Is Fundraising with Raffles, Casino Night for Schools or Charity Subject to Gambling Laws?
UPDATED: December 12, 2018
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No simple answer: it is complicated. Any non-gambling fundraiser will be legal. Any gambling fundraiser (one with consideration, prize, and chance) may be legal.
Every community rallies around fundraisers to raise money in support of good causes. For example:
(1) “Casino Night" or "Kentucky Derby Day" at a country club or community center to raise funds for the local school district.
(2) Church bingo or raffle, where the proceeds support the church and its charitable missions.
(3) A "50-50" lottery or tickets sold at a game to raise money for school sports or other school-related extracurricular activities.
(4) Bazaars or silent auctions held by a nonprofit organization.
(5) Historical societies raffling items to preserve historical sites.
(6) Parent groups holding bazaars or raffles to support schools.
Often gambling-themed, these activities are harmless and well intentioned, but well intentioned does not automatically mean "legal”. When do these otherwise entertaining and worthwhile activities become a form of gambling-- when not? And if considered gambling, when are they illegal fundraisers?
Is it Gambling?
As to the first question--when do these otherwise entertaining activities become a form of gambling--the answer is: if they meet the criteria to be considered gambling, they are gambling. Whether something is gambling or not does not depend on who (i.e., a nonprofit, school or parent group) performs it, or why, but only on whether the activity has the elements of gambling: (1) consideration, (2) prize, and (3) chance.
(1) Consideration: This is something of value (most commonly money) paid or staked (i.e., bet) in order to play or participate. The amount paid or staked is not relevant. Since the events are fundraisers, there is consideration paid, whether it's in the form of an entrance fee, a bet, or a bid. So there will be consideration.
(2) Prize: This is something of value you could win or obtain from participating. If there is a chance to come away with anything of value, not just cash, there is a prize. Sometimes the prize is a very direct consequence of paying your consideration, such as when you buy a ticket to a 50-50 raffle, you have a chance of winning half the money in the pot. Sometimes it's indirect, as in a casino-night-type event, where you pay money at the door to get chips or play (e.g. "Monopoly") money with no inherent value, then at the end of the night, you can trade in your winnings (if any!) for different prizes. But in any event, if you can walk away with something of value, be it cash, donated goods, a gift certificate to a restaurant or local store, etc., there is a prize.
(3) Chance: Chance is an element outside your control, which has some significant impact on whether you win a prize or not. Bingo has chance: what letters and numbers are drawn from the ball spinner. Raffles have chance: what ticket or number is drawn. Anything modeled on a casino game has chance: the cards that are dealt or drawn, the number the roulette wheel stops at, the fall of the dice, etc. Anything based on the outcome of a real race or simulating a race has chance: which horse wins the race. So in events like these, there will be chance. Since there will also be consideration and prize, fundraisers like these ones will be considered gambling.
But some fundraisers do not involve chance. Take bazaars, for example, where you buy donated goods. Whether you get the goods you want is not based on factors beyond your control; rather, it's based solely on whether you pay the asking price or not. Similarly, whether you win what you are bidding on a silent auction is based only on your own actions--are you willing to bid more than other people? So any fundraising event where the participants control their own outcomes will not be gambling.
If a Fundraiser Event is Considered Gambling, Is It Legal?
Even though the fundraiser satisfies all elements of gambling, it may not necessarily be illegal.
Gambling, subject to various restrictions and regulations, is widely legal in the United States--some states allow more gambling, some allow less, but all states except Utah and Hawaii allow at least some form of gambling. And charitable (i.e, fundraising) gambling is no exception: charitable gambling is allowed in all states except HI, SC, TN, and UT. That means you can engage in charitable gambling in 46 of 50 states.
However, just because charitable gambling is allowed doesn't mean that all charitable gambling will be allowed in a state. Legal gambling (charitable or otherwise) has to comply with state regulations. Every state has its own gambling laws and regulations, and for gambling to be legal, those laws and procedures must be followed. To use New Jersey as an example, the state allows four types of charitable gambling:
- Bingo, where "[n]o prize may be awarded in excess of $1,000.00 for a single regular or special game. The total prizes awarded of all games on any one occasion shall not exceed $3,000.00, except for the authorized percentage games known as, progressive jackpot, 50/50, multi-color, and pre-draw. These games are to be conducted only in the proper manner as described in the rules and regulations.All equipment utilized in the conduct of bingo, such as, bingo paper, and electronic bingo devices are to be purchased/leased from a licensed bingo equipment provider."
- Raffles, where "[a]ll equipment utilized in the conduct of raffles are to be purchased/leased from a licensed raffle equipment provider."
- Casino nights, where "players use imitation money purchased from the licensee to wager in games known as baccarat, beat the dealer, blackjack, Caribbean stud poker, chuck-a-luck, craps, joker seven, let it ride, mini-baccarat, money wheel, multi-action blackjack, red dog, roulette, skill stop reel or skill stop video games, token pushers, under/over, seven-card poker, or hold'em poker.”
- "Armchair races," which are "a type of game of chance, covered under the Raffle Licensing Law, where players use imitation money purchased from the licensee to wager on the outcome of a previously filmed horse race(s). The participants do not know the results in advance.The imitation money is then redeemable for merchandise prizes or raffle tickets only and not for cash or money."
To be legal in New Jersey, not only do you have to comply with the rules and regulations for legal charitable games, but you also must register with the Legalized Games of Chance Control Commission, which is part of the state's Department of Consumer Affairs.
To Sum It Up
Every state that allows charitable gambling fundraisers will define what type of organizations are eligible to conduct such activities, for what kind of purpose (i.e., schools, hospitals, libraries, etc.), what types of specific activities can be promoted (i.e., raffles, bingo) and regulatory oversight of that activity.
Violating your state's charitable gambling laws is generally a misdemeanor-level offense. That is, it can subject you to a fine of a few hundred dollars to around a thousand dollars, and possible (though rarely) days, weeks, or months in jail.