Texas nonprofit raffle laws: what’s legal and what’s not

Not every group can host a raffle, and not every prize is allowed. We’ve seen lots of nonprofits get tripped up by these details, especially when they're short on time or staff. That’s why it helps to get it right from the start.

We’ve been in your shoes. We know what it's like to juggle a hundred things at once while trying to make a real impact. So this guide breaks it all down in plain language,  what’s legal, what’s not, and how to hold a raffle that actually helps your mission instead of slowing you down with paperwork or penalties.

At Harness, we help nonprofits simplify fundraising,  including compliant, effective raffles that build stronger donor relationships. Ready to streamline your giving strategy?

 Understanding charitable raffles under Texas law

In Texas, raffles are generally illegal,  unless they meet very specific rules. The main law that makes nonprofit raffles possible is called the Charitable Raffle Enabling Act. This law creates a narrow exception that allows certain organizations to hold raffles without breaking gambling laws.

Under this law, a raffle is a game where people buy tickets for a chance to win a prize, and the money raised supports a charitable purpose. Sounds simple, but Texas takes this seriously. If a raffle doesn’t follow the rules in the Act, it’s treated as illegal gambling, even if the intent is good.

The law is clear about one thing: raffles are meant for charitable raffles only. That means individuals and for‑profit businesses are not allowed to run them. The organization conducting the raffle must qualify, follow strict prize rules, and use the funds the right way. There’s no gray area,  Texas law spells out what’s allowed and what’s not.

The good news? If your organization qualifies and follows the rules, raffles can be a legal and effective way to raise funds. The key is understanding where Texas draws the line before you sell a single ticket.

Eligibility: who can hold raffles in Texas?

Not every group can legally host a raffle in Texas,  and that’s where a lot of confusion starts. To be eligible, your organization must be a 501(c) tax-exempt nonprofit under the IRS code. That means you need to be officially recognized as a nonprofit,  not just operating like one.

Your nonprofit also needs to have been in existence for at least three years before holding a raffle. That rule is in place to prevent pop-up groups from taking advantage of the system.

There are a few more groups that qualify too. If you’re a volunteer fire department or a volunteer emergency medical service, you’re also allowed to hold a raffle under Texas law,  even if you don’t have 501(c) status. Those groups are considered essential to their communities, so they get an exception.

But here's the catch: individuals, for-profit businesses, and professional sports teams are not allowed to hold raffles, no matter how good the cause may seem. It doesn’t matter if you want to give the money away,  if you're not a qualifying organization, it’s illegal.

If you’re unsure whether your group qualifies, don’t guess. Make sure your tax status and legal documents are in order before you start planning.

Raffle frequency: how many raffles per calendar year?

Even if your organization qualifies, Texas puts a hard limit on how many raffles you can hold. Right now, state law only allows two raffles per calendar year. That’s it,  no exceptions, no extra permits.

This rule applies to each individual organization, not per campaign or event. So if your nonprofit runs different programs, departments, or chapters, you’ll need to coordinate so no one accidentally breaks the limit. We’ve seen well-meaning teams go over the line just by not talking to each other.

It’s also important to count your raffles carefully. Each drawing counts as one raffle, even if the tickets were sold over a long period or as part of a bigger fundraiser. Some organizations plan raffles around big annual events, while others use one mid-year and another at the end. The key is planning ahead and sticking to two.

If you need more flexibility, consider other types of fundraising between raffles. We’ve helped lots of nonprofits balance out their calendar with campaigns, text-to-give, and monthly donor drives that keep things moving without running into legal trouble.

Texas raffle ticket rules and required information

Texas has strict rules about what needs to be on every raffle ticket, and it’s not just about looking professional,  it’s about staying legal. Missing one detail could get your raffle flagged.

Here’s what must be printed on each ticket:

• The name of your organization
• The ticket price
• A general description of the prize or prizes
• The date the prize will be awarded
• A clear statement that the ticket buyer does not need to be present to win

That last one surprises a lot of people,  but in Texas, raffles aren’t allowed to require presence at the drawing. You can encourage it, sure, but you can’t make it a rule.

Now let’s talk about ticket sales. You can sell them in person, through direct mail, or even over the phone,  but you cannot sell raffle tickets online. Not through your website, not through email, not through payment apps like Venmo. It’s one of the most common mistakes we see, and it can shut down your entire raffle.

Finally, only members or volunteers of your organization can help sell tickets. You can’t hire a paid third party to run the raffle or push sales,  that’s another big no under Texas law.

Keep it simple, follow the rules, and your ticket sales can move forward without any headaches.

Permitted and prohibited raffle prizes in Texas

When it comes to raffle prizes, Texas law has some pretty specific rules. It’s not just about what people want to win,  it’s about what’s legal to give away.

First, let’s talk about what’s not allowed. You can’t offer cash prizes or anything that’s easily turned into cash, like coins, paper currency, or checks. Even gift cards can be tricky, depending on how they’re handled. If it feels like cash, Texas probably says no.

You also can’t raffle off alcohol, firearms, or anything else that comes with legal restrictions. And whatever you’re giving away, your organization must already have it in hand before the drawing. That means no promising a prize you haven’t bought yet or are hoping someone will donate last-minute.

As for limits,  the total value of all prizes awarded in one raffle can’t exceed $75,000. If you're giving away a residential dwelling (like a house), the cap jumps to $250,000, but that’s the only exception. For cars, trips, merchandise, or anything else, $75K is your limit.

So what can you give away? Think donated items, experiences, or in-kind goods that your nonprofit can legally hold and transfer. We’ve seen everything from handmade quilts to weekend getaways,  and those often connect more deeply with supporters than straight cash ever could.

How to stay compliant with Texas raffle laws

Running a legal raffle in Texas isn’t just about printing tickets and picking prizes. There are a few behind-the-scenes steps you need to follow to stay on the right side of the law,  and avoid serious penalties.

First, you don’t need a permit from the state, but depending on your prize or how your organization is set up, you might need to file a bond with the county clerk. This doesn’t apply to everyone, but it’s something to double-check, especially if your raffle gets big.

Next, keep your internal records tight. That means tracking ticket sales, prize distribution, and how the funds are used. Texas law doesn’t ask you to submit reports, but if there’s ever a complaint or audit, you’ll want that documentation ready.

Then there’s promotion. You’re allowed to advertise your raffle,  flyers, emails, social posts,  but be careful. You can’t make it sound like gambling, and you can’t sell or take payments online. If you’re boosting posts or running ads, make sure they’re clearly for a legal, nonprofit raffle.

The Texas Attorney General can investigate illegal raffles, and the penalties aren’t small. Organizations can be fined, and individuals involved could even face criminal charges.

Bottom line: keep your process clean, stay within the rules, and don’t cut corners. The risk just isn’t worth it.

Managing raffle proceeds responsibly

Once your raffle is over, your job’s not done. Texas law says that all money raised from a charitable raffle must be used for your organization’s charitable purpose,  and that’s not just a suggestion.

What does that mean in practice? The funds need to go directly toward supporting your mission. That could be program costs, equipment, outreach, or services tied to your nonprofit’s work. You can’t use raffle proceeds to pay staff bonuses, buy personal items, or cover unrelated expenses.

Good recordkeeping really matters here. Set up a separate way to track income and spending from your raffle,  even if it’s just a basic spreadsheet. If anyone ever questions how the money was used, you want to be able to show clear, simple answers.

You also need to think about taxes. While your nonprofit may be exempt from federal income tax, raffle winnings may still need to be reported by the winner,  and that can mean paperwork for you. Depending on the prize value, you might need to file IRS forms or withhold taxes.

We know it’s a lot, especially for small teams. But putting these pieces in place builds trust,  with your board, your donors, and your community.

Step-by-step checklist to run a legal Texas raffle

Planning a raffle doesn’t have to be overwhelming. Here’s a simple step-by-step list based on what’s worked for nonprofits like yours,  and what Texas law expects.

1. Confirm eligibility and tax status

Make sure your organization is a 501(c) nonprofit (or qualifies as a volunteer fire department or EMS). You’ll also need to show at least three years of operation.

2. Register internally and document your intent

You don’t need to file with the state, but it’s smart to keep internal records showing your board approved the raffle and understands the rules.

3. Design legal raffle tickets

Print all required info: your organization’s name, ticket price, prize description, drawing date, and the “need not be present to win” disclaimer.

4. Acquire, store, and promote qualified prizes

Make sure the prize is legal, doesn’t exceed value limits, and is already in your possession before you start the raffle.

5. Set raffle dates and publish rules

Choose drawing dates that work for your audience and clearly share how winners will be selected. Remember, only two raffles per calendar year.

6. Conduct drawing and award winners transparently

Use a fair process. Keep records of ticket sales, winners, and prize delivery.

7. Report and record use of funds

Track how the money is used, and make sure it aligns with your charitable mission. If you’re giving a high-value prize, be ready for tax forms.

This checklist might seem like a lot at first, but once you do it once or twice, it becomes part of your normal planning rhythm. And it’s worth it,  raffles done right can be a powerful way to fund your mission.

Legal raffles, real results

Raffles can be a simple, effective way to raise funds in Texas,  but only if they’re done by the book. As we’ve covered, your organization must be eligible, your prizes and ticketing need to meet strict rules, and you’re limited to two raffles per year. From how you promote the raffle to how you handle the money afterward, every step matters.

We’ve seen how easy it is for nonprofits to slip up without meaning to. But we’ve also seen how powerful a well-run, legal raffle can be,  bringing in funds, engaging donors, and building stronger community support.

At Harness, we help nonprofits take the stress out of fundraising by offering tools and expert support that make things like raffles easier to manage,  and easier to get right. Whether you’re planning your first raffle or improving your next one, we’re here to help you fund your mission with confidence.