Raffles can be an effective method of fundraising for your charity. However, there are strict laws surrounding which organizations can hold a raffle and what rules must be followed while conducting a raffle in Colorado.
Limitations and Rules
The first major limitation is that an eligible charity must be in existence for five years prior to applying for a raffle license. For example, the Colorado Nonprofit Legal Center was founded in April 2019, meaning we are ineligible for a raffle license until May 2024.
The second limitation is that only the raffle license holder may conduct raffles under the license. This means a new organization cannot “borrow” the raffle license of an established entity in order to conduct a raffle. This also means a charity cannot lend its license to volunteers who are conducting raffles for the benefit of the charity. The charity itself must run the raffle and exercise oversight.
In addition to the two limitations mentioned above, charities must abide by the following rules, among others:
- No alcohol can be used as prizes in a raffle
- Quarterly reports must be filed with the Secretary of State’s office
- If the aggregate value of all raffle prizes exceeds $1,000, the charity must print tickets with specific information, such as the date and time of the raffle
- A games manager must be identified and present for all raffles conducted under the license
Legally, a raffle is defined as (1) any person risking something of value, (2) for the chance, (3) to win a prize. If all three elements are present, the activity is a raffle and must conform to the laws mentioned above even if the activity is called something else by the charity (such as Opportunity Drawing). However, there are alternatives available to charities who might not be eligible for a license or who do not want to comply with the onerous state requirements.
First, the charity can use the prizes in a silent or live auction. Silent and live auctions do not need to be registered with the state and have few limitations.
Second, the charity can remove one of the three elements listed above. One way to do this is to remove payment for tickets and instead list a suggested donation. The charity does have to give tickets to anyone who asks even if they do not donate. However, because payment is not required, the activity does not fall within the legal definition of a raffle. A second method is to remove the chance. A popular example of this is wine pulls. In a wine pull, the charity has a set number of bottles of wine. The charity sells that exact number of tickets and then each ticket corresponds to a specific bottle. The bottles of wine are worth varying amounts. Since each participant is guaranteed a bottle of wine, there is no chance involved.
Did you know the Colorado Nonprofit Legal Center can assist with your raffle or other fundraising legal questions? Reach out today with any questions you have and to inquire about pricing.