Charitable Gaming Compliance

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Don’t roll the dice when it comes to compliance.

Getting Started

Bingos, raffles, and other games of chance can be a fun way for charities to connect with the community while also raising funds. Hosting a gaming event is an exciting opportunity for organizations, but sometimes lost in the excitement are the state and local government prerequisites for holding such an event.

Most states allow charitable organizations to conduct a variety of gaming events as long as the organization holds the proper license. The games charities are allowed to host for fundraising vary from state to state, but some commonly permitted games include:

  • Bingo
  • Raffles
  • Pull-tab tickets
  • Poker tournaments
  • Monte Carlo game nights
  • Casino games nights

Before hosting a charitable gaming event, organizations should apply for the relevant license or permit issued by state and municipal gaming authorities. Depending on the location of the event, charities may need just a state-level license, a municipal permit, or both a state-level license and a municipal permit. Charities that plan on offering multiple types of gaming may need to apply for more than one license.

States usually offer limited exemptions from charitable gaming laws. Senior living facilities offering bingo for social purposes are often exempt, along with charitable organizations that fail to meet an established gross receipt threshold.

Hawaii and Utah are the only states that do not allow charitable organizations to host gaming events. Hawaii does, however, allow charities to hold raffles as an activity within a dinner or other fundraising event as long as there is no separate fee to enter the raffle.

Licenses and Permits

Before applying for a license or permit, charities should make sure they meet the state’s requirements for licensure. Prerequisites vary by state, but most states require charities to hold an IRS tax exemption and an active entity registration with the secretary of state. Additionally, many states allow only organizations that have been in existence for a number of years to apply for a license.

The application process for a charitable gaming license typically includes filing an application and fee with the appropriate regulatory body. This process may need to be completed at both the state and local levels of government. States often require submission of additional documents and information, including:

  • Articles of Incorporation
  • Bylaws
  • A list of individuals assisting with gaming activities
  • Location of gaming event(s)
  • A list of the organization’s officers

Most states also require charities to designate individuals to oversee gaming activities. Depending on the state, game managers may need to file an individual application in conjunction with the organization’s application.

Hosting an Event

Once you have a license in hand, it is important to keep in mind what the license allows you to do. Some licenses are issued for a single event date, while others have multiyear durations. States and municipalities often place restrictions of the length of gaming events as well.

During the event, charities should also take care to follow all applicable state and local rules. Many jurisdictions do not allow minors to take part in charitable gaming activities, and the total value of prizes handed out is often limited. Organizations must also track receipts brought in from the event for reporting purposes.

Maintaining a License

Charitable gaming licenses are issued for a variety of time periods. Single-use event permits allow organizations to hold a single event at one location. These permits cannot be renewed, but charities are typically allowed to apply for multiple permits over the course of a year.

Annual charitable gaming licenses are issued for a calendar year and allow charities to hold multiple gaming events until the end of the year. Most annual licenses allow charities to host one event per week for 52 weeks. Annual licenses and multiyear licenses have an expiration date and can be renewed for additional time periods.

Risks of Noncompliance

Hosting charitable gaming events without the required license or permit can be costly. Penalty fees for unlicensed gaming vary greatly by jurisdiction, but some penalties may counteract any dollars raised by an event. New Jersey, for example, can assess up to $7,500 in penalties for a first-time violation of state bingo and raffle laws. Charities that fail to follow the law on multiple occasions can also lose their ability to hold charitable gaming events in the future.

Click on a link below for state specific information on how to obtain a charitable gaming license.

Continue reading “Charitable Gift Annuity Compliance”

Pull Tab - A ticket or card with obscured symbols that are revealed when the participant opens the ticket. Pull tabs are sometimes called lucky 7s, bell jars, or pickle cards.

Responsible Party - Person responsible for overseeing all charitable gaming activities. Most states require charities to appoint a responsible party that meets qualifying criteria.

Temporary License - A gaming license issued for a single event or a short period of time.