In the United States, raffles, opportunity drawings and lotteries are governed by the individual states. Each state has its own set of definitions and laws that dictate what is considered a raffle, which organizations are permitted to host a raffle, and what is required to legally host a raffle within the state.
Some states make it a bit more complicated than others, but nonprofit organizations that host ticketing events like raffles often end up hosting more than one raffle per year and some of the biggest campaigns on Zeffy are raffles. AKA raffles raise a lot of money for the nonprofits that host them.
So, yes, the first raffle you host can be a bit time-consuming and confusing, but all the time and energy invested is ultimately worth it. Plus, raffles are a great way to mix up your fundraising campaign portfolio and, as an added bonus, they attract new donors to your nonprofit. And, of course, we’re here to help by walking you through the process of setting up a raffle on Zeffy and we’ve even got a few tips on how to create successful charity raffles and lotteries.
Okay, let’s get started.
Pennsylvania defines gambling as:
Gambling exists when there is a payment of consideration or a fee or something of value for the opportunity for a prize or reward, the winner of which is determined by chance. Effectively, the three elements are:
3: A prize or reward
Who can host a raffle in Pennsylvania?
Pennsylvania is fairly strict with their gambling laws and only authorizes the following forms of gambling:
- Those gambling activities conducted pursuant to the Race Horse Industry Reform Act.
- Pennsylvania Lottery (including Powerball and Mega Millions).
- Bingo conducted pursuant to the Bingo Law.
- Those gambling activities conducted pursuant to the Pennsylvania Race Horse Development and GamingAct (Slots and Table Games).
- Those gambling activities conducted pursuant to the Local Option Small Games of Chance Act.
- Those gambling activities conducted pursuant to the Sport Raffle Charities Act (SRCA).
As a nonprofit organization in Pennsylvania, you need to follow the rules and regulations in the Local Option Small Games of Chance Act and, sometimes the Sport Raffle Charities Act. Our main focus in this article will be on the Local Option Small Games of Chance Act.
The small games of chance law authorizes eligible non-profit organizations to host:
- Pull-tab games
- Raffles (including special permit raffles)
- Daily drawings
- Weekly drawings
- Fifty-fifty (50/50) drawings
- Race Night Games
How does Pennsylvania define eligible nonprofit organizations?
Pennsylvania defines an eligible organization as one of the following:
- A charitable, religious, fraternal or veterans’ organization.
- A club, civic and service association.
- Or an affiliated non-profit organization of a major league sports team.
Good to know:
To be granted a games of chance license in Pennsylvania, your nonprofit needs to be have been working towards fulfilling its purpose for at least one year.
What is a Small Games of Chance Club License in PA?
Any nonprofit organization that falls under the Internal Revenue Code Section 501(c) or 527 and that is licensed to sell liquor under Section 404 of the Pennsylvania Liquor Code, is considered a club under the Local Option Small Games of Chance Act.
Do you need a raffle license to host a raffle or a 50-50 raffle in Pennsylvania?
Nonprofit organizations can apply for one of two types of raffle licenses: a regular license or a monthly license. Both licenses will allow your nonprofit to host any of the games of chance listed above. (And, if you're hosting a raffle, Zeffy can help!)
A regular license is:
A regular license is what Pennsylvania calls an annual license. If your nonprofit is approved, an regular/annual license is good for an entire calendar year, starting from the date it was issued. (The fee for a regular/annual license is $125.)
A monthly License:
A monthly license is valid for, you guessed it, 30 consecutive days from the date it was issued. Your nonprofit can apply for and obtain as many monthly licenses as you want, but the licenses cannot overlap. (The fee for a monthly license is $25.)
Good to know:
Pennsylvania also grants Special Raffle Permits to nonprofit organizations with a regular or monthly license. A special raffle permit allows your nonprofit to conduct a raffle that exceeds the normal prize limits. (We’ll get to those in a bit.)
Your nonprofit can apply for a special raffle permit through your country.
A licensed nonprofit organization can apply for and obtain up to 10 special raffle permits per year. The total prizes awarded under all special raffle permits may not exceed $150,000 per year.
Volunteer fire, ambulance, rescue or conservation organizations may obtain up to 12 special raffle permits and award up to $250,000 in prizes.
How does a nonprofit apply for a licensed raffle in Pennsylvania?
Eligible nonprofit organizations who want to host a raffle or small game of chance need to apply for a regular/annual or monthly license at the county treasurer in their county. If your county doesn’t have a county treasurer, you can apply directly with the licensing authority.
How to apply for a small games of chance license in PA?
While you cannot apply online for a small games of chance license in Pennsylvania, you can download forms, file tax returns, etc. Just visit: myPath and create or log into your account.
Are their prize limits for raffles hosted by nonprofit organizations in Pennsylvania?
Yes, there are prize limits to keep in mind when hosting a raffle in Pennsylvania.
Nonprofit and nonprofit club’s with a regular/annual or monthly license:
- A prize for a single chance in any game may not exceed $2,000.
- An eligible organization is limited to awarding $35,000 in prizes during a week (seven consecutive, reoccurring operating or non-operating days).
- No more than $15,000 may be awarded in raffles during a calendar month.
Raffles conducted under a special permit:
A special raffle permit allows your nonprofit to conduct a raffle that exceeds the normal prize limits.
- The total prizes awarded under all special raffle permits may not exceed $150,000 per year.
- Volunteer fire, ambulance, rescue or conservation organizations may obtain up to 12 special raffle permits and award up to $250,000 in prizes.
Daily and weekly drawing carryovers:
Amounts paid out in a carryover drawing are not subject to the general prize limits. (A carryover happens when there is no winner and the prize is carried over to the next daily or weekly drawing.)
100 percent payout drawings:
When a draw is conducted that awards 100% of the gross revenue from the game or raffle, then the prize does not count against the $35,000 weekly prize limit.
Can you sell raffle tickets online in Pennsylvania using Zeffy’s ticketing forms?
Unfortunately, for now, you cannot sell any raffle tickets over the internet in Pennsylvania. We know, we think it’s a bit of an outdated rule too. But, while you can’t use Zeffy’s free event and ticketing software to sell or redeem your raffle tickets in Washington State, you can still use Zeffy to:
- Track your raffle sales by adding offline ticket purchases to your campaign.
- Keep track of who purchased what and their info (such as email addresses and phone numbers) so you can contact the winner(s).
- Keep track of how many tickets you have sold, any additional donations, etc.
- Automatically create a contact list to send thank-you emails, re-engage with donors and even let donors know when next year’s raffle comes along.
Pennsylvania also allows you to use the internet to:
- Advertise your raffle. (Newsletters, banners, etc.)
- Display the rules of the raffle.
- Store raffle contact information for your nonprofit, including the eligible organization’s name, address, telephone number, facsimile number, or e-mail address.
- Answer frequently asked questions.
- List descriptions, photographs, or videos of the raffle prizes.
- List the prize winners.
Good to know:
Unlicensed raffle records must be kept for one to five years depending on your license.
In Pennsylvania, all nonprofit raffle and games of chance proceeds must be used for public interest purposes.
In addition to using 60% of proceeds to invest in your cause, nonprofit organizations can use 40% of their proceeds to purchase games of chance equipment and to pay for license fees.
And, if you’re wondering what Pennsylvania defines as an appropriate cause (public interest purposes), well:
- The activities and operations of a nonprofit with a religious, educational, philanthropic, humane, scientific, patriotic, social welfare, social advocacy, public health, public safety, emergency response, environmental or civic objective.
- Initiating, performing or fostering worthy public works or enabling or furthering the erection or maintenance of public structures.
- Lessening the burdens borne by government or voluntarily supporting, augmenting or supplementing services which government would normally provide.
- Improving, expanding, maintaining or repairing real property owned or leased by an eligible nonprofit organization and relating operational expenses used for purposes specified in bullet points (1), (2) and (3).
- Nonprofit youth sports activities.
- Activities relating to the provision of volunteer fire, ambulance or rescue services.
- Activities conducted by a veterans organization, such as:
- Services to economically or socially support veterans.
- Activities to honour veterans.
- Other activities that qualify under bullet points (1), (2), (3), (4), (5) and (6).
Good to know:
A nonprofit organization with revenue from a game of chance or raffle in excess of $40,000 is required to keep all small games of chance proceeds in a bank account separate from all other organization funds or accounts.
If your nonprofit has been designated a “club”, there are a few other rules and regulations to follow.
- A club licensee may use up to 40 percent of your games of chance proceeds per calendar year for expenses.
- Any proceeds not used for expenses must be used for public interest purposes.
- All games of chance proceeds obtained by a club licensee must be used within a year after the calendar year they were obtained, with one exception:
- You may set aside some or all of your proceeds allocated to pay for expenses if they are going to be used for a substantial public interest purchase or project.
What to include on any promotional materials your nonprofit shares.
There aren’t too many more must-haves in terms of nonprofit lottery and raffle laws in Pennsylvania, however, we recommend including a few details on any promotional materials:
- Your raffle license number (if you have one).
- The prizes to be won.
- The date and location of the draw.
- How/where people can purchase tickets.
Rules and regulations for tickets and ticket sales in Pennsylvania.
Pennsylvania has set a few rules and regulations regarding the sale of raffle tickets.
- Tickets may only be sold by your organization’s members.
- Tickets must be purchased in person.
- Tickets must be paid for in full by cash or check.
- Tickets and/or payments for tickets cannot be mailed.
- Individuals under 18 years of age may no purchase tickets.
What to include on tickets for your nonprofit’s raffle.
- A consecutive number for each ticket.
- The cost of each chance.
- The date/time/location of the draw.
- The name of your nonprofit organization.
- A description of prizes.
- Whether or not the person must be present at the drawing.
Although it’s not written, we do recommend that printed tickets have a detachable coupon or stub, and that both the ticket and its coupon or stub are marked with a unique and matching number.
You can purchase pre-made tickets or get inspired by our sample ticket:
Does it cost money for a nonprofit to register for a lottery in Pennsylvania?
Yes! Fees vary depending on the type of license you’re applying for.
- The fee for a regular/annual license is $125.
- The fee for a monthly license is $25.
After your nonprofit’s raffle…
A licensed nonprofit organization needs to keep records to demonstrate that your nonprofit organization is properly following all of Pennsylvania’s rules and regulations.
A licensed eligible organization must retain its records for at least two years. A club licensee must keep its records for at least five years.
Your nonprofit’s records must include the following:
- All sales invoices.
- Gross receipts from the conduct of each game of chance.
- The cost of each game of chance and other expenses related to the conduct of each game of chance.
- The total of prizes paid out for each game of chance and each prize’s cost or fair market value.
- The proceeds from the conduct of each game of chance.
- Totals for items listed in items 2 through 5 above for each operating day, operating week, calendar month, calendar year and licensed term.
- Details as to how proceeds from games of chance are or will be used or disbursed by the eligible organization.
- A record of any prize for which the licensed eligible organization is required to make a W-2G report to the IRS.
- A list of winners' names and addresses for prizes in excess of $600.
- For merchandise prizes, the licensed eligible organization is required to obtain a sales invoice showing the purchase price of the prize, or if the prize was donated to the licensed eligible organization, a written statement from the donor indicating the fair market value of the prize.
A licensed nonprofit organization must also maintain records relating to the printing or purchase of materials to be used for raffles and daily and weekly drawings. Records should include an invoice or receipt from the place of purchase that shows the cost and number or amount of the materials purchased.
Good to know:
The Pennsylvania State Police Bureau of Liquor Control Enforcement has record-keeping tools on its website to help your nonprofit keep proper records.
Here’s a recap of all the links and documents mentioned in this article:
If you need them: charitable lottery licence laws for other US states.