How to Legally Raffle Off a Car

Harbor House's 2008 Car Raffle Prize

It is difficult to develop a guide that addresses raffling off cars in all states, because state and county laws vary. In some jurisdictions, raffles are treated like lotteries and considered a form of gambling. It is advisable that you contact your city, county and state governments to ensure adherence to appropriate law. Many locations require registration or that an application be filed. A general process for holding a car raffle follows.

Difficulty:

Moderately Challenging

Instructions

1. Check with your local government to ensure that raffles are legal. Places where raffles are illegal include Hawaii and Kansas.

2. Verify whether individuals can hold a raffle; or if you are establishing a raffle for an organization, that the appropriate type of organization (e.g. for-profit business or non-profit charitable organization) is allowed to host them. Raffles are often limited to educational or charitable organizations, fraternal orders, churches or volunteer organizations (like volunteer fire departments). Occasionally there is a requirement that a charitable organization have been in operation for more than 5 years (e.g. Indiana and Tennessee).

3. If a raffle is legal, determine whether there is a permit, application or registration process. For example, in California, raffles register with the California Attorney General. In Maryland, charitable organizations must submit a disclosure statement to the Charitable Organizations Division (a branch of the Secretary of State) that includes details of the date, location and time of the raffle; information about the charity; and any costs attributable to the winner. In Georgia, a license is obtained from the Sheriff.

4. Check the application for deadlines. In Tennessee, applications are accepted by the Secretary of State, Division of Charitable Solicitations between July 1 and December 31.

5. Fill out the application and pay any applicable fees. Fee structures are often dependent upon the value of the item(s) being raffled.

6. Take note of any additional requirements the state may have. It is common for a financial report to be required after the event; and for extremely high-value items ($50,000 or more), an audited financial statement may be required. Some state limit the number of raffles an organization can hold in a year.

7. Make certain the entry rules mention whether winner of a raffle is responsible for local, state and federal taxes; insurance; fees; delivery costs; or incidentals like title transfers or registration. An organization is responsible for filing an IRS Form 990 for any prizes valued at $600 or more.

8. Consider including common provisions that raffles typically include, like a minimum age to enter (18 or 21); proof of driver's license, and the use of a certified public accountant or accounting firm to verify the raffle results.

9. Advertise your raffle, and sell tickets.

10. Conduct the raffle in accordance with the rules you established.

11. Deliver the prize(s) to any winners.

12. File any final paperwork with the government that is required.

13. Enjoy the fruits of your labor, and be sure to thank any donor that may have given your organization a car to raffle.

Tips & Warnings

• Fraud is a crime.