Are raffles illegal? A state-by-state nonprofit guide

But here’s the thing, raffles can also get you into legal trouble if you’re not careful. In fact, in some states, they’re flat-out illegal.

We get it. Fundraising is hard enough without needing a law degree. That’s why we’re here. This guide will help you understand why raffles are sometimes considered gambling, what makes them illegal in certain states, and how your organization can stay compliant while still raising the funds you need.

At Harness, we work with nonprofits every day who want to grow their impact without crossing any legal lines. If you’re looking for smart, simple fundraising tools that keep your team focused on what matters, your mission, we’ve got your back. Let’s get into it.

What is a raffle and why is it considered a form of gambling?

A raffle is when someone buys a ticket for a chance to win a prize. Sounds simple, right? But here’s where things get tricky. Because there’s money involved and the winner is chosen by luck, a raffle is considered a game of chance. That means it falls into the same legal category as gambling.

Now, not all gambling is illegal, but it is heavily regulated. And even though your raffle might be for a great cause, the law doesn’t always make a distinction. If someone pays for a chance to win, and that chance is random, the rules change fast.

You might also hear about sweepstakes or contests and wonder how they’re different. The key difference? With a sweepstakes, no one has to pay to enter. And a contest is based on skill, not luck. A raffle has both: money and chance. That’s why it's so closely watched under the law.

Why are raffles illegal or restricted in many states?

At a basic level, raffles are illegal in some states because they check all the boxes of gambling. Someone pays money, the outcome is based on luck, and a prize is awarded. Even when the goal is raising funds for a good cause, the law still treats this as gambling first.

Each state in the United States gets to decide how gambling is handled. Some states allow raffles only for charitable purposes. Others allow them but place tight rules around ticket sales, prize values, or how often a raffle can happen. And a few states don’t allow raffles at all, no matter who is running them.

Lawmakers put these rules in place to prevent fraud and protect the public. Without clear rules and regulations, it’s easy for money to be mishandled or for people to feel misled about their chances to win a prize. That’s why states often require permits, licenses, and detailed reporting, especially when real money is involved.

So even if your nonprofit has good intentions, a raffle can still be illegal if it doesn’t follow state-level laws exactly. That’s why understanding the rules before selling tickets is so important.

Can nonprofit organizations legally sell raffle tickets?

Yes, but only if they follow the rules. In many states, nonprofit organizations are allowed to run raffles, but there are strict requirements about how they do it. These rules usually depend on what kind of nonprofit you are, how much money you're raising, and where you’re located.

Most of the time, you’ll need to be a registered 501(c)(3) or another type of exempt nonprofit to even qualify. Then, before you sell a single ticket, your state might ask you to apply for a raffle license or permit. Some states also limit how many raffles you can hold each year or how large the prizes can be.

Other rules cover how tickets are sold, for example, some states don’t allow online ticket sales at all. Others require you to report all your gross receipts (the total money brought in from the raffle) and show how the funds are used for charitable purposes.

The big takeaway? Just being a nonprofit doesn’t automatically make your raffle legal. You still need to check your state’s rules and take the right steps to stay in compliance.

How to legally run a raffle in your state

Running a legal raffle might feel overwhelming, but it’s really just a matter of following the right steps. If you're a nonprofit looking to raise funds, here's what the process usually looks like:

1. Check if your nonprofit is eligible.
   Most states require you to be a registered nonprofit, and some only allow certain types, like charities, schools, or religious groups, to hold raffles.
2. Understand your state’s rules.
   Raffle laws are different in every state. Some ask for a raffle license, others a games license, and a few states don’t allow raffles at all. Look for clear info on prize limits, who can buy tickets, and whether you can sell them online.
3. Apply for the proper permit.
   If your state requires it, you’ll need to fill out forms, pay a fee, and sometimes wait for approval. Some states can take weeks or even months to process a raffle permit, so plan ahead.
4. Track your raffle income.
   States often ask you to report gross receipts (all money raised from ticket sales) and show how those funds were used. Keeping good records is key.
5. Follow ticket sale rules.
   Some places only allow tickets to be sold in-person or to state residents. Others may ban sales to minors or restrict advertising. These details matter.

If all of this feels like a lot, you’re not alone. Many nonprofits miss a step just because the process wasn’t clear. That’s why it helps to work with tools and partners that understand the fine print, so you can focus on your mission, not paperwork.

State-level raffle laws: What varies and why it matters

Even though raffles happen all over the country, there’s no one-size-fits-all rule. Raffle laws are decided at the state level, which means what’s legal in one place could be illegal just across the border.

Some states, like California or Texas, allow raffles, but only for certain types of nonprofits, and only if you follow strict guidelines. Other states, like Hawaii or Utah, don’t allow charitable raffles at all. And then there are states that allow them, but limit how often you can hold one, how big your prizes can be, or even how you advertise.

Here are just a few things that can vary from state to state:

• Whether you need a license or permit
• Who can buy or sell tickets
• How ticket sales are reported
• Prize value limits
• Whether raffles can be held online

This is why checking your specific state’s rules is so important. A raffle that’s totally legal in one state could break the law in another. If your nonprofit operates in more than one state, or if supporters buy tickets from across state lines, you need to be even more careful.

Best practices for fundraising raffles

If you’ve made sure your raffle is legal in your state, the next step is to run it well. A good raffle does more than raise money, it builds trust, strengthens your donor relationships, and shows that your nonprofit is serious about doing things the right way.

Here are a few smart ways to make that happen:

• Be clear and transparent.
  Let your supporters know how ticket sales work, what the prizes are, and how the winner will be chosen. Clear communication builds trust.
• Keep good records.
  Track ticket sales, expenses, and prize values from the beginning. This makes reporting easier and protects your team if questions come up later.
• Avoid over-promising.
  Don’t make the raffle sound bigger than it is. Be honest about your goals and how the funds will be used for your nonprofit’s mission.
• Know your audience.
  Think about what kind of prizes would actually excite your donors. Sometimes it’s not about a big cash prize, it could be a local experience or something tied to your cause.
• Use tech to stay organized.
  Some platforms can help you run smooth campaigns, track results, and keep everything in one place. You’ll spend less time on admin and more time growing your impact.

Running a raffle isn’t just about selling tickets, it’s about doing it in a way that makes your nonprofit look professional, organized, and trustworthy.

Alternatives to raffles for raising funds

Raffles can be great, but they’re not the only way to raise money, especially when rules get complicated. If your state makes raffles hard to manage, or if you just want something simpler, there are other options that still bring in support and stay fully legal.

Here are a few good ones:

• Sweepstakes
  These are like raffles, but with one key difference: no purchase is required to enter. That small detail can make a huge legal difference. You can still offer prizes and raise money by asking for optional donations.
• Contests
  Unlike raffles, contests are based on skill. Maybe it's a photo challenge or a trivia quiz. Supporters compete for a prize, and the outcome isn’t random, so it’s not considered gambling.
• Peer-to-peer fundraising
  Let your supporters raise money for you by creating their own campaigns. It’s personal, it builds community, and it's 100% raffle-free.
• Monthly giving programs
  Recurring donations are one of the most stable ways to raise money. And with the right tools, it’s easy to show donors the ongoing impact they’re making.
• Text-to-give and online campaigns
  Simple and effective. No licenses, no prize rules, just clear ways for your community to support what you do.

At Harness, we help nonprofits build powerful campaigns using tools that are easy, flexible, and legally safe. So even if raffles aren’t the right fit, there’s always a smart way forward.

Raffles done right

Raffles can be an incredible way to raise money, but only if they’re handled with care. Every state plays by its own rules, and the line between fundraising and gambling gets crossed more easily than most nonprofits realize.

But here’s the good news: once you understand the legal side, you can run raffles, or other creative campaigns, with confidence. Whether you’re selling tickets, hosting a contest, or launching an online giving campaign, the key is to keep your mission at the center and follow the rules that protect your cause.

And you don’t have to figure it all out alone.