California Raffle Laws 2026: Penal Code 320.5 Complete Guide for Nonprofits

California has some of the most detailed and restrictive raffle laws in the country. Governed primarily by Penal Code Sections 320.5 and 320.6, the state treats raffles as a narrow exception to its general ban on lotteries. This comprehensive guide covers every aspect of California raffle law, from eligible organizations and the 90% rule to Attorney General registration, online raffle restrictions, and the penalties for non-compliance.

Background: How Raffles Became Legal in California

California's constitution has historically treated lotteries as illegal. For decades, charitable raffles were technically unlawful under the same statutes that banned gambling operations. This changed in 2000, when the California Legislature enacted Penal Code Section 320.5, creating a specific exception that allows qualifying nonprofit organizations to hold raffles under strict conditions.

The law was designed to balance two competing interests: giving nonprofits a proven fundraising tool while preventing the kind of fraud and abuse that unregulated lotteries can invite. The result is one of the most carefully regulated raffle frameworks in the United States. If you are planning to organize a raffle in California, understanding this legal framework is essential before selling a single ticket.

California Penal Code Section 320.5: The Main Raffle Law

Penal Code 320.5 is the foundational statute for all charitable raffles in California. It sets out six critical components that every raffle organizer must understand:

1. Definition of a Raffle

Under 320.5(b), a "raffle" is defined as a scheme for the distribution of prizes by chance among persons who have paid money for paper tickets. Each ticket must provide an equal chance of winning. This is distinct from sweepstakes (no purchase necessary), auctions (highest bid wins), or door prizes (given to attendees regardless of payment).

2. The Eligible Organization Requirement

Only "eligible organizations" as defined in subdivision (c) can legally conduct a raffle. The requirements are specific and non-negotiable (see the detailed breakdown below).

3. The 90% Charitable-Use Mandate

At least 90% of the gross receipts from ticket sales must be used for beneficial or charitable purposes in the state of California. This is codified in subdivision (d) and is one of the strictest charitable-use thresholds in the country.

4. Ticket Sale Restrictions

Tickets cannot be sold over the internet, by mail, by telephone, or through any other means that allows purchase from outside California. All sales must occur in person and within the state.

5. Registration with the Attorney General

Before conducting any raffle, the organization must file an annual registration with the Attorney General's Registry of Charitable Trusts.

6. Financial Interest Prohibition

No person connected with the conduct of the raffle, including directors, officers, and employees of the organization, may have a direct financial interest in the raffle.

Penal Code Section 320.6: Repealed but Relevant

Section 320.6 originally provided additional detail on registration procedures and reporting. While some provisions have been consolidated into 320.5 through legislative amendments, you may still see references to 320.6 in older materials. The core requirements now live within 320.5 and the Attorney General's administrative rules.

Who Qualifies as an "Eligible Organization"?

California's definition of who can hold a raffle is narrow. Section 320.5(c) establishes four requirements that must all be met simultaneously:

Types of Organizations That Typically Qualify

• 501(c)(3) charities -- hospitals, food banks, homeless shelters, arts organizations
• Religious organizations -- churches, synagogues, mosques (if registered with AG or exempt)
• Educational institutions -- school foundations, PTAs/PTOs (with proper nonprofit status)
• Veterans organizations -- VFW posts, American Legion chapters (with 501(c)(3) or (c)(19) status)
• Community service organizations -- Rotary clubs, Lions clubs, Kiwanis (with qualifying tax-exempt status)

Organizations That CANNOT Hold Raffles in California

The following are explicitly ineligible, regardless of their charitable intentions:

• For-profit businesses -- Even if hosting a "charity event," a for-profit company cannot be the raffle operator
• Individuals -- Private citizens cannot hold raffles, even for personal fundraising
• Political organizations -- Political parties, PACs, campaign committees, and 501(c)(4) advocacy groups focused on political activity
• Government entities -- Cities, counties, state agencies, and public schools (unless they have an independent nonprofit foundation)
• Newly formed nonprofits -- Organizations that have not yet completed their first full year of operation in California
• Out-of-state nonprofits -- Organizations not registered to do business in California, even if they have 501(c)(3) status in another state

The 90% Rule: California's Charitable-Use Requirement

The 90% rule is one of the most important -- and most frequently misunderstood -- provisions in California raffle law. Here is exactly what it means and how it works.

What Counts as "Gross Receipts"?

Gross receipts means the total money collected from ticket sales before any deductions. If you sell 500 tickets at $20 each, your gross receipts are $10,000.

What Counts Toward the 10% Expense Cap?

All expenses directly related to the raffle must fit within the 10% limit, including:

• Cost of prizes (purchase price or fair market value of donated prizes does not count, only purchased prizes)
• Printing and production of raffle tickets
• Advertising and promotion costs for the raffle
• Administrative costs (bookkeeping, reporting)
• Venue costs specifically for the raffle drawing
• Any fees paid to third-party service providers

Practical Example of the 90% Rule

Line Item	Amount
Gross ticket sales (1,000 tickets x $50)	$50,000
Maximum allowed for expenses (10%)	$5,000
Minimum to charitable purposes (90%)	$45,000
Your total prizes + printing + admin + all other raffle costs must stay at or below $5,000

Strategies for Meeting the 90% Threshold

1. Solicit donated prizes: Since you are not purchasing them, donated prizes reduce your expense burden significantly
2. Keep ticket production simple: Basic numbered tickets are inexpensive and fully compliant
3. Use volunteers: Do not hire paid staff to sell tickets or manage the raffle
4. Bundle the drawing with an existing event: If you are already holding a gala or dinner, conducting the drawing there avoids separate venue costs

Registration with the California Attorney General

Every eligible organization must register with the Attorney General before conducting a raffle. Holding a raffle without current registration is a violation of law, even if your organization meets all other eligibility requirements.

Step-by-Step Registration Process

Step 1: Verify Your Eligibility

Before filing, confirm that your organization meets all four eligibility requirements described above. You will need:

• Your IRS determination letter confirming 501(c)(3) status
• Proof of current registration with the Registry of Charitable Trusts
• Documentation that your organization has been operating in California for at least one year

Step 2: Complete Form CT-NRP-1

File Form CT-NRP-1 (Nonprofit Raffle Registration) with the California Attorney General's Registry of Charitable Trusts. The form requires:

• Organization's legal name and any DBA (doing business as) names
• Mailing address and physical address
• Federal Employer Identification Number (FEIN)
• California Secretary of State entity number
• Registry of Charitable Trusts registration number (CT number)
• Type of tax-exempt status (501(c)(3), (c)(4), etc.)
• Names, titles, and addresses of all officers and directors
• A description of the charitable purposes that raffle proceeds will support
• Estimated number of raffles planned during the registration period

Step 3: Pay the $20 Annual Fee

The registration fee is $20 per year. Payment must accompany the form. The fee is non-refundable, even if you do not ultimately hold a raffle.

Step 4: Registration Period

The raffle registration period runs from September 1 through August 31 of the following year. You must re-register each year you plan to conduct raffles. There is no multi-year registration option.

Step 5: Wait for Confirmation

The Attorney General's office will process your registration and issue a confirmation. Do not hold a raffle until you have received confirmation of your registration. Processing times vary, so file well in advance of your planned raffle date.

Maintaining Good Standing

Registration alone is not enough. Your organization must also maintain:

• Current registration with the Registry of Charitable Trusts (separate from raffle registration)
• Filed all required annual reports: RRF-1, IRS Form 990 (or 990-EZ/990-N)
• No pending enforcement actions or violations from the Attorney General
• Active corporate status with the California Secretary of State
• Current tax-exempt status with both the IRS and the California Franchise Tax Board

Online Raffle Rules in California: What You Need to Know

This is the section that trips up the most organizations. California's rules on online raffles are unambiguous and strictly enforced.

Why California Bans Online Raffle Ticket Sales

The prohibition exists for several reasons rooted in the legislative intent of the law:

• Interstate commerce concerns: Online sales would make it impossible to verify that tickets are only sold within California
• Identity verification: In-person sales allow the organization to verify the buyer's identity and age
• Federal wire fraud prevention: Online sales across state lines could implicate federal gambling and wire fraud statutes
• Consumer protection: In-person transactions reduce the risk of ticket fraud and misrepresentation

What IS Allowed Online?

While you cannot sell tickets online, you can use digital tools for other aspects of your raffle:

• Advertising: You can promote your raffle on your website and social media, as long as you do not accept ticket purchases through those channels
• Winner notification: You can email or call winners after the drawing
• Drawing management: You can use raffle software to conduct the actual drawing, manage ticket numbers, and display results -- as long as ticket sales happened in person
• Record keeping: Digital systems for tracking sales, expenses, and reporting are not only allowed but encouraged

For a broader look at how online raffle rules differ from state to state, see our complete state-by-state raffle laws guide.

Prize Value Limits and Restrictions

Unlike some states that cap raffle prizes at specific dollar amounts, California does not impose a statutory limit on prize values. However, prize selection is still subject to important constraints.

No Dollar Cap on Prizes

You can offer prizes of any value -- a $50 gift card, a $5,000 vacation package, or a $50,000 automobile. The law does not set a maximum. That said, the 90% rule effectively constrains your prize budget. If prizes are purchased (not donated), their cost counts toward the 10% expense limit.

Prize Restrictions

• Legal items only: Prizes must be legal to own and transfer in California
• No cash prizes from ticket revenue: While not explicitly banned, cash prizes drawn from ticket revenue would reduce the charitable-use percentage and make the 90% threshold harder to meet
• Donated prizes are preferred: When prizes are donated, the cost is zero against your 10% expense cap, making it far easier to comply with the 90% rule
• Firearms: If offering a firearm as a prize, the winner must complete all standard California background checks and transfer requirements. The organization should work with a licensed dealer (FFL) for the transfer

Tax Implications of Prizes

Prize winners have tax obligations, and the organization has reporting duties:

Prize Value	Organization's Obligation
$600 or more (and at least 300x the wager)	Report to IRS on Form W-2G; collect winner's name, address, SSN
$5,000 or more	Withhold 24% federal income tax; withhold California state income tax (typically 7%)
Any value	Provide written notice to winners that prize value is taxable income

Raffle Ticket Requirements in California

California law specifies what information must appear on every raffle ticket. Using non-compliant tickets can void your raffle and expose your organization to penalties. For help designing tickets, see our raffle ticket templates guide.

Required Information on Every Ticket

Each raffle ticket must display all of the following:

• Name of the organization conducting the raffle
• Address of the organization
• Ticket price -- must be the same for every ticket (no discounts, bundles, or "buy 5 get 1 free" offers)
• Date of the drawing
• Time of the drawing
• Location of the drawing
• Description of prizes to be awarded
• "Need not be present to win" -- this statement is required by law

Ticket Pricing Rules

• Every ticket must cost the same amount
• You cannot offer discounted bundles (e.g., "3 tickets for $10" when individual tickets are $5)
• You cannot give away free tickets
• You cannot offer tickets as incentives for donations above a certain amount
• Each ticket must represent an equal chance of winning

Two-Part Ticket System

While not explicitly required by statute, best practice is to use a two-part ticket (stub and entry). The buyer keeps one portion as their receipt, and the other portion goes into the drawing container. This creates a verifiable record of the sale and makes it easier to comply with record-keeping requirements.

Conducting the Drawing

The drawing itself must comply with specific procedural requirements designed to ensure fairness and transparency.

Drawing Rules

• Public drawing: The drawing must be open to the public at the date, time, and location specified on the tickets
• Predetermined date/time/location: You cannot change the drawing details after tickets have been sold without notifying all ticket holders
• Impartial selection: The method of selecting winners must be random and verifiable. Physical drawing from a container, random number generators, and professional raffle software all qualify
• Winners need not be present: You cannot require attendance to claim a prize. The "need not be present to win" requirement protects buyers who cannot attend
• Results documentation: Record the name and contact information of each winner, the prize awarded, and the date/time of selection

Reporting Requirements and Annual Financial Reports

California requires detailed post-raffle reporting. Failure to file required reports can result in loss of raffle privileges and enforcement action by the Attorney General.

Form CT-NRP-2: Nonprofit Raffle Report

After each raffle (or at the end of the registration period for organizations that hold multiple raffles), you must file Form CT-NRP-2 with the Attorney General. This form requires:

• Total number of tickets sold
• Gross receipts from ticket sales
• Itemized list of all expenses (prizes, printing, administration, etc.)
• Total amount directed to charitable purposes
• Percentage of gross receipts used for charity (must be 90% or higher)
• Description of the charitable purposes funded
• Names and addresses of all prize winners
• Description and value of all prizes awarded

Record-Keeping Requirements (Keep for 4 Years)

California requires organizations to maintain comprehensive raffle records for at least four years. These records must be available for inspection by the Attorney General at any time. Required records include:

• Complete list of ticket purchasers with full contact information
• Number of tickets sold to each person
• Total gross receipts broken down by raffle event
• Itemized expenses with supporting documentation (receipts, invoices)
• List of all prizes, their fair market values, and whether they were purchased or donated
• Names, addresses, and contact information for all winners
• Documentation of prize delivery to each winner
• Copies of all raffle tickets (or ticket number ranges) printed
• Copies of any advertising or promotional materials
• Meeting minutes or board resolutions authorizing the raffle

Additional Reporting Obligations

• IRS Form 990: Report raffle income as part of your annual informational return. Raffle revenue typically goes on Schedule G (Supplemental Information Regarding Fundraising or Gaming Activities) if your organization raises more than $15,000 from gaming
• California RRF-1: Include raffle activity in your annual Registration Renewal Fee Report to the Registry of Charitable Trusts
• IRS Form W-2G: Issue to any winner who receives a prize of $600 or more (where the payout is at least 300 times the wager)
• IRS Form 945: Report any federal tax withholding on prize winnings (for prizes over $5,000)
• California Form 592: Report California state tax withholding on prizes

Common Violations and Penalties

The California Attorney General's office actively monitors raffle compliance. Understanding common violations can help your organization avoid costly mistakes.

Most Common Violations

Violation	Why It Happens
Selling tickets online or via social media	Organizations assume online sales are acceptable because they are common in other states
Accepting credit card payments for tickets	Convenience for buyers, but prohibited under the statute
Conducting a raffle without current AG registration	Forgot to renew, or assumed registration from a prior year still applies
Spending more than 10% on expenses	Purchased prizes consumed too much of the budget
Selling tickets outside California	Members or supporters in other states want to participate
Board members buying tickets or winning prizes	Board members see no harm in participating, unaware of the financial-interest prohibition
Offering ticket bundles or discounts	"Buy 5 get 1 free" promotions are common in other states but violate California's equal-chance requirement
Failing to file Form CT-NRP-2 after the raffle	Organization treats the post-raffle report as optional
Raffle conducted by an ineligible entity	A for-profit sponsor or government agency runs the raffle instead of the qualifying nonprofit

Penalties for Violations

California treats raffle violations seriously. Under Penal Code Section 320, conducting an unauthorized raffle (or violating the conditions of Section 320.5) is a misdemeanor. Consequences can include:

• Criminal charges: Misdemeanor prosecution with potential fines and up to one year in county jail
• Civil penalties: The Attorney General can seek civil fines and restitution
• Loss of raffle registration: Revocation of current registration and potential ban from future raffles
• Loss of tax-exempt status: The IRS or California Franchise Tax Board may revoke the organization's tax exemption if raffle violations suggest misuse of charitable funds
• Personal liability: Individual directors, officers, and employees who participated in the violation can be held personally liable
• Reputational damage: Enforcement actions are public record and can undermine donor confidence

Special Situations and Edge Cases

Reverse Raffles in California

A reverse raffle -- where the last ticket remaining wins the grand prize -- is a popular fundraising format. California law does not specifically address reverse raffles by name, but they are generally considered to fall under the same Penal Code 320.5 requirements as standard raffles, since participants pay for tickets and winners are selected by chance. All the same rules apply: in-person ticket sales only, 90% rule, AG registration, and so on.

50/50 Raffles in California

A 50/50 raffle -- where the winner receives half the ticket revenue -- presents a significant compliance problem in California. Because 50% of gross receipts would go to the winner as a prize and 50% to the organization, you cannot meet the 90% charitable-use requirement. Traditional 50/50 raffles are therefore not feasible under California law unless the prize portion comes from a separate source (not ticket revenue) or the split is modified to stay within the 90/10 framework.

Opportunity Drawings and "Duck Races"

Some organizations try to call their raffles "opportunity drawings" or "duck races" to avoid the raffle statute. California law looks at the substance of the activity, not the label. If participants pay money for a chance to win a prize, it is a raffle regardless of what you call it, and all Penal Code 320.5 requirements apply.

Silent Auction vs. Raffle

A silent auction is not a raffle because the winner is determined by the highest bid, not by chance. Silent auctions are generally not subject to Penal Code 320.5. However, if you combine a raffle element with an auction (such as a "mystery box" where bidders do not know what they are getting), you may inadvertently create a hybrid that triggers raffle law requirements.

Multi-Organization Raffles

If multiple nonprofits want to collaborate on a raffle, one eligible organization must serve as the primary operator and take full responsibility for compliance. The raffle registration must be in that organization's name. Revenue-sharing arrangements between organizations are permissible, but the 90% rule still applies to the total gross receipts.

Complete California Raffle Compliance Checklist

Best Practices for Running a Successful California Raffle

1. Start planning 3-4 months in advance: Allow time for AG registration, ticket design, prize solicitation, and volunteer training
2. Get legal review: Have an attorney familiar with California nonprofit law review your procedures before your first raffle
3. Train every volunteer: Anyone selling tickets must understand the rules: no online sales, no credit cards, no discounts, no out-of-state sales
4. Document everything in real time: Do not rely on memory. Use numbered tickets, written receipts, and digital tracking from the start
5. Prioritize donated prizes: This is the single most effective way to keep expenses within the 10% cap and maximize the charitable-use percentage
6. Use technology for the drawing: Software-based drawings are transparent, verifiable, and create automatic documentation for your compliance records
7. Communicate the rules publicly: Post the rules of your raffle visibly at the point of sale and on your website
8. Set a prize claim deadline: Give winners a reasonable window (30-60 days) to claim prizes, with unclaimed prizes reverting to the charitable fund
9. Plan for tax obligations: Budget for the administrative cost of issuing W-2G forms and handling withholding for high-value prizes
10. File your post-raffle report promptly: Do not let the 30-day CT-NRP-2 deadline pass. Late or missing reports can trigger AG scrutiny

Make Your California Raffle a Success

California's raffle laws are among the most restrictive in the country, but they exist to protect both charitable organizations and the public. The restrictions may feel burdensome, but they also create trust: when donors buy a raffle ticket from a registered California nonprofit, they know that 90 cents of every dollar is going to a genuine charitable purpose.

By understanding Penal Code 320.5, registering with the Attorney General, keeping meticulous records, and staying within the 90/10 framework, your nonprofit can run successful raffles that raise significant funds -- without risking the legal and reputational consequences of non-compliance.

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 getting it wrong.