- The California constitution specifically prohibits lotteries. However, many exceptions have been created, and the prohibition is all but meaningless. Raffles are among the exceptions. California also has a state lottery that supports education.
- Cal. Penal Code § 320.5; Cal. Code Regulations. tit 11, §§ 410-426
- Raffles may only be conducted by nonprofits or organizations with a charitable purpose. Generally, such organizations must register with the California Attorney General's Registry of Charitable Trusts before conducting a raffle, and the organizations must also file financial disclosures with the state after a raffle. The rules governing conduct of a raffle can be found in California Penal Code section 320.5.
- Each raffle ticket must be a detachable with a matching stub that has identifying numbers. The drawing must occur in California and be done by a person 18 or older who is employed by the nonprofit, and at least 90 percent of the funds must be used for charitable purposes. Raffle proceeds must be used in California. The employees running the raffle may not be paid from the raffle, and no one may have a financial interest in the raffle, such as investors. There are also specific registration requirements.
- The raffle organizer must set forth written rules in advance of the drawing. For example, some raffle rules indicate that if the holder of the winning ticket is not present at the drawing, he forfeits his prize and another ticket must be drawn.
- The drawing must be fair, with every ticket equally likely of being chosen. Most jurisdictions require a financial report to be filed with the state department of revenue or taxation after the raffle is completed.
- Though appearing simple, raffles can be a complex area of law. A nonprofit seeking to hold a raffle should consult an attorney licensed in California to ensure proper conduct of the raffle and proper documentation with the state.
- This information is for educational purposes only and should not be construed as legal advice.