Everyone loves a raffle. It’s so exciting to sit there with your ticket and hope that your number gets called and you’re the big winner. But is this also a way to make money? Here are some tips on how to set up a raffle business.
Before You Do Anything – Check the Laws
No surprise, before you try to set up a raffle business, you should check the laws in your state or jurisdiction. At their heart, raffles are a form of gambling (specifically a lottery), and in the United States and many other countries, gambling is tightly controlled. In some states, raffles are completely illegal. In a number of states, raffles are only allowed as a form of non-profit fundraising. In addition, you may also need to obtain a permit before running a raffle.
For example, in Delaware,
- only charitable organizations can run raffles
- net profits from permitted raffles are used solely for the achievement of the purposes of the organization as described in the organization’s by-laws
You only need a permit if the raffle ticket is more than $5 for a single drawing or more than $15 for multiple drawings, or the total prize is $5000 or more. But you still must be a qualified charitable organization.
So Can You Set Up a Raffle Business?
You may be able to set up a raffle business that works with non-profit organizations to run their raffles. That way, the proceeds are going to the charitable organization and you aren’t running an illegal lottery. You will first want to see what other organizations are out there providing this service and figure out what they charge and if you can do better. What special services do you want to be able to provide the charitable organizations? Will you help them assemble prizes or advertise the raffle? Will you handle accepting payments and dealing with any tax paperwork? Will you create an online portal to sell tickets?
You can also work to become an expert at the raffle laws in your jurisdiction and be able to help organizations figure out how to keep their raffles legal. You may have to be careful to only allow people who live in certain states to buy raffle tickets. In some cases, just selling a raffle ticket to someone in a state with different raffle laws can be prohibited.
The water is murky, but there is a place for an expert in raffles – and setting yourself up as that expert might be just the way to set up a raffle business and profit.