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Can a for-profit business have a raffle for a fundraiser and give away cash prizes?

Waxahachie, TX |
Filed under: Business

I have a for-profit business and we'd like to do a fundraiser to help our clients raise money to go to competitions. Can we do this? Can we do a raffle and give away cash as the prize?

Attorney Answers 2


  1. No. This is a lottery and as such a violation of the criminal laws of most states. I have answered this question several times and the response is always "But so and so does it." For instance the Indian casinos and the Lotto. Those are specifically exempted from the anti-gambling laws by statute adopted by state legislatures. "My church does it." Those are illegal. The D.A. tends to look the other way on charitable lotteries and Bingo, which are both illegal. Many seeming lotteries in fact give the public the opportunity to participate free by submitting a form with their address etc. I strongly recommend that you not follow your proposed plan.
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    (Bryant) Keith Martin
    sbbizlaw.com


  2. Raffles are illegal in most states but the prohibition against them is often ignored when it comes to churches that do not engage in aggressive advertising of their charitable fundraising event. Generally speaking, a for-profit raffle is considered an illegal lottery and would attract the attention of law enforcement. At its most basic level, what makes such raffles "lotteries" for legal purposes is the act of the participant having to wage a "thing of value" (such as paying money for a raffle ticket) in order to have the chance to win a prize.

    Very few people are aware that a minority of states, such as Georgia, have delegated the authority to authorize raffles to the county sheriff so long as the raffle is run by a charitable or nonprofit organization, even an organization that was just formed for a single purpose and/or event and even for organizations that are not charitable but are still nonprofit, such as state and local political campaigns. However, even then the prize cannot be cash but must be some other thing of value.

    If you were to not plan on requiring that someone buy a raffle ticket in order to participate in the raffle, then the analysis of your question changes and what you are referring to as a raffle may legally only be considered a promotion under your state's law.

    It may still be possible to organize a fundraiser for the purpose you describe but the structure would almost certainly have to be different in order to comply with your state and local gambling laws and the fundraiser itself would not be eligible for tax-exemption.

    Disclaimer: This answer is merely for educational purposes, does not consist of legal advice, does not consist of tax advice of any kind, and does not create an attorney-client relationship.

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