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California Raffle Regulations Essay

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California Raffle Regulations

It’s legal for nonprofit organizations (NGO) to hold raffles in California, either for the raise of funds or for charitable purposes. At least 90% of the proceedings from ticket sales must either be used in the organization’s interest, or be donated to one or more charities that are established in California.
Prior to holding any raffles, an NGO must first register Attorney General's Registry of Charitable Trusts. According to the Penal Code, section 320.5, NGOs can only register with the trust if they have qualified to conduct business for at least 1 year in the state of California.
If an organization decides to offer both free and paid tickets for its raffle, the event will be classified as an “opportunity drawing”. …show more content…

An annual registration statement can be filed with the UC San Diego Foundation. By doing so, the organization can easily register all of its upcoming raffles.
The 90/10 Rule
According to the newest laws and regulations, all raffles must comply with this rule. It states that 90% of all raffle proceeds have to go to charity. The remaining 10% can be used by the organizing party for raffle related expenses. Due to this rule, it is very hard for organizations to offer substantial prizes based solely on ticket proceeds. A solution to this rule can be found in prize donations.
Tax Regulations
Because raffles are considered a form of lottery, the IRS keeps a close eye on every organization that registered to hold such an event. As such, the organizing party is responsible for reporting the prize winner to the IRS, if it meets both of the following two conditions:
The prize pool value exceeds $600
The prize pool value is at least 300 times larger than the price of one raffle ticket
If both of the conditions are met, the organizer must make sure that the winner of the prize fills out a tax identification form

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