The state of CA requires nonprofit organizations to register any raffle held at a fundraiser, and file follow up reports on the money raised.

The CA Attorney General’s office defines a Raffle as “a type of lottery in which prizes are awarded to people who pay for a chance to win.” Each person enters the game of chance by submitting a detachable coupon or stub from the paper ticket purchased.

The raffle must be registered 60 days before the scheduled date of the raffle. Registration of the raffle is done via submission of Form CT-TRP-1 and confirmed upon receipt of a letter from The Registry of Charitable Trusts.

The CA Attorney General established the 90/10 rule for all raffle fundraisers- 90% of the gross receipts generated by the sale of raffle tickets for any given draw are to be used by the eligible organization for charitable purposes. The 90/10 rule is regulated by a follow up annual report required by the Attorney General.  Raffle reporting is done between September 1-August 31. At the end of the reporting period, organizations must file an Annual Report Form CT-NRP-2 to report the gross receipts and incurred costs of hosting raffles for the year (used to verify compliance with the 90/10 rule).

How do you know if your organization’s raffle is required to register?

There are very few exceptions to the registration requirements. Here are some nitty gritty specifics:

-Opportunity Drawing

Your raffle qualifies as an opportunity drawing and is therefore exempt from registration if ALL of the following are true:

  1. It involves a general and indiscriminate distribution of the tickets;
  2. The tickets are offered on the same terms and conditions as the tickets for which a donation is given; and
  3. The scheme does not require any of the participants to pay for a chance to win.

If participants are required to purchase a ticket in order to have a chance to win a prize, or can purchase ADDITIONAL tickets to increase their chances of winning, the drawing is subject to the provisions of Penal Code Section 320.5 and all related regulations.

-Silent Auction

A silent auction is not considered a raffle so a charity is not required to register with the Registry of Charitable Trusts before conducting silent auction activities. A silent auction is not a game of chance. Unlike a raffle where multiple participants pay for a chance to win a prize based on a random draw, a silent auction is a sale of an item to the highest bidder. Although a silent auction need not be registered with the Attorney General’s Registry of Charitable Trusts, to find out if your silent auction event is subject to any restrictions, licensing requirements, or taxes, please contact the State Board of Equalization and/or your local law enforcement agency.

-50/50 Raffle

50/50 raffle’s can NOT be hosted by a nonprofit organization because they cannot meet the 90/10 rule.

What happens if you do not register a raffle?

Failure to register your raffle can have serious consequences. The CA Attorney General’s office explains, “Gambling is illegal in California unless it is permitted by statute. A raffle is defined as gambling unless it meets all of the criteria set forth in Penal Code section 320.5. One of the criteria is that an eligible organization must be registered with the Attorney General prior to conducting any activity associated with a raffle. Failure to comply with the provisions of section 320.5 is a misdemeanor. Violations of section 320.5 may be forwarded to the local district attorney, city attorney, or county counsel for enforcement.”

What happens if you do not file the follow up annual reports?

If annual raffle reports are not filed, the CA AG can impose fines, suspend tax exempt status through the CA Franchise Tax Board, and ban the entity from hosting future raffle fundraisers.

If your organization plans to host a raffle as a part of their fundraising efforts next year, we recommend using this Checklist created by the CA Attorney General to ensure your organization and event remain in compliance.

Please do not hesitate to reach out. Visit our contact page if you have any questions!