Nonprofit raffle rules: What to know before you sell your first ticket

⚖️ Disclaimer: Raffle laws vary significantly by state and change frequently. This guide is for informational purposes only and is not legal advice. The state-specific information included here is intended as general guidance and may not be current or complete. Always confirm requirements with your state attorney general's office or a licensed nonprofit or gaming attorney before launching your raffle.

You've decided to host a fundraising raffle. But a quick Google search leaves you more confused than when you started. Raffle rules aren't always clear, and online forums often say conflicting things. When the stakes are high it's easy to second-guess yourself at every step.

Raffle rules can feel overwhelming. But with the right guidance, you won't have to miss out on a high-ROI fundraiser. This guide breaks down raffle rules for nonprofits in plain language, with key requirements across multiple states and a free checklist to help you stay compliant from planning your raffle to reporting your income.

Key takeaways

• Raffles are legal in most states 👍 Nonprofit raffles are legal in many states, but rules and restrictions vary widely.
• Every state has different raffle rules 🤔 Some require a license or permit, while others limit raffles to nonprofits registered for a certain number of years.
• Funds must support your mission 💛 Some states require a minimum percentage of your proceeds, while others require all raffle funds raised to be used for your cause.
• Online raffles have strict regulations 💻 Not every state that allows raffles also allows online ticket sales—and selling across state lines can create legal risk.
• Raffles may require IRS reporting 📋 You may need to report raffle earnings to the IRS, depending on the amount.
• When in doubt, seek legal advice 🧑‍⚖️ Nonprofit raffles are often doable, but the legality can be complex. Consult a legal professional if you're unsure.
• Keep your raffle running smoothly with the right tools 🧈 Platforms like Givebutter offer event ticketing, built-in reporting, and more fundraising features—all in one place.

Download your free nonprofit raffle rules checklist

Stay compliant at every stage of your raffle with a step-by-step checklist that guides you through what to do before, during, and after. Simply download it and start checking off each task.

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Download your free nonprofit raffle rules checklist →

Are raffles legal? What nonprofit raffle rules actually say

Raffles are legal in most U.S. states, but the regulations vary based on your nonprofit's location. Some states ban raffles entirely, while others allow them only under specific conditions. It's essential to confirm your state's laws before planning your raffle.

Who can legally hold a raffle? 🏛️

To legally hold a raffle, your organization must be a registered nonprofit (often a 501(c)(3)) and meet your state's eligibility requirements. For-profit raffles are illegal in every state. In most cases, individuals cannot run raffles on behalf of a nonprofit; raffles must be organized and conducted by the nonprofit itself.

What makes something a raffle vs a sweepstakes? 🎟️

The key difference between a raffle and a sweepstakes is that a sweepstakes must offer free entry. For an event to be considered a raffle, it must have a prize, a random drawing, and consideration (typically a payment to enter).

In a sweepstakes, the payment requirement is removed. Both raffles and sweepstakes involve participants entering for a chance to win a prize.

Because sweepstakes are free to enter, they typically come with fewer geographic restrictions than raffles. If you're not sure whether a raffle or a sweepstakes is right for your nonprofit, consult a legal professional.

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Raffle laws by state: permits, licenses, & key requirements

One of the biggest challenges with nonprofit raffles is that the rules aren't the same everywhere. Some states require permits, others restrict online ticket sales, and many have specific rules about who can host a raffle and how proceeds are used.

Before you launch, it's important to understand the requirements where your nonprofit operates.

Do you need a raffle permit or license? 📋

Many states require a permit or license, so confirm your state's specific rules for how to run a raffle before you start planning. To find your state's requirements, search "[state] raffle license" or check your state attorney general's website.

For example, in Washington, you can host up to two unlicensed raffles per year as long as total revenue doesn't exceed $5K. In New York, you only need a license if your net profit exceeds $5K.

💡 Pro tip: Be sure to apply for your raffle license early. Depending on your state, the process can take eight weeks or more.

State-by-state raffle rules snapshot 🗺️

One of the trickiest parts of running a nonprofit raffle is that the rules aren't consistent across the country. A raffle that's perfectly legal in one state may require permits, restrictions, or additional reporting in another.

To help you get oriented, we pulled together a snapshot of common raffle requirements in several states.

✍️ Keep in mind: State raffle laws can change frequently. The information below is intended as a general overview and may not reflect the latest legal requirements in your area. Always confirm current rules with your state attorney general's office or a qualified nonprofit attorney.

Are online raffles legal? 💻

Online raffle ticket sales come with additional legal considerations. Some states that allow in-person raffles prohibit selling tickets online.

Even where online sales are allowed, selling tickets across state lines can create legal complications. To stay compliant, always confirm your state's rules for raffles in advance.

Learn more

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What your raffle tickets & proceeds must include

Staying compliant means paying attention to both your raffle tickets and how your proceeds are handled. Here are the key rules nonprofits should know before launching a raffle.

Required info on every raffle ticket 🎟️

In most states, raffle ticket rules require specific details to appear on your tickets. To stay compliant and run a smooth raffle, include these recommended fields when building your raffle ticket template:

• Name & contact 📱 Feature your organization's name, email, and phone number.
• Prize description 🎁 Include a short, specific description of your raffle prizes.
• Drawing date, time, and location 📍 State when and where the drawing will take place to ensure transparency.
• Ticket price 💸 List the price per ticket and any bundled pricing offered.
• Sequential ticket number 🔢 Use unique, sequential numbers and print matching numbers on both the ticket and stub to track entries and identify winners.
• State-required disclaimers ❗ Include any disclaimers or disclosures required by your state, like "no purchase necessary."

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How raffle proceeds must be used 💛

State laws don't just regulate how you run a raffle—they also determine how raffle proceeds can be used.

In most cases, raffle proceeds must support your nonprofit's mission or operational costs. Some states require you to put 100% of your proceeds toward charitable purposes, while others allow a portion to cover costs like events or administrative expenses.

Raffles may also require special IRS reporting. If your organization earns more than $600 in raffle income, it may need to be reported as unrelated business income (UBI) to the IRS using Form W-2G and Form 990-T. Consult a CPA to learn more about your state's specific raffle tax requirements.

💡 Pro tip: When a state doesn't specify a required percentage, it's safest to assume all raffle proceeds should go toward your mission.

More to explore

Check out the ultimate list of companies that donate raffle prizes →

Launch a compliant raffle with Givebutter

Raffle rules can feel intimidating at first, but with the right preparation, a compliant and successful fundraiser is absolutely within reach. Once you understand your state's requirements, create clear rules, and keep strong records, you'll be in a much better position to run a raffle your supporters can trust.

When you're ready to launch, Givebutter helps simplify the process with event ticketing, donor management, promotion tools, customizable donation pages, and more—all in one place. That means less time juggling logistics and more time focusing on your mission.

Create your free Givebutter account today and launch your raffle with confidence.

FAQs about nonprofit raffle rules and regulations

Can anyone run a raffle?

Eligibility rules vary by state, but raffles are typically limited to registered nonprofits. Raffles are classified as gambling, which means they're limited to nonprofits or educational organizations that have applied for a license. Check with your state's attorney general's office or a qualified legal professional to learn about specific requirements.

How to get a raffle license?

Start by confirming your eligibility under state law. Then complete any required registration or licensing through your state government's website.

Make sure you give yourself enough time to apply, as some states can take up to eight weeks or more to process a license application.

Can a nonprofit sell raffle tickets online?

Some states allow online raffle ticket sales, while others, like California and Indiana, prohibit them. Even where permitted, selling across state lines can cause compliance issues.

In what states are raffles legal?

Raffles are legal in many states, but laws vary widely by location. For example, Utah prohibits raffles entirely. In some states, nonprofits must meet additional eligibility requirements before hosting a raffle.

Do raffle winners pay taxes?

Yes, raffle winners are required to pay taxes. You may need to report raffle winnings using IRS Form 1099-MISC, depending on the prize amount.

What are common raffle mistakes to avoid?

For a smooth and compliant raffle, avoid these common mistakes:

• Planning your raffle without checking your state’s legal requirements
• Underestimating the amount of time it takes to plan and promote
• Hosting a raffle with unclear rules
• Selecting low-value prizes that don’t generate attention and ticket sales 
• Forgetting to highlight your mission in marketing and promotions