The Charitable Raffle Enabling Act, Chapter 2002 of the Occupations Code (CREA) establishes the guidelines for raffles in Texas. See Tex. Occ. Code Ann. Ch. 2002 (Vernon 2004). The statute is very technical and should be consulted before advising an organization regarding the legality of a proposed raffle. There are numerous Attorney General Opinions regarding both raffles and casino/poker nights. The Attorney General is not permitted to give specific legal advice to members of the general public, and the following represents only guidelines for suggested responses to frequently asked questions.
CREA defines a raffle as "the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize."
Only a qualified religious society that has been in existence in Texas for at least 10 years; a qualified volunteer fire department that operates fire fighting equipment, provides fire-fighting services and that does not pay its members other than nominal compensation; a qualified volunteer emergency medical service that does not pay its members other than nominal compensation; or a qualified 501(c) tax-exempt, nonprofit organization that has been in existence for at least three years may hold raffles in Texas. Individuals and for profit businesses may not hold raffles.
No. You just have to qualify under the law.
Each qualified organization is allowed two raffles per calendar year.
The organization may set another date not later than 30 days from the original date. If the prizes are not awarded within 30 days of the original date, the organization must refund the ticket money to the purchasers.
All proceeds from raffles must be used for the charitable purposes of the organization as defined by CREA 2002.002(1).
Paid advertising through a medium of mass communication is prohibited. Donated advertising is permissible.
CREA states that the organization may not promote or advertise a raffle statewide or sell or offer to sell tickets statewide. The term statewide has not been defined or interpreted in any known court proceeding or Attorney General Opinion, but it is generally thought that statewide would include Internet promotion.
The organization's members or anyone who is authorized by the organization may sell tickets.
No. The organization may not compensate a person directly or indirectly for selling tickets.
No. The organization may not compensate a person directly or indirectly for organizing or conducting a raffle.
Five items must be on each ticket: 1) the name of the organization conducting the raffle; 2) the address of the organization or of a named officer of the organization; 3) the ticket price; 4) a general description of each prize having a value of more than $10 to be awarded in the raffle and 5) the date on which the raffle prize or prizes will be awarded.
No. Cash prizes are strictly prohibited. "Money" is defined by CREA as "coins, paper currency, or a negotiable instrument that represents and is readily convertible to coins or paper currency." See 2002.002(1-a). A certificate of deposit is a prohibited prize. See Tex. Att'y Gen. Op. No. JC-0111 (1999). A U.S. savings bond and a prepaid, or "stored-value," credit card is not prohibited. See Tex. Att'y Gen. Op. No. GA-0341 (2005). The question of the prohibition of a gift certificate has not been addressed in an AG Opinion, but it has been suggested that as long as it is not readily convertible to cash, it would likely not be prohibited.
Yes. For purchased prizes, the value of each prize may not exceed $50,000. For a purchased residential dwelling, the value may not exceed $250,000. There is no limit on the value of donated prizes
CREA states that the organization must have the prize in its possession or ownership or it must post a bond with the county clerk of the county in which the raffle is to be held for the full amount of the money value of the prize.
The statute is very vague on this, but it is assumed that it must be some sort of surety bond. Many county clerks are unaware of the required procedure, so it is suggested that a surety bond be obtained from a bond company and the county clerk's office then asked to keep it on file until the prize is awarded. Refer the clerk's office to CREA 2002.056(d)(2).
Unlike raffles and bingo, there is NO exception to the gambling law in Texas for nonprofits to hold poker or casino night fundraising events. The gambling law, Chapter 47 of the Penal Code, applies to nonprofits and to for profits equally. See Tex. Pen. Code Ann. §47 (Vernon 2003). Basically, there are three parts to an activity that could make it illegal gambling: 1) money or anything of value is paid to enter the game; 2) the winners are decided by a game of chance and 3) prizes of value are awarded. If all three of those conditions are met, then it's probably gambling and illegal. If the game is free to enter, then prizes of value may be awarded. If an entry fee is charged, then prizes of value may not be awarded. There are some exceptions to this rule, including certain carnival contests in which prizes with a value of less than $25 are awarded and mechanical devices for amusement purposes in which prizes with a value of less than $5 are awarded. If your organization is considering conducting an event involving a game of chance, you should consult Chapter 47 of the Penal Code to determine its legality.
It is legal for individuals to play poker or other casino activities in a private place, defined as "a place to which the public does not have access." They can bet money and win money. However, all money must be redistributed to the participants. The "house" cannot keep a cut, thus it would obviously be difficult for a nonprofit to raise funds in this way.