May Rotary Clubs Hold Raffles?

The California state constitution and Penal Code provide a narrow exception to the prohibition against gambling in California. Certain tax-exempt groups such as charities may hold fundraising raffles.

Yes We Can!

Eligible organizations include organizations that have been exempted from state taxation by the Franchise Tax Board under Revenue and Taxation Code section 23701f (civic leagues, social welfare organizations, or local employee organizations). That’s us!

What is a Raffle?

A raffle is a type of lottery in which prizes are awarded to people who pay for a chance to win. Each person enters the game of chance by submitting a detachable coupon or stub from the paper ticket purchased.

Can We Just Call It An “Opportunity Drawing”?

If participants are required to purchase a ticket in order to have a chance to win a prize, it’s a raffle!

Opportunity Drawings are exempt from the raffle rules only if all 3 things are true:

  • General and indiscriminate distribution of the tickets.
  • Tickets are offered on the same terms and conditions as the tickets for which a donation is given.
  • No requirement for any of the participants to pay for a chance to win.

Raffle Rules

A raffle must be conducted under the supervision of a natural person age 18 or older. However, the law does not prohibit sale of the tickets by persons under the age of 18. At all times, Rotarians must supervise youth participants in accordance with the youth protection policies of Rotary International.

No gaming machines, devices, or apparatus such as a slot machines allowed.

A raffle also may not be operated or conducted over the Internet. However, the organization conducting the raffle may advertise the raffle on the Internet.

At least 90 percent of the gross receipts from raffle ticket sales must be used by the eligible tax-exempt organization to benefit or support beneficial purposes in California.

Example: An organization raised $100 in ticket sales. It would be required to spend $90 of that amount to further its charitable purposes, and only $10 could be used to help pay for expenses or operating costs associated with conducting the raffle.

What About 50/50 Raffles?

The 90/10 rule applies to 50/50 raffles, in which 50 percent of ticket-sale revenue is awarded as the prize and 50 percent of the revenue is retained by the organization conducting the raffle. 50/50 raffles are illegal because 90 percent of the gross ticket-sale revenue is not used for charitable purposes.

So What Can We Do?

The Revenue and Taxation Code specifically allows organizations to use funds from other sources to pay for the administration or other costs of conducting the raffle.

Your club may set aside, from other, pre-existing unrestricted club funds, the amount needed to make the raffle payout. Ninety percent of the proceeds received from the raffle itself should then be spent directly on your club’s future charitable projects.

Example 1. The Rotary Club holds an “opportunity drawing”. All tickets for the drawing are free, solicitations of voluntary donations to the club are in no way connected to distribution of the tickets, all tickets have the same opportunity to win and this is made clear to all participants.

Example 2. The Rotary Club holds a “cash bash”. First Prize is $1,000, Second Prize is $500, and Third Prize is $250.

  • The Club sets aside, from pre-existing, non-restricted club funds, $1,750 to pay the winners of the “cash bash”.
  • The club sells $5,000 worth of tickets. $4,500 (90%) is placed in a restricted account and is only spent on club charitable activities. (Note: you can’t spend it to start another raffle!)
  • $500 is kept in the club’s general fund.

Registering Club Raffles

Complete the raffle annual registration form (CT-NRP-1) and mail it to the California Attorney General Registry of Charitable Trusts with your $20 registration fee. Checks should be made payable to the Department of Justice.

You must receive written confirmation of your registration before conducting any raffle activities, including the sale of tickets.

  • Registrations are valid from September 1 to August 31 of the following year.
  • Registration applications are due by September 1.
  • If you miss the deadline, you must submit a registration application at least 60 days before the scheduled date for the raffle.

Registering Multiple Raffles

Registering multiple raffles to be conducted at the same event or registering the weekly raffle to be held at your club meeting can be done on a single application.

Although separate raffle “pots” at a single fundraising event are technically separate raffles for each prize, a Rotary Club may report all of its raffles for the “raffle season” on a single application. (California Code of Regulations, Title 11, Division 1, Chapter 4.6. Non-Profit Raffle Program Regulations, Section 215.)

To register multiple raffles on a single application, the Rotary Club should separately identify each raffle to be held between September 1 through August 31 of the following year. The club should complete a single application form. “If the organization plans to conduct more than one raffle during the annual registration period (September 1 through August 31), it must indicate on the application form each date that it plans to conduct a raffle; however, if any date changes, the organization is not required to amend its application.” The application must be mailed to the Attorney General and postmarked by September 1st. See the Regulations for details.

IRS Reporting of Raffle Winners

The form to report to the IRS is W-2G. It is required if both of the following are true

  1. The club pays a winner more than $600 in cash as the result of a raffle; AND
  2. The winnings are at least 300 times the amount of the wager, after subtracting the wager.

Example: $1 ticket, winnings are $300. $300 minus $1 = $299 = not reportable.
Compare: $1 ticket, winnings are $350. $350 minus $1 = $349 = reportable.

Beware discount ticket pricing such as $1 each, 20 for $15. In this case, the wager is 75 cents, not a dollar, when computing the reportable winnings.

More information about IRS reporting is here:

What’s The Downside? Can We Ignore These Rules?

NO! The law prohibiting unregistered raffles is Penal Code section 320.5, a criminal statute. Violations may be forwarded to the local district attorney, city attorney, or county counsel for investigation and possible prosecution. In addition, the Attorney General may take legal action under the provisions of the Nonprofit Corporation Law for breach of fiduciary duty or waste of charitable assets. Your club’s board of directors may be held personally responsible for violations of this law.



  • California Guide for Charities California Guide for Charities (1775 KB)
  • Raffle - IRS Form W2G Raffle - IRS Form W2G (85 KB)
  • Raffle - IRS Form W2G Instructions Raffle - IRS Form W2G Instructions (127 KB)
  • Raffle Application Raffle Application (671 KB)
  • Raffle Checklist Raffle Checklist (37 KB)
  • Raffle Report - NonProfit Raffle Report - NonProfit (758 KB)
  • Raffles - California Code of Regulations Raffles - California Code of Regulations (36 KB)

  • Actual resolution of legal issues depends upon many factors, including variations of facts and state laws. This website is not intended to provide legal advice on specific subjects, but rather to provide insight into general legal principles and issues. The reader should always consult with legal counsel before taking action on the matters herein.