Raffle Compliance for Nonprofits: What to Verify Before You Launch
Raffle law varies by state, changes regularly, and is enforced inconsistently. The consequences of getting it wrong — especially for a licensed 501(c)(3) — range from fines to license revocation to personal board member liability. This guide covers the questions every organization must answer before selling a single ticket.
Nonprofit raffle compliance requirements vary by state. Most states require: (1) the organization to be a registered 501(c)(3) or qualified charity, (2) a raffle license or permit for events above a gross revenue threshold, (3) all proceeds to benefit the charitable purpose, and (4) specific recordkeeping and reporting. Online raffle platforms must be structured as ticket sales tools for the nonprofit — not as the raffle operator. Chance2Win is structured as a website for the nonprofit, not a licensed electronic raffle system.
The Compliance Checklist No Platform Will Give You
| # | Question | Why it matters | Where to check |
|---|---|---|---|
| 1 | Is our organization eligible to run a charitable raffle in our state? | Most states require 501(c)(3) status, state charitable registration, or both. Some states exclude certain organization types from raffle licensing eligibility. | Your state's charitable gaming office or attorney general's office |
| 2 | Do we need a raffle license or permit? | Thresholds vary widely — some states require a permit for any paid raffle, others only above $5,000 gross. Running without a required license is the most common enforcement action. | State charitable gaming division. Thresholds change — verify annually. |
| 3 | Are there restrictions on our prize category? | Cash prizes, alcohol, tobacco, and firearms all have state-specific rules. House and real estate prizes have complex property transfer requirements. | State gaming office + payment processor acceptable use policy |
| 4 | How must the drawing be conducted? | Some states require witnessed drawings, specific drawing methodologies, or certified electronic drawing systems. Kentucky and Colorado have specific certified-system requirements. | State gaming office. Chance2Win provides printable paper ticket mode as a compliance-aware workaround in certified-system states. |
| 5 | What recordkeeping and reporting is required after the raffle? | Many states require post-event reporting of gross sales, expenses, and net proceeds. Records must be maintained for 3–7 years depending on state. | State charitable gaming office + your CPA |
How Chance2Win Is Structured — and Why It Matters
Chance2Win is structured as a website for the nonprofit — providing all the tools to manage your raffle website. This is distinct from a licensed electronic raffle system. Licensed electronic raffle system certifications cost approximately $1 million per year across all states and are held by a small number of specialized gaming operators.
The practical implication: Chance2Win can be used in states without certified-system requirements, which covers the vast majority of charitable gaming jurisdictions. For Kentucky and Colorado — which have specific certified electronic drawing requirements — Chance2Win provides a printable paper ticket mode that organizations can use as a compliance-aware approach while conducting the electronic drawing separately.
The Compliance Question Tip-Based Platforms Don't Answer
Several raffle platforms use tip-based or bonus-entry checkout models where supporters are prompted to pay a platform tip at checkout. In states with regulated raffle licensing, specific questions arise:
- Tip model (Zeffy, Givebutter): In some states, the ticket price must be a fixed, stated amount. A transaction where the buyer pays a variable amount (ticket price plus variable tip) may create questions about whether the ticket was issued at the stated price.
- Bonus-entry tipping (RallyUp Free): Where raffle regulations require that all entries be based solely on tickets purchased at the stated price, entries derived from platform tips may not comply. Two buyers who paid the same ticket price end up with different odds — one who tipped gets more entries.
Neither issue is universally resolved across all states. Consult your state's charitable gaming office before using these models for licensed raffle events. Full analysis of tip model compliance considerations →
The Jurisdictions With the Most Active Enforcement
Kentucky & Colorado
Both require certified electronic drawing systems for online raffles. Most web-based raffle platforms are not certified. Paper ticket mode with separate electronic or manual drawing is the compliance path for these states.
California
Strictly regulated. All charitable raffles must register with the DOJ Registry of Charitable Trusts. Specific raffle permit required. Proceeds must go primarily to charitable purposes. Electronic raffle regulations are among the most detailed in the country.
New York
Requires a games of chance license from the municipality (not the state). License application must be filed before ticket sales begin. Drawing must be supervised by a licensed member of the organization.
Most other states
Require 501(c)(3) status, annual registration or permit, and post-event reporting. Thresholds and requirements vary — verify with your state's charitable gaming division annually.
Frequently Asked Questions
Do online raffles require a license?
In most states that regulate charitable gaming, yes — if the raffle exceeds the gross revenue threshold. Whether the raffle is conducted online or in person typically does not affect the licensing requirement. The question is whether your organization and raffle structure meet the licensing criteria.
Can a 501(c)(3) automatically run a raffle in any state?
No. 501(c)(3) status establishes federal tax-exempt status but does not confer state charitable gaming licenses. Each state has its own eligibility criteria, which typically include 501(c)(3) status as a prerequisite but require additional state registration and often a specific raffle permit.
Is Chance2Win a licensed gaming operator?
No. Chance2Win provides website tools for the nonprofit to manage their raffle. It is not a licensed electronic raffle system in the sense used by gaming regulators. This structure is appropriate for most charitable raffle jurisdictions. Organizations with specific licensing questions should consult a gaming attorney in their state.
Continue reading
Starting a raffle and want compliance-first onboarding?
Chance2Win reviews every organization's setup before tickets go on sale. Not legal advice — but the kind of practical guidance that prevents the disasters that send people back to us saying 'the other guys were free.'
Call (813) 699-9325 — real people, real raffle expertise.