50/50 Raffles in Texas
- Michelle Crim, CFRE
- 11 minutes ago
- 3 min read
A 50/50 raffle is a popular fundraising method where participants purchase tickets for a chance to win a cash prize, typically 50% of the total ticket sales, with the remaining proceeds benefiting the hosting organization. While this model is common in many states, Texas law imposes specific restrictions that make traditional 50/50 raffles generally illegal for most nonprofits.
Understanding Texas Raffle Laws
In Texas, the Charitable Raffle Enabling Act (CREA) governs the conduct of raffles by certain qualified organizations. Under CREA, only specific types of nonprofit organizations are permitted to hold raffles, and there are strict limitations on the nature of the prizes. Click HERE for state regulations.
Eligibility: Organizations must be a qualified religious society existing in Texas for at least 10 years, a qualified volunteer fire department or emergency medical service, or a qualified 501(c) tax-exempt nonprofit organization that has been in existence for at least three years.
Prize Restrictions: CREA explicitly prohibits cash prizes. "Money" is defined as coins, paper currency, or a negotiable instrument that represents and is readily convertible to coins or paper currency. Therefore, offering a cash prize, as in a 50/50 raffle, is not allowed under CREA.
Raffle Frequency: Qualified organizations may hold up to four raffles per calendar year.
Advertising Restrictions: Raffles cannot be advertised statewide, except through the organization's own website or publications provided only to previously identified supporters.
Exception for Professional Sports Team Charitable Foundations
An exception exists under the Professional Sports Team Charitable Foundation Raffle Enabling Act, which allows certain professional sports team charitable foundations to conduct raffles that can include cash prizes
Eligibility: The foundation must be associated with a professional sports team with a home venue in Texas and be a 501(c)(3) tax-exempt nonprofit organization that has been in existence for at least three years.
Cash Prizes: These foundations may award cash prizes in an amount not to exceed 50% of the gross proceeds collected from the sale of raffle tickets.
Raffle Timing and Location: Raffles can be conducted during each preseason, regular season, and postseason game hosted at the home venue of the professional sports team.
Implications for Nonprofits
For most nonprofits in Texas, conducting a traditional 50/50 raffle is not permissible due to the prohibition on cash prizes under CREA. Offering cash as a prize could be considered illegal gambling, subjecting the organization to potential legal penalties.
Alternative Fundraising Strategies
Nonprofits seeking to engage supporters through raffles can consider alternative prize options that comply with Texas law:
Non-Cash Prizes: Offer tangible items, services, or experiences as prizes, ensuring they are not readily convertible to cash.
Gift Cards: While cash is prohibited, certain gift cards may be acceptable if they are not considered "negotiable instruments." However, it's advisable to consult legal counsel to ensure compliance.
Silent Auctions or Sweepstakes: These can be structured in ways that comply with state laws and still engage donors effectively.
Understanding and adhering to Texas raffle laws is crucial for nonprofits to avoid legal complications. By exploring compliant fundraising alternatives, organizations can continue to engage their communities and support their missions effectively.
Cheers,
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.
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