Raffle Law in the State of California
Conducting a raffle to raise money is in no way a modern invention. However, it has become a mainstay in nonprofit fund raising in recent years. California has specific laws governing raffles. For example, 50-50 raffles, wherein the winner splits the proceeds with the nonprofit, are illegal in California.
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Constitutional Prohibition
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The California constitution specifically prohibits lotteries. However, many exceptions have been created, and the prohibition is all but meaningless. Raffles are among the exceptions. California also has a state lottery that supports education.
Nonprofits
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Raffles may only be conducted by nonprofits or organizations with a charitable purpose. Generally, such organizations must register with the California Attorney General's Registry of Charitable Trusts before conducting a raffle, and the organizations must also file financial disclosures with the state after a raffle. The rules governing conduct of a raffle can be found in California Penal Code section 320.5.
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Rules
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Each raffle ticket must be a detachable with a matching stub that has identifying numbers. The drawing must occur in California and be done by a person 18 or older who is employed by the nonprofit, and at least 90 percent of the funds must be used for charitable purposes. Raffle proceeds must be used in California. The employees running the raffle may not be paid from the raffle, and no one may have a financial interest in the raffle, such as investors. There are also specific registration requirements.
Types of Raffles
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California does not limit what may be given away in a raffle, with the exception of otherwise regulated items such as guns or drugs. California nonprofits have raffled away small items such as bicycles and art to large items such as cars and homes. The limits are really up to the imagination of a nonprofit.
Disclaimer
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Though appearing simple, raffles can be a complex area of law. A nonprofit seeking to hold a raffle should consult an attorney licensed in California to ensure proper conduct of the raffle and proper documentation with the state. This article is for educational purposes only and should not be construed as legal advice.
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References
- Photo Credit raffle tickets image by Alison Bowden from Fotolia.com
