Raffle Laws by State 2026: Licensing Requirements for Nonprofits
Charitable gaming law varies more by state than almost any other area of nonprofit regulation. What requires a license in one state is prohibited in another and unregulated in a third. This reference guide covers the key distinctions, the states with the strictest requirements, and what every organization must verify before selling a ticket.
Most U.S. states permit nonprofit charitable raffles with some form of licensing or registration requirement. Key variables: (1) the gross revenue threshold above which a license is required — ranging from $0 (license always required) to $50,000+ in some states; (2) eligible organization types (most require 501(c)(3) status plus state charitable registration); (3) prize restrictions (cash, alcohol, tobacco, firearms all have state-specific rules); and (4) drawing requirements (Kentucky and Colorado require certified electronic drawing systems for online raffles). Several states — including Alabama, Hawaii, Kansas, Utah, and Washington — have significant restrictions on charitable gaming that may affect online raffle viability. Always verify current requirements with your state's charitable gaming office.
What the State Tiers Mean
| Tier | What it means | What to do |
|---|---|---|
| Heavy regulation | Active licensing requirements, regular enforcement, specific online raffle rules. Getting it wrong has real consequences. | Engage a gaming attorney before launching. Do not rely on this guide alone. |
| Moderate regulation | License required above a threshold, standard reporting, some enforcement. Most organized nonprofits navigate this routinely. | Contact your state gaming office to confirm current thresholds and requirements. |
| Light regulation | Minimal licensing requirements, low enforcement activity, or high thresholds before licensing kicks in. | Still verify. "Light" doesn't mean exempt. |
| Prohibited / restricted | State law significantly restricts or prohibits charitable gaming raffles in ways that affect typical nonprofit operations. | Consult an attorney before assuming your event qualifies for any exemption. |
Heavy Regulation States
These states have the most detailed requirements, most active enforcement, and the most specific rules for online raffle operations. Organizations in these states should engage a gaming attorney before launching.
| State | Key requirements | Online raffle specifics | Where to verify |
|---|---|---|---|
| California | Registration with CA DOJ Registry of Charitable Trusts required before ticket sales. Raffle registration fee. Annual reporting. 90% of net proceeds must go to charitable purpose. | Online sales permitted for registered orgs. Drawing rules are detailed. Specific requirements for how winners are determined. | oag.ca.gov/charities/raffle |
| New York | License from municipality (not state) — must apply to local licensing authority before sales begin. Specific license types for different event sizes. Drawing must be supervised by licensed member. | Online ticket sales are increasingly common but subject to local licensing authority interpretation. Confirm with your local licensing body. | gaming.ny.gov/gaming/charitable |
| Illinois | Organization must be licensed for at least 5 years and meet membership requirements. Illinois Gaming Board oversight. Detailed recordkeeping. Separate licensing for different raffle types. | Online raffles subject to same licensing requirements as in-person. Platform selection affects compliance profile. | igb.illinois.gov/charitable |
| Pennsylvania | License from local municipality. Strict prize limits per event. Detailed financial reporting. Organization eligibility requirements including years of operation. | Online ticket sales have specific requirements. Verify with your municipality's licensing authority. | Local municipality gaming office |
| Kentucky | License required. Certified electronic drawing system required for online raffles — most web-based raffle platforms are not certified. Paper ticket mode is the compliance path for most online platforms. | This is one of two states (with Colorado) that explicitly require certified electronic drawing systems. Chance2Win provides printable paper ticket mode for this scenario. | lgrc.ky.gov |
| Colorado | License required. Certified electronic drawing system required for electronic raffles. Strict financial controls. 85% of gross must go to charitable purpose. | Same certified-system requirement as Kentucky. Paper ticket mode is the compliance approach for organizations using standard web-based platforms. | sos.colorado.gov/charities |
| Michigan | Annual license. Detailed reporting requirements. Organization eligibility criteria. Specific rules for electronic raffles and ticket pricing. | Online raffle platform must meet state requirements for electronic charitable gaming. Verify platform eligibility with MGCB. | michigan.gov/mgcb |
| Texas | Raffle Enabling Act governs nonprofit raffles. License not always required but strict eligibility criteria. Raffle must be conducted by qualified organization. Specific rules on prizes and who can conduct drawings. | Online raffle sales are permissible but subject to the Raffle Enabling Act's qualified organization requirements. Verify eligibility before assuming qualification. | texasattorneygeneral.gov/charities |
Moderate Regulation States
Most states fall into this category — license or permit required above a threshold, standard reporting requirements, some enforcement. The majority of organized nonprofits navigate this routinely with proper preparation.
| State group | Typical threshold range | Common requirements |
|---|---|---|
| Ohio, Indiana, Wisconsin, Minnesota, Oregon, Washington (events only) | $1,000–$10,000 gross before license required | 501(c)(3) required. License from state gaming authority. Annual reporting. Proceeds primarily to charitable purpose. |
| Georgia, Virginia, North Carolina, Maryland, New Jersey, Connecticut | Varies widely — $500 to $25,000+ | Organization registration plus raffle permit. Some require advance approval of prize structure. Post-event financial report. |
| Missouri, Iowa, Nebraska, South Dakota, North Dakota | Generally low thresholds ($1,000–$5,000) | License required for most organized raffles. Relatively straightforward process for established nonprofits. |
| Most remaining states | Varies | Contact your state attorney general's charitable division or gaming commission for current requirements. Thresholds and requirements change regularly. |
Light Regulation States
| State | General posture | Still verify because… |
|---|---|---|
| Florida | Raffles conducted by 501(c)(3)s are generally not considered gambling under state law when tickets are $0.00 — but paid-ticket raffles have a different legal landscape. Paid ticket charitable raffles require careful legal review. | The free-ticket exception does not apply to typical nonprofit fundraising raffles. Verify paid ticket raffle legality with a Florida gaming attorney. |
| Montana, Wyoming, Idaho, New Mexico, South Carolina | Relatively limited regulatory infrastructure for charitable gaming. Lower active enforcement compared to major states. | "Light enforcement" is not "no enforcement." Verify with state AG or gaming division. |
| Delaware, Rhode Island, Vermont, Maine, New Hampshire | Small states with generally accessible charitable gaming frameworks for established nonprofits. | Requirements still exist. Threshold and permit requirements vary. |
States With Significant Restrictions
| State | Restriction | Practical impact |
|---|---|---|
| Alabama | Charitable gaming prohibited under state constitution except for specific constitutional amendments. Very limited exceptions. | Most nonprofit raffles — including online raffles — are not permissible. Consult an Alabama attorney before any raffle activity. |
| Hawaii | All forms of gambling, including charitable gaming, are generally prohibited under state law. | Nonprofit raffles are generally not permissible. Very limited exceptions may exist — verify with a Hawaii attorney. |
| Kansas | Charitable gaming is prohibited except for specific narrow exemptions (bingo by specific organization types). Raffles have very limited permitted scope. | Most nonprofit raffle fundraisers are not permissible. Consult a Kansas attorney for current exemption scope. |
| Utah | All gambling is prohibited under the Utah Constitution. No charitable gaming exemption for raffles. | Nonprofit raffles are not permissible in Utah. No platform can make a Utah raffle compliant. |
| Washington | Washington permits some charitable gaming but has specific and detailed requirements. Online raffle ticket sales face particular scrutiny. | Online raffle platforms have identified Washington as a restricted state for online sales. Confirm current status with the Washington State Gambling Commission before launching. |
What Every State Requires Regardless of Tier
| # | Requirement | Why it matters for platform selection |
|---|---|---|
| 1 | Eligible organization — 501(c)(3) or qualified charity | Online platforms should verify nonprofit status. Chance2Win requires EIN verification before launch. |
| 2 | Proceeds benefit the charitable purpose | Platform fees and tip flows can affect the proceeds calculation. Fixed disclosed fees are easier to document than variable tip amounts. |
| 3 | Drawing integrity — verifiable, documented winner selection | Platform must provide an auditable drawing process. Kentucky and Colorado require certified electronic systems; paper ticket mode is the workaround for other platforms. |
| 4 | Recordkeeping — ticket sales, winner, proceeds | Platform should export complete transaction records. Manual entry and hybrid pools must be included in the record. |
| 5 | Post-event reporting (in most licensed states) | Platform analytics must support the financial reporting required by your state. Zeffy's analytics are limited; most full-featured platforms have adequate reporting. |
When Your Prize Category Creates Additional Requirements
| Prize category | State restriction pattern | Platform implication |
|---|---|---|
| Cash prizes | Generally permitted but often capped (e.g., no more than $X per prize, or 50% of proceeds). 50/50 raffles are the most common format — many states have specific 50/50 rules. | Any platform can technically handle cash prizes. Verify your state's cap structure. |
| Alcohol (wine, bourbon, spirits) | State-level restrictions on alcohol as a raffle prize vary significantly. Many states permit it; some require the organization to hold a specific permit. Not a federal prohibition. | Stripe restricts alcohol-related transactions. Platforms locked to Stripe (Zeffy, Givebutter, RallyUp, BetterWorld, GalaBid) face campaign closure risk for alcohol prizes. Chance2Win supports Square and Authorize.net which have different restriction profiles. |
| Firearms | Legal in most states for licensed events, subject to state and federal firearms transfer requirements. Winner must pass background check through licensed dealer. | Stripe restricts firearms transactions. Only platforms with non-Stripe processor options (Chance2Win) can handle firearm prize raffles online. Always coordinate physical transfer with a licensed FFL dealer. |
| Real estate / vehicles | Complex property transfer requirements. Many states require specific regulatory approval for house raffles. Vehicle titles have specific transfer procedures. | Platform capability is secondary to legal structure. Always engage an attorney for house raffles — see the $50,000 compliance disaster story in our large fundraiser guide. |
| Tobacco / cigars | State-level restrictions vary. Federal restrictions on cigarette promotion apply. | Similar to alcohol — Stripe-locked platforms face potential campaign closure. Non-Stripe processor options provide an alternative path where state law permits. |
Frequently Asked Questions
Do all states allow nonprofits to run online raffles?
No. Alabama, Hawaii, Kansas, and Utah prohibit charitable gaming raffles entirely or have restrictions so significant that online raffle fundraising is not viable. Washington has specific restrictions on online raffle ticket sales. Several other states have regulations that require careful legal review before launching. Always verify current law with your state's charitable gaming office and a qualified attorney.
Can a 501(c)(3) automatically run a raffle in any state?
No. Federal 501(c)(3) status establishes federal tax-exempt status but does not grant state charitable gaming licenses. Each state has its own eligibility criteria — typically requiring 501(c)(3) status as a prerequisite but also requiring additional state registration and often a specific raffle permit or license above a gross revenue threshold.
What are the strictest states for raffle compliance?
California (DOJ registration required, specific drawing rules), New York (municipal license required, supervisor requirements), Illinois (organization eligibility criteria, Gaming Board oversight), Kentucky and Colorado (certified electronic drawing system required for online raffles), Pennsylvania and Michigan (detailed licensing and reporting). Organizations in these states should engage a gaming attorney before launching.
Why do Kentucky and Colorado treat online raffles differently?
Both states have enacted legislation or regulations requiring certified electronic raffle systems for raffles conducted electronically. A "certified electronic raffle system" is a specific legal designation — most web-based raffle platforms, including Chance2Win, are not certified in this sense. The compliance path for organizations in these states using standard web platforms is to use the platform for ticket sales and administration while conducting the actual drawing via a separate, certified method (or paper ticket mode with a witnessed manual draw).
Are raffle ticket sales tax-deductible for donors?
Generally, no. The IRS explicitly states that the cost of raffle, bingo, or lottery tickets is not deductible as a charitable contribution because the buyer receives something of value in return (the chance to win). This is a common point of confusion for donors. Consult a tax advisor for your specific situation.
How often do raffle laws change?
More often than most nonprofits expect. State legislative sessions regularly address charitable gaming — thresholds are adjusted, new platform categories are added, and enforcement priorities shift. The information on this page reflects our best understanding as of April 2026. Verify current requirements with your state's charitable gaming office at least annually, and before launching any new raffle campaign.
Continue reading
- Raffle compliance overview — the full pre-launch checklist
- Tip-based fee compliance — the checkout model compliance question
- Platform capability matrix — compliance scores included
- Best platforms for large fundraisers — compliance review before launch
- Chance2Win review — compliance posture explained
Running a raffle in a regulated state?
Chance2Win reviews every organization's setup before tickets go on sale. That includes flagging restricted states, reviewing prize categories, and checking raffle structure — not legal advice, but the practical review that catches the problems that end up costing $50,000.
Questions about your state? Call (813) 699-9325