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A raffle is a lottery scheme where people purchase a ticket for a chance to win a prize. In both the United States and Canada, raffles are considered illegal gambling, unless they are run by a charitable, nonprofit organization. It is illegal for a for-profit business to run a raffle.
While a raffle may seem like an easy and fun way to raise money for your cause while increasing brand awareness, that’s simply not the case. Raffles are subject to various laws and regulations regarding who can run one, how they can be run, and where they can be run.
In the USA, Federal regulations allow only 501(c)(3) nonprofits to run raffles. Furthermore, each state (and sometimes a city or county) has their own regulations as well that you need to adhere to. Read more.
In the USA, raffles are subject to some very strict rules regarding tax law. Every nonprofit that holds a raffle must comply with federal income tax requirements linked to unrelated business income, reporting and withholding. Read more.
In Canada, it is illegal to run a raffle without a licence. In addition, only religious or charitable organizations are eligible to apply for a raffle licence. While all Canadian Provinces allow raffles, each Province has different rules and when it comes to determining eligibility for a licence, and each province sets additional, separate guidelines to adhere to when running a raffle as well. It’s also important to note that it is impossible to hold a raffle nationally, due to these regulations. Read more.
What if my organization does not meet the eligibility criteria to run a raffle, or if I can't run a raffle in my area? A charity sweepstakes is a perfect alternative when you aren’t eligible to run a raffle or can't run a raffle in your area. Raffles and charity sweepstakes are very similar, but there are a few key differences that allow for a charity sweepstakes to be run when (or where) a raffle cannot.
Charity sweepstakes have fewer geographic regulatory restrictions than raffles in both the US and Canada. Sweepstakes entries can usually be sold nationally and even internationally. This provides organizations with the opportunity to run donation campaigns that have a much wider reach with less restrictions.
While a charity sweepstakes allows organizations to reach a vast audience due to the lessened geographical restrictions, a free method of entry must be offered in addition to donation-based entries. This is the biggest differentiator between raffles and sweepstakes.
While sweepstakes have their own set of rules to adhere to and their own reporting requirements, the restrictions are much more reasonable. A charity sweepstakes is the only way to legally run a raffle styled fundraising campaign nationally or internationally.
Looking to run a raffle or charity sweepstakes? Contact us with your ideas and we’ll provide a recommendation.