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

By Lance Trebesch July 5, 2011

State by State: Raffle Law in America

Taxes are Inevitable

In some states, most games of chance are completely condoned, but organizations and individuals running raffles need to be aware of their tax burden on local, state, and federal levels. In Alaska, qualified groups may purchase a permit that allows them to run many games of chance: “bingo, raffles and lotteries, pull-tab games, ice classics, rain classics, mushing sweepstakes, fish derbies,” but the more successful the group is in raising funds, the more expensive the permit is (between $20 to $100) and those earning more than $20,000 a year from gaming activities are taxed an additional 1% on their proceeds.

Iowa also levies taxes on raffle ticket sale income: local sales tax (typically 1%) along with state taxes “on the gross receipts (not net receipts) of all gambling activities.” The state helpfully recommends that these taxes be added to the price of the raffle ticket. Otherwise, the organization must calculate the taxes themselves and take them out of their profits.

Any organization running a raffle should keep strict records with as much information as possible. Recording not only the number of tickets sold and amount of money raised, but also keeping track of donors’ names and contact information can come in handy later on. This information may be necessary for tax purposes, and, in any event, can be useful later on, when you need to do further fundraising.

Details, Details

Colorado gaming rules spell out many details you might not have considered. For instance, “Tickets…shall be sold at a stated price, and each ticket constitutes a separate and equal chance to win.” With large prizes, there are more rules, and certain information must be printed on the body of the raffle ticket. There are special considerations if the prize is a car or a house. You can download a 41-page PDF file to learn every last detail. If you wish to hold a raffle in the state of Oregon, you should be aware that that the state offers two tiers of raffle licenses depending on the amount of the handle. Games exceeding $10,000 require a separate license. Application fees vary, but the license is good for an entire year.

Another state with many specific rules regarding running your own raffle is Idaho, which limits organizations to twelve a year (with exceptions for elementary and secondary schools) along with the maximum cash value of prizes in certain circumstances ($1000), and provides a hefty fine (up to $10,000) to “Any charitable or nonprofit organization who conducts a raffle in violation” of the rules. In Idaho, organizations earning more than $200,000 per annum from raffle ticket sales must also provide an audit to the state.

Twelve raffles a year is lenient compared to the law in Tennessee, which only allows charitable organizations to “conduct one event during an event period (July 1 – June 30).” On the other hand, Vermont outlaws all forms of professional gambling, but lays out very reasonable and lenient laws to allow, “nonprofit organizations [to] operate games of chance and to ensure that the proceeds from the games go to charity.” A complicated set of rules allows raffles and other games of chance to be held twice a week, and, in certain occasions, on three consecutive days. The maximum value of prizes also varies.

Next: When Raffle Laws are Broken