A raffle is a type of lottery where prizes are awarded to individuals who enter to win something of value. This is a game of chance in which a coupon or a stub is purchased. At least 90 percent of the gross receipts from raffle ticket sales must be used by eligible tax-exempt organization to benefit or support beneficial purposes in California. Under Penal Code section 320.5, groups are prohibited from awarding raffle prizes through the use of a gaming machine such as a slot machine. Further, although a raffle may be advertised on the Internet, a raffle cannot be conducted over the Internet.

You may only conduct a raffle to raise funds for your charitable organization if you have been approved for tax-exempt status in California for at least one year before operating the raffle. Such eligible organizations include charities and religious or other organizations that have been exempted from state taxation by the Franchise Tax Board.

For further information on business formations and more please contact the Affordable Tustin Business Lawyers at Yanez & Associates at 714-665-8322. We offer a free initial consultation of 60-minutes. Call today to schedule a consultation with a lawyer at our firm.