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The Truth, the Whole Truth, and Nothing but the Truth about US Raffle Law Part II

By Lance Trebesch June 29, 2011

State by State: Raffle Law in America

Raffle Law and State’s Rights

When our forefathers outlined our American rights in the US Constitution over two hundred years ago, they specifically stated that those topics not covered in that document were reserved for the individual states to decide: state’s rights. This term often brings to mind some of the most controversial issues in our culture.

Raffles and lotteries, technically a form of gambling, fall squarely into this category. Raffle laws vary from state to state, with prize draws of any kind being completely outlawed in some places, and generally embraced in others.

Fundraisers Beware: Illegal Raffles

In some states, games of chance featuring prizes and requiring purchase are strictly prohibited whether you are a private individual, incorporated business, or not-for-profit charitable organization. In Alabama, the state constitution includes language to “prohibit the sale…of…tickets in any scheme in the nature of a lottery.” According to the Attorney General, raffle tickets are a type of lottery, and therefore illegal. In the state of Utah, “The Legislature shall not authorize any game of chance, lottery or gift enterprise under any pretense or for any purpose,” including any kind of raffle or prize draw.

Hawaii also prohibits any type of raffle in which tickets are sold. However, it is legal to distribute tickets without charging for them, so you can still have the fun of a prize draw as long as you don’t earn any money from it. The same holds true in Kansas, where exchanging money for games of chance is strictly illegal, but the District Attorney’s office suggests that such rules can be circumventing by making the contribution voluntary. To comply with state regulations, make it clear that “Individuals are under no obligation to make a contribution and may not be barred from participation if they choose not to make any donation.”

Changing Nation, Changing Laws

In general, raffle law seems to be relaxing in America. As stated in part I of this article, many states that forbid any raffle ticket sales in the past have recently passed legislation allowing such games of chance. Oklahoma is one that state that previously banned any raffle-based fundraising, then relaxed restrictions in 2003, allowing charitable organizations to conduct raffles. Even Washington, DC has its own Lottery and Charitable Games Control Board, responsible for licensing Bingo, Monte Carlo/casino nights, and, of course, raffles.

The trend seems to be toward greater tolerance of raffle ticket sales, and printing raffle tickets is useful in the majority of the US. However, private individual should be aware that many states, such as Wyoming, strictly prohibit selling raffle tickets for personal gain: only bona fide charitable organizations are legally allowed to run raffles in many places. If you are unfamiliar with your local laws, it’s best to find a local expert who can provide up-to-date information.

Paperwork in Order

Registering with the state is often a requirement, and in some cases, the state must approve your proposal. In Arizona, raffles fall under the umbrella of “Amusement Gambling” and must be approved on a case-by-case basis. You can fill out a form to register. In the state of Delaware, the cost of applying for your raffle license is $15 (the same price to apply for a license to hold a Texas Hold’em tournament), which is non-refundable if your application is denied. Timing is important! Applications are considered at board meetings, and applicants are advised to submit, “no later than 4:30 PM ten full working days before the meeting date.”

Florida is another state where raffles are highly regulated. The state wishes to protect its citizens from fraudulent or illegal raffles, but, more importantly, to prevent competition with its state lottery, which is an educational one: that is to say, proceeds fund the state’s schools. North Dakota maintains a list of downloadable forms required for a legal prize draw to be held in that state. Interested parties should pay careful attention, for record-keeping is important, and these forms make it simpler to keep track of details.

Next: Taxes and Other Little Details