Is Your Fundraising Raffle Legal in Your State?


by Audrey M. Saxton, PLS

One of the most common and successful fundraising tools used by nonprofit groups is the raffle or prize drawing. However, most nonprofit groups are not even aware of the laws which govern gaming—or gambling, which, in essence, is what a raffle or prize drawing is. Local and state laws which determine whether gaming is permitted vary from state to state. While some states say a nonprofit can hold raffles, sometimes without a license, others just outright ban the practice of gaming in any form. So, before holding a fundraiser raffle or drawing, it would be advisable to check whether the activity is prohibited in your location. Just because “it has always been done” or “other groups do it all the time” does not necessarily mean that it is legal. The eventual cost to the nonprofit organization for doing something illegally might be too much in comparison to the time and effort invested to just check on the laws that govern the activity.

“Gaming” is defined by the Internal Revenue Service (“IRS”) as “includ[ing] bingo, beano, raffles, lotteries, pull-tabs, scratch-offs, pari-mutuel betting, Calcutta wagering, pickle jars, punchboards, tip boards, tip jars, certain video games, and other games of chance.”1 So, by this definition, even a simple Chinese auction, as is seen so frequently at numerous NALS events, falls under the definition of gaming. But, not all raffles are defined the same. In some cases, your chapter will have to be careful to note whether its raffle is considered a lottery, a game of chance, or otherwise defined.

It must be noted that often when trying to determine if a charitable raffle can be held, an organization will first need to determine and be prepared to provide proof whether it is qualified as either a 501(c)(3) (nonprofit charitable) or a 501(c)(6) (nonprofit business league) organization or under one of the many other nonprofit categories defined by the IRS..2 NALS chapters fall under the category of
501(c)(6) business leagues unless they have met the criteria to register also as a 501(c)(3) for charitable purposes (such as the NALS Foundation).

To make things just a little more complicated, some jurisdictions require an organization to have been in operation for a minimum certain period of time, such as two (2) or five (5) years. For registration purposes, the organization will likely need to provide a copy of its nonprofit determination letter from the IRS as well, so it is advisable to be prepared to jump through some hoops. However, with all the requirements a nonprofit might face in order to get permission to run a fundraising raffle, in the end, it will likely be found that the time taken to research the laws and submit any necessary paperwork for registration or licensure will be well worth the effort.

Below is a table which should help you determine if raffles are legal in your area and provides a reference source for checking the laws in your state in further detail.

AUTHOR’S NOTE: The information and links provided are intended as an informational resource. The author is not responsible for content provided on web sites which are referenced in this table. No warranties or guarantees are implied or expressed. Information contained in the attached article and following table are not meant as a substitute for advice given from a licensed attorney. Consult with an attorney to ensure compliance with state and local regulations, or risk investigation and/or penalties if a complaint is filed or law enforcement agencies become aware of non-compliant activities.

Location Legal? Registration or License Required? Governing Laws Internet Resource
Alabama No n/a Ala. Code § 13A-12-20 Link
Alaska Yes Yes Alaska Stat. 05.15.010 Link
Arizona Yes Yes, in some cases Ariz. Rev. Stat § 13-331 Link
Arkansas Yes No Arkansas Code,
§ 23-114-101, et seq.
Link
California Yes Yes Cal. Penal Code § 320.5; Cal. Code Regs. tit 11, §§ 410-426 Link
Colorado Yes Yes Colo. Rev. Stat. § 12-9-101, et seq. Link
Connecticut Yes Yes Conn. Gen. Stat. §§ 7-170 to 7-186 Link
Delaware Yes Yes 10-100-102 Del. Code Regs. Link
Florida Yes3 Yes Fla. Stat. § 849.0935 Link
Georgia Yes Yes, see county sheriff Ga. Code Ann. § 16-12-22 Link
Hawaii No4 n/a Haw. Rev. Stat. § 712-1220 Link
Idaho Yes Yes Idaho Code Ann. § 67-77 Link
Illinois Yes Yes 230 Ill. Comp. Stat. 15/8.1 Link
Indiana Yes Yes 68 Ind. Admin. Code 21-1-01 through 21-7-14 Link
Iowa Yes Yes Iowa Code § 99B.6 Link
Kansas No n/a Kan. Stat. Ann. § 21-4302 Link
Kentucky Yes Yes Ky. Rev. Stat. Ann. § 239.500-570,995 Link
Louisiana Yes Yes and No La. Rev. Stat. Ann. §§ 4:701-740; § 27-402 Link
Maine Yes Yes Me. Rev. Stat. Ann. tit. 17 § 331 Link
Maryland Yes Yes, Varies by county Md. Code Title 13 Gaming Link
Massachusetts Yes Yes Mass. Gen. Laws ch. 271 § 7A Link
Michigan Yes Yes Mich. Comp. Laws § 432.101 et seq. Link
Minnesota Yes No5 Minn. Stat. §§ 349.11 to 349.23 Link
Mississippi Yes No Miss. Code Ann. § 97-33-50 et seq. Link
Missouri Yes6 Yes Mo. Rev. Stat. §§ 313.005 to 313.080 Link 1

Link 2

Montana Yes Yes Mont. Code Ann. § 23-5-413; Mont. Admin. R. § 23-16-2602 Link
Nebraska Yes Yes Neb. Rev. Stat.
§ 9-1,101 et seq.
Link
Nevada Yes Yes Nev. Rev. Stat. §§ 462-064; 462-130 to 462-200 Link
New Hampshire Yes Yes N.H. Rev. Stat. Ann. §§ 287-A:1 to 287-A:11 Link
New Jersey Yes Yes N.J. Rev. Stat. Ann. §§ 5:8-50 to 5:8- Link
New Mexico Yes Yes N.M. Stat. Ann.
§§ 60-2F-1 to 60-2F-26
Link
New York Yes Yes N.Y. Rac. Wag. Law §§ 185 to 195r Link
North Carolina Yes7 No N.C. Gen. Stat.
§ 14-309.15; § 105‑130.11 et seq.
Link 1

Link 2

North Dakota Yes Yes N. D. Cent. Code
§ 53-06.1
Link
Ohio Yes8 No Oh. Rev. Code. Ann. § 2915.092 Link
Oklahoma Yes9 Yes Okla. Stat. tit. 3A, §§ 401 to 427 Link
Oregon Yes Yes Or. Rev. Stat. §§ 464-250 to -995 and Or. Admin. R. 137-025-0020 to -0310 Link 1

Link 2

Pennsylvania Yes Yes 10 Pa. Code §§ 311 to 327 Link
Rhode Island Yes Yes R.I. Gen. Laws §§ 11-19-1 et seq.; 41-3-1 et seq. Link
South Carolina No n/a S.C. Code Ann. §16-19-10 et seq. Link
South Dakota Yes Yes S.D. Const. § 25;
S.D. Codified Laws § 22-25-23 et seq.
Link
Tennessee Yes10 Yes Tenn. Code Ann.
§ 3-17-101 et seq.
Link
Texas Yes Yes Tex. Occ. Code Ann. § 2002 Link
Utah No n/a Utah Const. Art. 4, Sec. 27 Link
Vermont Yes No Vt. Stat. Ann. tit. 13 § 2143 Link
Virginia Yes No11 Va. Code Ann. §§ 15.2-912.2; 18.2-334.2; 18.2-340-16 et seq. Link
Washington Yes No Wash. Rev. Code. Ann. § 9.46.0311 Link
Washington, D.C. Yes Yes D.C. Mun. Regs. tit. 30, § 1500 et seq. Link
West Virginia Yes12 No13 W. Va. Code R. § 47-21-1 et seq. Link
Wisconsin Yes Yes Wis. Stat. Ann. § 563-90 et seq. Link
Wyoming Yes No Wyo. Code R. § 6-7-101 Link

Other sources of information can be found at:
Gambling-Law-US.com:  http://www.gambling-law-us.com/Charitable-Gaming/
RaffleFAQ.com: http://rafflefaq.com/united-states-raffle-laws/

Footnotes

  1. See Gaming Activities, Notice 1335, Internal Revenue Service (October 2004), http://www.irs.gov/pub/irs-tege/notice_1335.pdf. For the purposes of this article, unrelated business income tax derived from gaming activities will not be addressed. However, it is recommended that your organization also investigate any tax liabilities or reporting requirements which might arise out of fundraising activities.
  2. There are a number of reasons why your 501(c)(6) nonprofit business league might wish to also create a 501(c)(3) nonprofit charity in addition to qualifying for fundraising activities. For more information on the difference between a 501(c)(3) and a 501(c)(6) and how to apply for a 501(c)(3) determination, visit http://www.irs.gov/charities/index.html or speak to an attorney or qualified tax professional.
  3. 501(c)(3) only.
  4. No raffles in exchange for money may be held, but door prizes given away at random for no money purchase are allowed.
  5. No registration or license is required unless the total value of prizes awarded in one calendar year exceeds $1,500; at which time, the organization must register and be licensed.
  6. Legal only for 501(c)(3), -(4), -(5), -(7), -(8), -(10) and -(19) organizations only. 501(c)(6) business leagues may not conduct raffles.
  7. Maximum of two per year.
  8. Only allowable for 501(c)(3), 501(c)(4), 501(c)(7), 501(c)(8), 501(c)(10), or 501(c)(19) organizations. However, any non-501(c)(3) must contribute no less than 50% of all proceeds from raffle to a qualified 501(c)(3) charitable organization.
  9. 501(c)(3) organizations only.
  10. 501(c)(3) only; only one event per year; no more than two events per year per host location.
  11. Unless projected proceeds in one year are projected to exceed $25,000.
  12. Only organizations falling under 501(c)(3), 501(c)(4), 501(c)(8), 501(c)(10), 501(c)(19) or 501(d) of the Internal Revenue Code of 1986, as amended; or those organizations exempt from income taxes under subsection 527(a) of said code.
  13. Provided proceeds do not exceed $4,000.

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  1. #1 by Mary on November 16, 2011 - 4:09 pm

    Please be aware that many cities require permits to hold raffles or other forms of gambling. For example, the city of St. Paul, Minnesota requires a permit to hold a raffle, without regard to the value of the item raffled.

  2. #2 by Stu on December 26, 2011 - 9:11 am

    Such a nice article you have there which local and state laws which determine whether gaming is permitted vary from state to state. While some states say a nonprofit can hold raffles, sometimes without a license, others just outright ban the practice of gaming in any form. Such a interesting and informative article,thanks a lot.

  3. #3 by michael on June 23, 2012 - 2:01 pm

    can i run a one time raffel to raise money for my grandaughter to go to l.a for a modeling event she is 8 yrs old.i live in colo.

  4. #4 by April Collins on June 26, 2012 - 12:06 pm

    Michael, view the Colorado link above for further information about the raffle rules in the state. The link was broken, but should be working correctly now.

  5. #5 by Yvonne Kita on January 22, 2013 - 5:36 pm

    There’s now a PowerPoint presentation on the Pennsylvania Department of Revenue website that says that Chinese Auctions are not legal in Pennsylvania . See this link: http://www.portal.state.pa.us/portal/server.pt/document/1261699/sgoc_-_seminars_pdf?qid=87971067&rank=6

  6. #6 by Patrick on March 17, 2013 - 5:20 am

    I live in Texas and my organization *does* qualify to hold up to two raffles per year and the prize cannot be cash or a prize readily exchangeable for cash (e.g. coins or a negotiable instrument). However, I am unable to find an answer to this question even after reading the statute (http://www.statutes.legis.state.tx.us/SOTWDocs/OC/htm/OC.2002.htm). My question is: Can a single raffle ticket be good for multiple drawings on different days throughout the year? I know that the date(s) of the drawing(s) must be printed on the tickets. For example, is it permissable to sell tickets that will be used in 52 drawings (one per week), giving away one prize per week?

  7. #7 by Audrey Saxton on March 20, 2013 - 11:42 am

    I’m happy to see that this article has become a resource for some; however, I must re-iterate that I am not an attorney, and the information provided was mostly for resource purposes.

    For individuals in specific states with specific questions, I recommend the additional resources found on another website pertaining to “anti-gambling” laws (http://www.gambling-law-us.com/).

    And above all, please remember to seek out the advice of an attorney or call the local attorney general’s office or state department responsible for gaming regulation in your state for your specific questions.

  8. #8 by Doug on April 16, 2013 - 8:03 am

    I live and have a Pub in new york state, I operate under a o.p license (On Premises) under nys liqueur athority I can not do any wagering of any kind. Why is it that a non profit organization under the same license o.p is allowed. How can i compete?

  9. #9 by Pat V on June 24, 2013 - 2:30 pm

    I am going to be doing a nationwide drawing where there is no cost to have you enter. I am curious if you ask for something other than money to win a prize if this is considered gambling. I was also hoping you might know some one who can help like an attorney or accountant that I could hire to help with making this happen? With the states governing this it makes it difficult with eCommerce to make sure I am legal. I hope that there are people that have verbiage and rules for national campaigns already established.

  10. #10 by Pat V on June 24, 2013 - 2:37 pm

    I would like to clarify my earlier comment. I am publishing a book of short stories and want others to submit stories. I am having entries into a drawing for the people who submit their stories. Is this considered gambling?

  11. #11 by Teri Pierce on November 16, 2013 - 9:36 am

    We are having a benefit for me on Dec.1 and would like to do a raffle. I am battling brain cancer, it’s terminal and the benefit first of all will help with cost of dying, but it won’t be a big raffle, maybe, hopefully bring in 750.00- 1000.00? It’s very short notice but feel it would help.

  12. #12 by Karen PAtterson on January 16, 2014 - 6:04 pm

    is a 50/50 raffle legal for non profits in New Mexico if only memberfs of the non profit are eligible to win?

  13. #13 by David Gowan on April 29, 2014 - 11:31 am

    Is a one time raffle by a charity legal in S. Lake Tahoe? Does one need local (county, city) licenses, state license or approval or all?

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