Wine Auction License grants the right to sell distilled spirits and wine by the bottle through an auction (for example, a fund-raiser with a silent auction).
Any bottle auctioned must be consumed off premises. This license is separate from the caterer’s — who may be serving alcoholic beverages for consumption at the event. Generally, the Kentucky Department of Alcoholic Beverage Control will not allow two ABC licenses on the same premises because it is difficult to enforce the laws with multiple licensees involved. But in the case of the auction license, an exception is made because any bottle sold is to be consumed off the event premises.
• A Special Temporary License “may be issued in wet territory to any regularly organized fair, exposition, racing association or other party, when in the opinion of the [Kentucky ABC] board a necessity therefor exists.” A special temporary license cannot be issued for an event held in moist territory where only limited alcoholic beverage drink sales have been approved. A caterer is not allowed to sell alcohol at an event operating under a special temporary license because both licensees would be selling by the drink and, enforcement of the laws would be difficult.