Can my Nonprofit hold Raffle to Raise Money?

Question: Can my Nonprofit hold Raffle to Raise Money? The Charitable Raffle Enabling Act, effective January 1, 1990, permits “qualified organizations” to hold up to two raffles per calendar year, with certain specified restrictions.

Answer: A raffle is defined as the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize.

In general, a qualified organization is:

  1. A nonprofit association organized primarily for religious purposes that has been in existence in Texas for at least 10 years;
  2. A nonprofit volunteer emergency medical service that does not pay its members other than nominal compensation;
  3. A nonprofit volunteer fire department that operates fire-fighting equipment, provides fire-fighting services, and does not pay its members other than nominal compensation; or
  4. A nonprofit organization that has existed for at least three preceding years and is exempt from federal income tax under Section 501(c), Internal Revenue Code; does not distribute any of its income to its members, officers or governing body; does not devote a substantial part of its activities to attempting to influence legislation; and does not participate in any political campaign.

Prizes Offered and Proceeds from Ticket Sales

A qualified organization may offer any prize except money. “Money” is defined as coins, paper currency, or a negotiable instrument that represents and is readily convertible to coins or paper currency. If the raffle organizers offer a prize which they have purchased or have given other consideration for, the value of the prize may not exceed $50,000, or $250,000 if the purchased prize is a residential dwelling. There is no value limit on prizes donated to the organization.

Texas lottery tickets may be purchased and offered as prizes, even though the tickets’ payoff may exceed $50,000. The organization must have each raffle prize in its possession or ownership or must post a bond for the full amount of the value of the prize with the county clerk of the county where the raffle will be held.

Proceeds from ticket sales must be used only for the charitable purposes of the qualified organization.

Restrictions

A qualified organization is not required to register with the State before conducting a raffle. However certain restrictions apply.

  1. A qualified organization may hold only two raffles per calendar year and only one raffle at a time.
  2. Raffle tickets may not be advertised statewide or through paid advertisements. Each raffle ticket must state: 1) the name of the organization conducting the raffle; 2) the address of the organization or of a named officer of the organization; 3) the ticket price; 4) a general description of each prize having a value of more than $10; and 5) the date on which the raffle prize(s) will be awarded.
  3. No one may be compensated directly or indirectly for organizing or conducting a raffle or for selling raffle tickets.