Raffles are an excellent way to raise money for your cause, but you should be aware of any legal restrictions. In the United States, the IRS considers raffles to be a form of gambling. Other countries may also have restrictions, but this article specifically applies to organizations in the United States.
Am I eligible to run a Raffle in the United States?
Only 501(c) organizations are allowed to run raffles. Some states also require a license or permit.
The following states prohibit online raffles:
Alabama
California
Hawaii
Indiana
Iowa
Kansas
Minnesota
New Jersey
New Mexico
Rhode Island
Utah
Washington
Wisconsin
How do I ensure my Raffle is legally compliant?
Givebacks doesn’t offer legal advice or monitor individual raffles. Instead, it’s up to your organization to make sure your raffles are compliant. Exercise due diligence and do your own research. If necessary, consult with legal counsel to ensure you’re obeying federal, state, and local laws.
Should I run a Sweepstakes instead of a Raffle?
If your organization operates in one of the states listed above, or you aren’t sure about your eligibility or legal compliance, you shouldn’t run a raffle. Instead, you may want to consider running a sweepstakes. In the United States sweepstakes aren’t considered gambling because you must offer free entries, so sweepstakes have fewer restrictions. Sweepstakes also have fewer geographic regulations, and entries can usually be sold nationally or internationally. This allows you to run charity drawings that have a much wider reach.
Frequently Asked Questions
Which states prohibit online Raffles?
Thirteen states prohibit online Raffles: Alabama, California, Hawaii, Indiana, Iowa, Kansas, Minnesota, New Jersey, New Mexico, Rhode Island, Utah, Washington, and Wisconsin. Organizations in these states should consider running a Sweepstakes instead.
What type of organization can legally run a Raffle?
Only 501(c) organizations are allowed to run Raffles in the United States. The IRS considers Raffles to be a form of gambling, which restricts who can legally operate them. Some states may also require additional licenses or permits.
Does Givebacks provide legal guidance for my Raffle?
No, Givebacks doesn’t offer legal advice or monitor individual Raffles. It’s your organization’s responsibility to ensure compliance with federal, state, and local laws. If needed, consult with legal counsel to confirm your Raffle is compliant.
Why are Sweepstakes less restricted than Raffles?
In the United States, Sweepstakes aren’t considered gambling because they must offer free entries. This makes them subject to fewer restrictions and allows for wider geographic reach, including national and international entries.
Do I need a license or permit to run a Raffle?
Requirements vary by state. While only 501(c) organizations can run Raffles federally, some states also require additional licenses or permits. Research your state’s specific requirements or consult legal counsel to ensure full compliance.
Additional Resources
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