All games of chance organized for charitable purposes are subject to the state’s gambling laws. There is an exception to the general constitutional prohibition against lotteries (which includes raffles). In California, certain “eligible organizations,” as defined by the Penal Code, may conduct raffles to raise funds for beneficial or charitable purposes if certain conditions are met. “Eligible organizations,” such as private, nonprofit organizations, must be tax-exempt and have been qualified to do business in California for at least a year prior to the raffle.

According to the Attorney General, the three elements of a lottery are: (1) a prize, (2) distributed by chance, and (3) something of value given for a chance to win. To comply with the Penal Code, at least 90% of the gross receipts from the raffle must go directly to beneficial or charitable purposes in California. Any person that receives compensation must be an employee of the eligible organization and not receive proceeds that should be dedicated to the charitable purposes. See Penal Code section 320.5(d). Use of the internet for raffle sales is prohibited, however, the organization’s website may announce the raffle. No gaming machine, apparatus or device, may be used in conducting the raffle. No entity may have or hold a financial interest in the raffle other than the organization conducting the raffle or any eligible organization which receives funds from the raffle. The raffle or selling of tickets may not be located within an operating racetrack enclosure, satellite wagering facility or gambling establishment.

An organization may not conduct a raffle unless it completes the annual “Application for Registration” form and files an annual “Nonprofit Raffle Report” with the Department of Justice. See Penal Code section 320.5(h)(6). Certain organizations are exempt from the registration requirements.