Requirements to Have a Raffle in Pennsylvania

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Most of us have, at some point or another, bought a raffle ticket without having any idea of the prizes offered. That's because these raffles are often used by schools and churches as a way of raising funds for their programs.

Raffles may seem like an innocuous way to raise money, but some states consider them a form of gambling. Pennsylvania is one of those states. Although it does not completely outlaw raffles in the state, it does limit the types of organizations that can hold raffles and where money raised from a raffle can be used.

Anyone considering fundraising by holding a raffle in Pennsylvania needs to become familiar with the fairly complex laws involving licensing, registration, record-keeping, operations and reporting requirements. That's the only way to be sure to stay on the good side of the law.

Small Games of Chance in Pennsylvania

Raffles in Pennsylvania are considered "small games of chance." This is the classification given to all games that require a fee to enter and offer the possibility of winning a prize by random selection.

All such games of chance are regulated by the terms of Chapter 901 of the Pennsylvania Codes, enacted in the Local Option Small Games of Chance Act of 1988 Act. The law is quite extensive and includes registration, operating and reporting requirements.

Raffles as Small Games of Chance

Pennsylvania statutes define a raffle as "a game in which a participant buys a ticket for a chance at a prize with the winner determined by a random drawing of corresponding ticket stubs to take place at a location and date or dates printed upon each ticket."

The code makes clear that lotteries are included in the term. However, it also lists other games that are not. These include:

  • Roulette wheels.
  • Cards.
  • Dice and other table games.
  • Other forms of gambling not specifically authorized by law.

Only Nonprofit Organizations Are Eligible for License Issuance

An individual cannot hold a raffle; only organizations can do so. And, in Pennsylvania, only those organizations that meet state eligibility requirements and obtain a license are eligible.

What does this mean? It means that to hold a raffle, a business entity must be a nonprofit and a charitable organization, religious organization, fraternal organization, veterans organization, club, or civic and service association.

Types of Entities Eligible for Raffles

Note that these terms are addressed in the definitions section of the law. For example:

  • Not-for-profit:‌ Group or body of persons that was created and exists for the purpose of performing a humane service; promoting welfare of the aged, poor, infirm or distressed; combating juvenile delinquency; or advancing the spiritual, mental, social and physical improvement of young men and women. The term includes the YMCA and YWCA.
  • Fraternal organization:‌ Raffle must be carried on for the mutual benefit of its members; have a limited membership and a representative form of government; and be a branch, lodge or chapter of a national or state organization.
  • Religious organization:‌ Created for the predominant purpose of conducting religious activities or religious education without pecuniary benefit to an officers or members other than for actual services rendered to the organization.

In addition to these mandatory requirements, the organization cannot be a Johnny-come-lately. It must have been in existence and operating for one full year before applying for a license to hold a raffle in Pennsylvania.

Becoming a Licensed Eligible Organization

If an organization fits into one of the eligible categories, it has the legal right to apply for, and obtain, a small games of chance license from a licensing authority. The agency should be in the county where the organization is located. It is mandatory to obtain the license before purchasing games of chance for use in this Commonwealth.

Obtaining a license for a raffle in Pennsylvania involves filling out a license application and submitting it to the appropriate County Treasurer's office. There is a filing fee for doing this. The organization must also present copies of its bylaws or other governing documents to establish eligibility.

Game Supplier Must Also be Licensed

It is not only the organization holding the raffle that needs government approval in Pennsylvania. The person or company selling or furnishing games of chance to licensed distributors must be registered with the Department of Revenue and possess a manufacturer’s registration certificate.

They may not sell a game of chance to a licensed distributor until the Department has approved it.

Limitations on Raffle Details

Pennsylvania's state laws, as well as county ordinances, can limit the details of a raffle. They restrict where a raffle can be held, the value of the prizes to be given out, and how the money gained from the raffle can be used.

To begin, every raffle in Pennsylvania must be held on licensed premises. This is most frequently the organization's principle office. For those organizations without a principal office, an alternative location can be chosen, but the owner of the location must hold a license and must consent in writing to the raffle.

Pennsylvania Raffle Prize Limits

How much can one win in a Pennsylvania raffle? It is a far cry from state lottery possibilities in some states that soar into the millions. No single prize awarded in a Pennsylvania raffle can have a fair market value of over $2,000, and the total value of all prizes awarded in one month cannot exceed $15,000.

However, an eligible organization can apply for a special raffle permit, and these raffles are not subject to the general prize limitations. An organization can get up to 10 special permits and award total prizes up to $150,000 from all special permit raffles.

In addition, all proceeds the organization earns from the raffle must be used to promote charitable or other public interest purposes.

Enforcing the Gambling Laws

These laws would be meaningless without some type of administrative oversight. And Pennsylvania oversees and checks up on raffles conducted. Three government entities are involved:

  • County Treasurer's Office performs the licensing background checks and issues licenses.
  • Local law enforcement officials oversee the administration of the raffle to make sure all state and local laws are followed.
  • Pennsylvania Department of Revenue reviews the reports of organizations conducting raffles to verify that proceeds from the ticket sales are used properly.

These departments exchange information with one another in a coordinated attempt to ensure that the laws are complied with. For example, all organizations holding raffles are required to maintain and keep for at least two years records regarding compliance. They must be available to the oversight agencies to inspect and they must contain:

  • Gross receipts from each raffle.
  • Total value of the prizes of a raffle.
  • Details as to use of the funds generated.