The Rules for Selling Raffle Tickets

• Raffles must abide by a number of laws.raffle tickets image by Alison Bowden from Fotolia.com
  
  A raffle is classified by the federal government and most states as a game of chance, meaning it is subject to a number of laws. Laws on raffles vary widely. In some states, including Michigan, raffle organizers must submit an application before holding a raffle, while in others, such as Hawaii and Alabama, they are banned. For a list of laws by state, see the link in the Resources section.
  
  

Sellers of Tickets

• Generally, the only organizations legally allowed to hold raffles are nonprofit corporations or charitable groups. These organizations usually must be registered with the state in which they are incorporated. Each state has its own laws governing who can sell tickets. In Washington, only members of the organization or people supervised by members can sell tickets. However, in no states can raffle tickets be sold over the Internet, as this is a violation of federal gambling laws.
  
  

Other Conditions

• Many states have other conditions on who can sell raffle tickets. In Ohio, if a nonprofit organization that does not hold 501(c)(3) status under the federal tax laws wishes to hold a raffle, 50 percent of the receipts must be donated to a 501(c)(3)-eligible organization.
  
  

Casinos

• Some casinos are allowed to sell raffle tickets as one of their games of chance, but the rules that regulate them are different than the statutes governing the holding of nonprofit raffles.
  
  

Applications/Permits

• Before raffle tickets can be sold, many states require a permit or license. This usually involves filling out an application describing the nature of the organization, the event, the prizes and the distribution of the receipts. Organizers must usually pay a fee and should allow time for the application to be processed. In Michigan, the secretary of state advises waiting six weeks for the application to be approved.
  
  

Buyers of Tickets

• In many states, such as Washington, people under 18 are not permitted to purchase raffle tickets. In others, members of the organization selling the tickets are not permitted to buy them.
  
  

Taxes

• According to the Internal Revenue Service, all organizations must report the names of all prize winners and withhold the correct tax on the prize, usually 25 percent to 28 percent of the value of the prize. If the money is not withheld from the winner, the organization sponsoring the raffle is liable for paying the tax.