Raffles can be a great way to create buzz and bring people together—but there’s more to it than just selling tickets. You’ll need the proper license in place before you can get started. That’s where MGL comes in. We handle the legal details, so you can focus on running your event without getting stuck in paperwork.
Required documents for Raffle Gambling License
You’ll usually need a few core documents to get things moving:
Personal Information
- Source of funds
- Official registration or incorporation papers
- Clean criminal records for key personnel
- A list of board members with contact information
Financial Information
- A clear explanation of how the raffle funds will be used
- Your current operating budget
Raffle Information
- A detailed raffle operation plan
- Types of raffle
- Draw schedule
- The rules
- A sample ticket
When You Need a Raffle License
You will usually require a raffle license if people are paying for the opportunity, the prizes have real dollar values, and the practice is for fundraising purposes or for profit. Individual legislation varies depending on the jurisdiction, but the most common considerations usually involve prize values, the frequency of raffles that you host, the nature of the organization running the raffle, and the extent of ticket sales involved.
Here are a few examples from different regions:
Prize Value Limits
- Washington State, U.S.: Raffles earning over $5,000 annually require a license.
- Michigan, U.S.: Raffles with prizes $500 or below cost $15 (covers three draws max). Prizes above $500: $50 per draw.
- Victoria, Australia: Permits required for prize pools above $20,000.
- Alberta, Canada: Raffles valued up to $20,000 need a license.
Organization Type and Purpose
- Michigan: Only registered nonprofits qualify.
- Victoria: Profits must benefit specific charitable or community groups.
- UK: Small society lotteries (e.g., advance ticket sales) must be registered.
Ticket Sales Frequency & Location
- Washington State: License needed for more than two public raffles per year or sales to non-members.
- Michigan: One license can cover multiple draws held at the same place.
- Victoria: Ticket sales limited to approved periods; sellers can't earn beyond covering basic costs.
Always verify local gambling rules due to regional variations. Contact us for details on raffle rules in your region.
If you have any questions
If you have any questions
What Qualifies as a Raffle
A raffle involves selling tickets for the chance to win prizes. To count legally as a raffle, it needs payment, randomness, and prizes.
When money and chance mix, governments usually view raffles as gambling. Regulations exist mainly to stop scams and keep things fair.
If planning a raffle where people pay to enter, you might need a license depending on local rules. Licenses let organizers:
- Sell tickets legally
- Publicly promote the raffle
- Collect money without trouble
- Make money or raise funds from the raffle
Licenses Fees
Raffle licensing varies quite a bit depending on location and the scale of the event. Take New York, for instance—rules shift based on how big the raffle is and how much money it’s expected to bring in:
License Exemptions
Certain groups are exempt from raffle licensing rules. These typically include:
- Religious organizations: For example, in California, registered religious groups are not required to register raffles. Ontario does the same, though in certain situations, local authorities still have to be informed.
- Educational institutions: Schools running smaller raffles.
- Nonprofits: In Washington State, qualified nonprofits can operate raffles without a license if their annual raffle revenue stays under $5,000. In Victoria, Australia, no license is needed if the total take is under AUD $20,000, but the raffle still has to follow the rules.
In California, nonprofit raffles must allocate at least 90% of their gross receipts to charitable purposes. Even exempt organizations must comply with gambling laws and reporting requirements. Always check your local rules to confirm whether you qualify for an exemption.
Raffle License Categories
Raffle license categories help you match the right permit to your event's size and scope. Here's a breakdown of the main types to guide your decision.
Small-Scale Licenses
These licenses are ideal for smaller raffles with lower-value prizes. For example, in Michigan, a small-scale license costs $15 and covers prizes up to $500, including up to three drawing dates. Organizations hosting occasional, low-key events often find this option the best fit.
Major Event Licenses
If your raffle involves larger prize pools and more complex operations, you'll need a major event license. These come with stricter oversight and higher fees due to the increased scale and potential risks. For instance, New York's Category 1A license addresses these larger events.
One-Time Event Permits
Designed for single raffles, one-time event permits provide a simpler alternative to annual licenses. In Michigan, these permits cost $50 per drawing date and allow unlimited prize amounts. They're perfect for organizations planning one-off fundraising events.
These categories set the stage for the next steps: applying for the appropriate license.
How To Start a Raffle
Here’s a step by step overview of starting a raffle:
Step 1. Define Your Goal
Decide why you’re running the raffle. It can be fundraising, community support, event promotion, and more. Set a clear fundraising target if it’s for a cause. This is important for the licensing process.
Step 2. Pick Prizes People Actually Want
Think gift cards, gadgets, weekend getaways—things people would spend money on. Set a ticket price that makes sense for your crowd—$2, $5, $10 are common options. Decide how many tickets you’ll print (500, 1,000, etc.), and consider bundle deals like “1 for $5 or 5 for $20.”
Step 3. Figure Out the Draw
Pick a date, time, and spot for the draw. Decide how the draw will happen, if digital, you need a random number generator. Consider making it public or streaming it to keep things transparent.
Design your tickets carefully. Each one should show the number, cause or event name, draw details, prize info, and a contact number or email.
If you're doing it online, double-check your payment options, and make sure everyone gets a ticket or receipt.
Step 4. Promote Your Raffle
Use whatever platforms you’ve got—social media, newsletters, posters—to build hype. Focus on the prizes and the deadline to push urgency. Once it’s over, let winners know directly. Post the results on your socials or website.
Application Errors to Avoid
Certain errors can slow down or even derail your application. Here’s what to watch out for:
Incomplete Prize Details
- Forgetting to list the maximum retail value of all prizes for a single raffle
- Not specifying the value of individual prizes
- Leaving out the maximum ticket prices
Timeline Issues
- Failing to state how long tickets will be sold
- Omitting the license validity period
Documentation Gaps
- Submitting outdated or incomplete documents
- Missing key organizational details
Since requirements can vary by city or county, it’s a good idea to consult a licensing specialist to ensure you meet all local rules.
Legal Compliance Rules
Running a licensed raffle requires strict adherence to regulations. These rules ensure every step of your raffle, from ticket sales to prize distribution, complies with the law. Following these guidelines is essential for a smooth and lawful operation.
Required Records
Even if standard forms aren't mandatory, keeping thorough records of your raffle activities is crucial. Key documents to maintain include:
Ticket Distribution Records
- Logs for individual ticket sales
- Records of discounted ticket sales
- Summaries of daily sales
- Documentation of prize distribution
Raffle Ticket Details
Each ticket must include the following:
- Organization's name
- Unique ticket number
- Ticket price
- Prize details
- License number and issuing authority
- Date, time, and location of the drawing
- A note on whether the winner must be present
- A disclaimer stating the ticket is not a charitable donation
For specialized raffles like fifty-fifty draws, additional tracking is required. North Dakota offers a good example with standardized forms such as the Fifty-Fifty Raffle Summary (SFN 61071) and Draw Number Allocation & Sales Reconciliation (SFN 61070).
Prize and Marketing Rules
Your raffle's promotions and prize distribution are also governed by specific regulations.
Marketing Guidelines
- Promotional materials must clearly state that no purchase is necessary to enter.
- Instructions for free entry must be easy to find and understand.
- Descriptions of prizes should be accurate and thorough.
- Non-cash prizes must reflect their regular retail value.
Prize Distribution Rules
- All prizes must be awarded at no extra cost to the winners.
- For prizes valued at $5,000 or higher, organizers must withhold 25% for taxes.
- Any conditions that could prevent prize distribution must be clearly disclosed.
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If you have any questions
If you have any questions
AML and KYC Requirements
Anti-money laundering (AML) and know-your-customer (KYC) compliance are increasingly critical in raffle operations.
AML Compliance Essentials
- Verify customer details thoroughly.
- Monitor transactions for any suspicious activity.
- Keep detailed transaction records.
- Report any suspicious activities, regardless of the amount involved.
KYC Verification Steps
- Confirm customer identity before allowing participation.
- Validate the source of funds.
- Develop risk profiles for customers.
- Continuously monitor accounts for irregularities.
Regular compliance training and independent AML audits are vital to maintaining effective programs. The EU has flagged money laundering risks in online gambling as a top-level threat (4), underscoring the need for strong compliance measures.
Top Licensing Locations
Choosing the right jurisdiction for a raffle gambling license is essential. Each location has its own regulatory environment and benefits, so understanding these options can help you decide based on your operational goals and budget.
Malta Licensing
Malta provides licenses that are recognized across the EU, offering a strong regulatory framework and access to over 70 double taxation treaties. Businesses also benefit from a skilled workforce and a tax system that effectively reduces corporate tax to 5% through a full imputation system.
Key costs include a non-refundable application fee of €5,000 and annual fees of €25,000. For operators focusing solely on Type 4 gaming services, the annual fee is reduced to €10,000.
Curacao Licensing
Curaçao stands out with its single license covering all gambling activities. It supports cryptocurrency operations, imposes no corporate tax on external revenue, and has a processing time of just 1–2 months. The annual fee is ANG 120,000 (approximately €61,200).
Other License Options
Other jurisdictions also cater to specific business needs, offering tailored advantages:
The Malta Gaming Authority (MGA) ensures high standards through stringent audits and reviews. When evaluating licensing locations, consider factors like your available capital, target markets, compliance needs, and long-term growth plans.
For newcomers, Curacao offers a straightforward and cost-effective entry point. Meanwhile, established operators might prefer Malta for its prestige and comprehensive regulatory framework, despite the higher costs. These options give operators the flexibility to align their licensing strategy with their business goals and market demands.
Operating Risks and Issues
Running a licensed raffle comes with its own set of challenges, particularly when it comes to compliance and operational success.
Money Management
Handling finances can be tricky. Here's a quick breakdown of the required withholdings based on prize value:
To reduce financial risks, consider these steps:
- Use dedicated accounts and reliable accounting systems.
- Secure surety bonds for high-value prizes.
- Keep detailed records of all transactions.
- Separate raffle funds from prize distributions in your accounting.
Staying on top of financial management is just one part of the equation. You also need to stay aligned with evolving legal requirements.
Following Regulations
Regulations differ depending on where you operate. For example:
- In California, nonprofits must allocate at least 90% of gross raffle receipts to charitable activities within the state.
- In Texas, offering cash prizes in raffles is not allowed.
Key compliance areas to focus on include:
- Documenting that at least 85% of the work is done by volunteers.
- Meeting state-specific registration rules.
- Keeping track of regulatory updates.
- Maintaining detailed records of prize distribution.
By adhering to these rules, you can avoid legal troubles and maintain operational integrity.
Public Trust
Beyond finances and compliance, trust is the foundation of a successful raffle. Transparency directly affects participation and your organization’s reputation. To build trust:
- Clearly communicate raffle terms and prize details.
- Ensure prizes are distributed fairly.
- Conduct independent audits of raffle results.
- Regularly inform stakeholders about compliance efforts and outcomes.
To avoid any perception of bias, consider barring board members and staff from participating in raffles. Additionally, keep thorough records of:
- Volunteer involvement.
- Ticket sales.
- Prize distribution processes.
- Compliance-related documentation.
- Financial transactions.
Strong trust and clear processes are essential for long-term success.
Conclusion
Key Takeaways
Running a raffle requires following strict rules and adhering to best practices. In most places, only nonprofit organizations and 501(c)(3) entities are allowed to conduct raffles. Licensing costs can vary, ranging from free to $600.
Here are some of the main compliance requirements:
To get started, make sure you fully understand your local regulations.
First Steps
Start by checking with your state’s business licensing department. Keep in mind that processing your application could take 4–6 weeks. If you're unsure about the process, we can help you with choosing right jurisdiction and with application process.
