How to Run a Charity Raffle Online: Legal Requirements + Free Tools 2026
Charity raffles raise billions every year. They also generate thousands of regulatory fines — usually because well-meaning organizers didn't know the rules. This guide covers the legal requirements in the US, UK, and Canada, plus how to pick winners in a way that's transparent, documented, and dispute-proof.
Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Raffle laws vary by jurisdiction and change frequently. Always consult a lawyer familiar with charitable gaming laws in your specific location before running a raffle.
1. Raffle vs. Sweepstakes — The Legal Difference That Changes Everything
These two words get mixed up constantly, and the confusion creates legal exposure. In most jurisdictions, the distinction is:
Raffle
- • Requires purchase of ticket to enter
- • Winner chosen by random draw from paid entries
- • Regulated as "lottery" in most jurisdictions
- • Usually requires nonprofit status + licence
- • Proceeds must go to charitable purpose
Sweepstakes
- • Must have free alternative method of entry (AMOE)
- • No purchase necessary to win
- • Not regulated as lottery — can run commercially
- • Winner chosen randomly from all entries
- • Subject to different FTC/ASA rules
The critical element is "consideration" — if people have to pay or provide significant effort to enter, it's a lottery. If there's a free entry path, it's a sweepstakes. Most charity "raffles" are legally lotteries, which is why they require licences in most places.
Important: Running an unlicensed lottery (even for charity) is a criminal offence in the UK and a misdemeanor or felony in many US states. "We didn't know" is not a defence.
2. US State-by-State Requirements
There is no unified federal charity raffle law in the US. Each state regulates independently — and some states (Utah, Hawaii) ban charitable lotteries entirely. Here's a snapshot of major states:
| State | Licence | Key Rules |
|---|---|---|
| California | Required for prizes over $25,000 | Must register with AG's office, file financial report within 30 days |
| New York | Required — games of chance license | County clerk issues license, must be nonprofit 501(c) |
| Texas | Not required if under $50,000/year | Cannot charge admission fee, must be charitable organization |
| Florida | Required for prizes over $500 | DBPR license, must post results publicly |
| Washington | Required — charitable gaming license | Washington State Gambling Commission, strict financial reporting |
| Illinois | Required for prizes over $5,000 | Illinois Gaming Board, must have 35-member nonprofit |
| Pennsylvania | Required — small games of chance permit | Local municipality issues permit, 50% of proceeds to charity |
| Colorado | Required — bingo/raffle license | Secretary of State, gross receipts reporting required |
Federal layer: The Charity Games Advertising Clarification Act
Federal law generally prohibits operating lotteries, but the 1988 Charity Games Act provides an exception: states may authorize charitable lotteries without violating federal law. This means if your state authorizes it and you have a valid licence, you're covered federally. But the moment you sell tickets across state lines online, you may be triggering federal mail or wire fraud statutes. This is why most lawyers advise keeping ticket sales strictly within your licensed state.
States that prohibit charitable raffles entirely: Utah and Hawaii have historically banned most forms of charitable gambling. Alabama and Alaska have very limited exemptions. Always verify current law with a local attorney — these rules change with legislation.
3. UK Gambling Commission Rules
In the UK, lotteries are regulated under the Gambling Act 2005. The good news: there are several exempt categories that don't require a Gambling Commission licence, as long as you stay within the limits.
Small lotteries exemption
Prizes under £500, no rollover, tickets sold only at same event
Private society lotteries
Members only, no external ticket sales, all proceeds to good cause
Customer lotteries
On single premises only, no rollover, no profit
Registered lotteries
Non-commercial only, register with Gambling Commission, prizes up to £50 per ticket
Licensed lotteries
Full operator licence required, complex compliance, for large operations
For most charity events, the "small society lottery" category is the relevant one. If your charity has an annual turnover under £250,000, you can register with your local authority (not the Gambling Commission) and run lotteries with ticket prices up to £2 and prizes up to £25,000. Above those thresholds, you need a full Gambling Commission operating licence — a significantly more complex process.
UK requirement: At least 20% of proceeds from a registered lottery must go to the society's purposes. Maximum 80% can be used for prizes and expenses combined. Keep detailed accounts — HMRC and the Gambling Commission both have audit rights.
4. Canadian Provincial Licensing
Canada is similar to the US — lottery regulation is provincial, not federal. Each province has its own gaming authority. The Criminal Code of Canada makes lotteries illegal except where authorized by provincial licence.
Ontario
Alcohol and Gaming Commission
Licence required for prizes over $500, application fee based on prize value
British Columbia
Gaming Policy & Enforcement Branch
Must be registered charity, licence by prize tier
Quebec
Régie des alcools, des courses et des jeux
Strict requirements, French-language compliance mandatory
Alberta
Alberta Gaming, Liquor & Cannabis
Registered charity required, community licence for smaller events
Most provinces require: proof of charitable registration, a completed licence application, prize descriptions with fair market values, and a post-event financial report. Licence fees are typically a percentage of gross prize value. Processing times range from 2 weeks (Alberta) to 8+ weeks (Quebec) — plan well ahead.
5. The Problem With Online Ticket Sales Across Borders
This is where most charities run into serious trouble: they get a licence in their state or province, then put the ticket sales link on social media — and suddenly they have buyers from 40 different jurisdictions, none of which they're licensed in.
The core problem
A raffle licence authorizes you to sell tickets in a specific jurisdiction. When someone in a different state, province, or country buys a ticket online, you may be violating lottery laws in their jurisdiction — even though you followed the rules in yours. US federal courts have ruled that the Wire Act and mail fraud statutes can apply to interstate lottery ticket sales, even charitable ones.
Practical solutions:
- Restrict sales geographically — Use your ticket platform's geo-restriction settings to block purchases from outside your licensed jurisdiction.
- Add a declaration checkbox — Require buyers to confirm they're residents of the authorized jurisdiction before purchase.
- Consider a sweepstakes format instead — If you add a free alternative entry method (mail-in, online form without purchase), you convert the legal classification from lottery to sweepstakes, eliminating the licence requirement in most US states.
- In-person events — Selling tickets only at a physical event sidesteps the cross-border issue entirely, and often qualifies for simpler exemptions.
6. How to Pick Winners Transparently
The winner selection is the moment of highest legal and reputational risk. A random draw that looks rigged — or actually is rigged — can end your charity's credibility. Here's the process that protects you:
Shows no last-minute additions, builds trust
Real-time witness, timestamped record
Cryptographic randomness is auditable
Evidence for disputes and regulatory filing
Regulatory requirement in most jurisdictions
Audit defense, IRS/HMRC requirements
Why tool choice matters for credibility
Not all "random" is equal. JavaScript's Math.random() uses a pseudo-random algorithm that produces predictable sequences if you know the seed. A determined critic could theoretically claim the draw was manipulated.
Real Wheel Picker uses crypto.getRandomValues() — the Web Cryptography API, the same standard used by password managers and banking software. The W3C specification requires implementations to use "cryptographically secure pseudo-random number generators." That's a verifiable, auditable claim.
7. Documentation Checklist
Every regulatory body — IRS, HMRC, provincial gaming authorities — requires post-raffle reporting. Keep these documents for at least 3 years, 7 years if you're in the US and the IRS requires it for your tax exemption status.
Financial reporting requirements (US nonprofit)
If your organization files Form 990, gaming income is reported on Schedule G. Gross receipts from gaming over $15,000 trigger Part III of Schedule G. Paid gaming workers must receive W-2s if their winnings exceed $600 in a calendar year. If a winner's prize is over $600 and more than 300x the ticket price, your organization must withhold 24% federal tax and file Form W-2G.
8. Common Mistakes That Get Charities in Trouble
Calling it a raffle when it's a sweepstakes
Risk: Legal misclassification — raffle requires ticket purchase, sweepstakes must be free entry
Selling tickets across state lines online
Risk: Triggers federal lottery laws — potentially illegal without federal exception
Using Math.random() or basic shuffle
Risk: Not auditably random — open to accusations of manipulation
Skipping financial reporting
Risk: Loss of nonprofit status, regulatory fines, personal liability for organizers
No winner contact documentation
Risk: Unclaimed prizes create legal liability; must show attempts were made
Giving prizes to organizers or their families
Risk: Automatic disqualification, potential fraud charges
The short version
Get licensed before selling a single ticket. Restrict sales to your licensed jurisdiction. Use a verifiably random tool. Document everything. File your financial reports on time. Consult a lawyer if your prize value or expected gross receipts exceed $10,000 — the licence fee and legal consultation cost a fraction of what a regulatory investigation costs.
Ready to Run Your Charity Draw?
Once you have your licence sorted, use Real Wheel Picker to run a cryptographically fair, screen-recordable draw that satisfies regulatory transparency requirements.
Start the Free Raffle Wheel