Online Charitable Raffles - Raising Money for your Non-Profit with Games of Chance Online

Our firm recently received an inquiry recently regarding the feasibility of operating an online charitable raffle in Pennsylvania. The goal would be to offer raffle tickets for sale online, and offer it nationwide if possible.

This proves impossible for a number of reasons.

Each state has its own applicable laws regarding games of chance as it might apply to charitable purposes. One must of course comply with each state’s laws, which would require researching all fifty states. Some states, such as Utah, do not allow raffles at all, even for charity. This aspect along makes nationwide compliance a daunting task. Pennsylvania law requires the raffle drawing take place at a designated and approved location, meaning the drawing could not be held in any other state. (§ 901.703)  That is likely to be a common requirement among the states, meaning no out-of-state raffles are permissible.

So, what if this online raffle were to be restricted to within PA state borders? There are a number of provisions which make this proposition infeasible.

·         Pennsylvania law leaves the decision of whether to allow on small games of chance up to the counties. If the county permits small games of chance, tickets can be sold in those other counties. However, for counties that do not permit it, no tickets can be sold there, even if the raffle takes place in another county. This further limits the geographical scope. (§ 901.701c(c))

·         PA law has specific requirements for raffle tickets, but most basically there must be physical tickets. A physical ticket must be sold, with one part remaining for the raffle and the other going to the buyer. This can be problematic for internet sales, as physical tickets would still somehow have to be exchanged. Perhaps there could be a novel workaround, but it would be risky. (§ 901.743)

·         “Advertising” raffles is generally not permitted, so questions as to how it would be promoted online are many.

·         Perhaps most significantly, raffle tickets can only be sold for cash. Checks are permitted, but credit cards specifically are not. The state does not want to encourage gambling on credit, even for charitable purposes. This makes online sales nearly impossible, as paying with a method other than credit cards is very difficult online.

All told, an online raffle does not appear to be feasible in Pennsylvania. The incentive to conduct online raffles would of course be to raise the potential market and number of tickets sold, but even then, there are limits to what can be raffled in PA. For a raffle with a prize value of over $5,000, a special license needs to be obtained. Even then, the prize value limit is $100,000, and no more than two such special raffles are permitted per year for most organizations. So, there is a ceiling as to the potential benefit regardless.

For online raffles to be possible, it would likely require a change in the law. Charitable raffles, while often fun, effective and for a good cause, are still a form of gambling. States have liberalized gambling in places, but online gambling remains largely banned. Doing so for charitable purposes is no different. The state is in no hurry encourage more gambling, even for charity. So, don’t expect to be playing your local Church’s Friday night bingo from your iPhone any time soon.