Booster Club Raffles: State Gaming Law and Federal Tax Rules

The Two Layers

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.

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 (UBITUBITUnrelated business income tax: the federal tax a 501(c)(3) owes on net income from a business it regularly carries on that is not substantially related to its exempt purpose. Most volunteer-run booster club fundraising falls under an exception.All terms) 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.
• 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.

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 and Are Booster Club Raffles Legal first, then follow How to Run a Booster Club 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.