California Raffle Laws: Complete Legal Guide for Nonprofits
California has specific regulations governing charitable raffles. This comprehensive guide covers everything nonprofits need to know about running legal raffles in the Golden State, including registration requirements, restrictions, and compliance steps.
⚠️ Legal Disclaimer: This guide provides general information about California raffle laws as of 2025. Laws change frequently. Always consult with legal counsel or the California Attorney General's office for current requirements specific to your situation.
California Raffle Laws: Quick Facts
Who Can Hold Raffles:
Only qualified 501(c)(3) nonprofits
Registration Required:
Yes, annual registration with CA DOJ
Registration Fee:
$20 per year
Minimum Existence:
Must be registered in CA for 1+ year
Online Sales:
Prohibited
Out-of-State Sales:
Prohibited
Prize Limits:
None specified
90% Rule:
90% of gross receipts must benefit charity
Who Can Conduct Raffles in California?
California Penal Code Section 320.5 strictly limits who can legally conduct raffles:
Eligible Organizations Must:
Be qualified to do business in California for at least one year
Have 501(c)(3) tax-exempt status from the IRS
Be registered with the California Attorney General's Registry of Charitable Trusts
Use raffle proceeds for charitable or beneficial purposes in California
Ineligible Organizations
The following CANNOT conduct raffles in California:
For-profit businesses
Individuals
Political organizations
Government entities
Newly formed nonprofits (less than 1 year)
Registration Requirements
Before conducting any raffle, eligible organizations must:
1. Register Annually
File registration with California Department of Justice (DOJ)
Pay $20 annual registration fee
Registration valid from September 1 to August 31
Must register each year you plan to conduct raffles
2. Submit Required Information
Organization name and address
Federal tax ID number
Purpose of organization
Names of directors/officers
Intended use of raffle proceeds
3. Maintain Good Standing
Current registration with Registry of Charitable Trusts
Filed all required reports (RRF-1, IRS Form 990)
No outstanding violations
Key Restrictions and Requirements
The 90% Rule
At least 90% of gross raffle receipts must go directly to beneficial or charitable purposes in California. Only 10% can be used for raffle expenses.
Prohibited Activities
No Internet Sales: Tickets cannot be sold online
No Out-of-State Sales: Cannot sell tickets outside California
No Credit Cards: Cannot accept credit card payments for tickets
No Discounts: Cannot offer free or discounted tickets
No Interest in Result: Directors/officers cannot participate
Allowed Activities
Sell tickets in person at events
Accept cash or checks
Conduct multiple raffles per year
Offer any legal prize (no value limits)
Use volunteers to sell tickets
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Conducting Your Raffle: Step-by-Step
California Raffle Compliance Checklist
Verify 501(c)(3) status is current
Confirm registration with CA Attorney General
Complete annual raffle registration ($20 fee)
Design tickets with required information
Set up cash/check only payment system
Train volunteers on legal requirements
Plan in-person sales locations only
Prepare to track all sales meticulously
Schedule public drawing
Calculate 90% charitable distribution
Prepare required reporting documents
Required Ticket Information
Each raffle ticket must display:
Name of the organization
Address of the organization
Ticket price
Date, time, and location of drawing
Prizes to be awarded
Statement: "Need not be present to win"
Drawing Requirements
Must be held at predetermined date/time/location
Must be open to the public
Winners need not be present
Must use impartial selection method
Results must be documented
Record Keeping and Reporting
California requires detailed record keeping for all raffles:
Required Records (Keep for 3 Years)
Complete list of ticket purchasers with contact information
Number of tickets sold to each person
Total gross receipts
Itemized list of all expenses
List of all prizes and their values
Names and addresses of all winners
Documentation of prize distribution
Reporting Requirements
Report raffle income on IRS Form 990
Report to California on RRF-1 annual report
May need to issue 1099 forms for prizes over $600
File state income tax withholding for prizes over $5,000
Common Violations and Penalties
Warning: Violations of California raffle laws can result in criminal charges, fines, and loss of nonprofit status.
Common Violations
Selling tickets online or via social media
Accepting credit card payments
Failing to register before conducting raffle
Using more than 10% for expenses
Selling tickets out of state
Allowing board members to participate
Potential Penalties
Misdemeanor criminal charges
Fines and penalties
Loss of tax-exempt status
Personal liability for directors/officers
Prohibition from future raffles
Best Practices for California Raffles
Start Early: Begin planning 3-4 months in advance
Get Legal Review: Have an attorney review your procedures
Train Volunteers: Ensure everyone knows the rules
Document Everything: Keep meticulous records
Use Technology Wisely: Use rafflr for drawing and display, but sell tickets in person
Communicate Clearly: Make all rules and restrictions public
While California's raffle laws are restrictive, they're designed to protect both charities and donors. By following these guidelines and maintaining proper documentation, your nonprofit can run successful, compliant raffles that raise significant funds for your cause.
Remember: When in doubt, consult with legal counsel familiar with California nonprofit law. The investment in proper legal guidance is minimal compared to the potential penalties for non-compliance.
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