# Booster Club Raffles: State Gaming Law and Federal Tax Rules

> How booster club raffles work legally: state gaming law decides whether a club may hold one, and federal tax law sets the W-2G, withholding, and 990 rules.

- URL: https://boosterclub.org/raffles/
- Section: Raffles
- Updated: 2026-10-08

A booster club raffle is legal only when it satisfies two separate layers of law: the state's gambling law, which decides whether the club may hold a raffle at all, and federal tax law, which decides what the club reports, withholds, and files afterward. The president confirms that the raffle is allowed before the board approves it, the raffle chair runs it, and the treasurer handles the money and the tax paperwork.

Legally, a raffle is a lottery, and states start from a general ban on lotteries. A charitable raffle is an exception each state writes for itself, with its own eligibility rules, permits, and limits. A club that sells tickets without meeting those conditions is running an illegal lottery, no matter how good the cause.

## The Two Layers

| Layer | What it decides | Who enforces it | Where to read more |
|---|---|---|---|
| State gaming law | Whether the club may hold a raffle, whether it needs a permit or registration, ticket and prize rules, state reporting | Varies by state: attorney general, secretary of state, gaming commission, or local government; local prosecutors | [Are Booster Club Raffles Legal](https://boosterclub.org/raffles/are-raffles-legal/) and the club's [state page](https://boosterclub.org/states/#raffles-gaming) |
| Federal tax law | Whether buyers can deduct tickets (they cannot), when the club files Form W-2G and withholds tax from a winner, how raffle income appears on the Form 990 series, whether the income is taxable | Internal Revenue Service (IRS) | [Federal Tax Rules for Raffles](https://boosterclub.org/raffles/federal-rules/) |

A third layer sits on top: the school district. District policy can make a raffle that is legal under state law off limits at a school event. See [School District Fundraising Policies and MOUs](https://boosterclub.org/fundraising/district-policies/).

## Quick Answers

- **Can a booster club hold a raffle?** In most states, yes, if the club meets the state's eligibility rules. A few states do not allow charitable raffles at all (Alabama, Hawaii, and Utah), and others restrict them heavily (Tennessee requires annual approval by the legislature; Texas requires three years of existence and bans cash prizes).
- **Is a raffle ticket a tax-deductible donation?** No. IRS Publication 526 states that amounts paid for raffle tickets cannot be deducted as charitable contributions. The club does not call ticket sales "donations" in receipts or advertising.
- **Does the club report the winner to the IRS?** Sometimes. Form W-2G (Certain Gambling Winnings) is the IRS form for reporting a prize. For prizes paid in 2026, the club files it when the prize is $2,000 or more and at least 300 times the ticket price, and whenever it withholds tax. The threshold was $600 for prizes paid before 2026.
- **Does the club withhold tax?** When the prize minus the ticket price exceeds $5,000, the club withholds 24% of that amount and reports it on Form 945.
- **Is raffle income taxable to the club?** Usually not. Unrelated business income tax (UBIT) does not reach gaming held only occasionally or run by unpaid volunteers.
- **Can the club sell tickets online?** Not in every state. California prohibits conducting a raffle via the Internet. See [Online and Electronic Raffles](https://boosterclub.org/raffles/online-raffles/).
- **Is a 50/50 raffle legal?** It depends on the state. California and Texas do not allow a typical booster club 50/50 raffle. See [50/50 Raffles](https://boosterclub.org/raffles/50-50-raffles/).

## Why the Rules Are Strict

States regulate raffles to keep proceeds going to charitable purposes and to keep gambling operators from posing as charities. The IRS takes a similar view: Publication 3079 states that "there is nothing inherently charitable about gaming." A 501(c)(3) organization (a nonprofit recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code) may conduct gaming only as an insubstantial part of its activities.

The consequences fall on people. In California, violating the nonprofit raffle statute is a misdemeanor, and the Attorney General can pursue board members for breach of fiduciary duty. In Tennessee, an unapproved raffle is subject to criminal prosecution.

## Where to Start

Read the club's [state page](https://boosterclub.org/states/#raffles-gaming) and [Are Booster Club Raffles Legal](https://boosterclub.org/raffles/are-raffles-legal/) first, then follow [How to Run a Booster Club Raffle](https://boosterclub.org/raffles/how-to-run-a-raffle/). Some states (California, Tennessee, Texas) require the club to have existed for a minimum period or to hold a specific state tax exemption before its first raffle. If the state does not allow raffles or the club does not yet qualify, see [Alternatives When Raffles Are Not Allowed](https://boosterclub.org/raffles/opportunity-drawings-and-alternatives/).

## Pages in This Section

- [Are Booster Club Raffles Legal](https://boosterclub.org/raffles/are-raffles-legal/) how state raffle law works, states that ban or restrict raffles, and a state-by-state summary
- [Federal Tax Rules for Raffles](https://boosterclub.org/raffles/federal-rules/) deductibility, Form W-2G, withholding, Form 945, and Form 990 reporting
- [How to Run a Booster Club Raffle](https://boosterclub.org/raffles/how-to-run-a-raffle/) permits, tickets, the drawing, records, and reporting, step by step
- [50/50 Raffles at Booster Club Events](https://boosterclub.org/raffles/50-50-raffles/) legality, game-day procedures, and cash controls
- [Online and Electronic Raffles](https://boosterclub.org/raffles/online-raffles/) why states restrict them and what to check before using a platform
- [Bingo, Casino Nights, and Poker Tournaments](https://boosterclub.org/raffles/other-gaming/) other games of chance and how they differ from raffles
- [Raffle Prizes, Donated Items, and Vehicles](https://boosterclub.org/raffles/prizes-and-donated-items/) valuation, acknowledgments, withholding on large prizes, and title transfer
- [Alternatives When Raffles Are Not Allowed](https://boosterclub.org/raffles/opportunity-drawings-and-alternatives/) free-entry drawings, auctions, and other options

## Common Mistakes

- **Assuming a nonprofit can always hold a raffle.** In Alabama, Hawaii, and Utah it cannot, and the officers are the ones exposed.
- **Calling tickets "donations."** It does not change the legal character of the raffle, and it misleads buyers into claiming a deduction the IRS does not allow.
- **Selling tickets before the permit arrives.** California requires a confirmation letter before any ticket sales.
- **Ignoring the tax side of a big prize.** A car or trip can require thousands of dollars in withholding, collected from the winner or paid by the club.

## Checklist

- [ ] Confirm raffles are legal in the club's state on the [state page](https://boosterclub.org/states/#raffles-gaming) (president)
- [ ] Confirm the club meets the state's eligibility rules (years in existence, tax exemption)
- [ ] Confirm the district and school allow the raffle at the planned event
- [ ] Approve the raffle, budget, and prize plan at a board meeting and record it in the minutes
- [ ] Register or obtain any required permit before ordering or selling tickets
- [ ] Assign a raffle chair and a second person for every cash count
- [ ] Plan for Form W-2G and withholding if any prize is $2,000 or more (treasurer)
- [ ] File any state raffle report by its deadline
- [ ] Report raffle gross receipts on the club's annual IRS return
- [ ] Keep the permit, ticket log, drawing record, and winner paperwork for at least three years

## Related Pages

- [Are Booster Club Raffles Legal](https://boosterclub.org/raffles/are-raffles-legal/) the state law layer in detail
- [Federal Tax Rules for Raffles](https://boosterclub.org/raffles/federal-rules/) the IRS layer in detail
- [Fundraising Rules for Booster Clubs](https://boosterclub.org/fundraising/rules/) the broader rules every fundraiser must follow
- [Handling Cash at Booster Club Events](https://boosterclub.org/finance/cash-handling/) count sheets and the two-person rule
- [Booster Club Filing Requirements by State](https://boosterclub.org/states/) each state's raffle permit and reporting rules

---

*This page is general information for volunteer-run booster clubs. It is not legal,
tax, or accounting advice, and BoosterClub.org is not a law firm, accounting firm, or
government agency. Rules change and vary by state and district. Confirm current
requirements with the IRS, the relevant state agency, the school district, and a
qualified professional before acting. If a fact on this page is out of date, we want
to know.*

## Sources

1. IRS: https://www.irs.gov/pub/irs-pdf/p3079.pdf
2. IRS: https://www.irs.gov/instructions/iw2g
3. IRS: https://www.irs.gov/publications/p1099
4. IRS: https://www.irs.gov/publications/p526
5. IRS: https://www.irs.gov/publications/p598
6. California Attorney General: https://oag.ca.gov/charities/raffles
7. Texas Legislature: https://tcss.legis.texas.gov/resources/OC/htm/OC.2002.htm
8. Tennessee Secretary of State: https://sos.tn.gov/charities/guides/charitable-gaming-event-faqs
9. Utah Legislature: https://le.utah.gov/xcode/ArticleVI/UC_AVI_S27_1800010118000101.pdf
10. Alabama Legislature: https://alison.legislature.state.al.us/files/pdf/SearchableInstruments/2025RS/HB47-int.pdf
11. data.capitol.hawaii.gov: https://data.capitol.hawaii.gov/hrscurrent/Vol14_Ch0701-0853/HRS0712/HRS_0712-1220.htm