Raffles are one of the oldest and simplest fundraising formats in existence, and also one of the most regulated: in the United States, paid-entry raffles generally fall under state lottery and charitable-gaming laws, so the rules must be checked before the first ticket is sold. This guide explains how a raffle fundraiser works, when it is the right choice, why it remains so popular, and how to run one that is fair, profitable, and legal. It focuses on nonprofit raffles in the United States; raffle laws and terminology differ in other countries.
What Is a Raffle Fundraiser?
A raffle fundraiser is a game of chance in which supporters buy numbered tickets for a shot at winning a prize. One or more winning tickets are drawn at random, the winners take the prizes, and the organization keeps the ticket revenue as fundraising income.
In plain terms: gather prizes people genuinely want, sell inexpensive tickets to as many people as possible, draw the winners fairly, and the money left after prizes and running costs goes to your cause. With donated prizes, a large share of ticket revenue can end up as net proceeds once permits, printing, and promotion are covered.
For experienced organizers, the precise framing matters. A paid raffle contains the same three legal elements as a lottery: a prize, an element of chance, and paid entry. That combination is why most US states regulate raffles as charitable gaming rather than ordinary fundraising, why eligibility is generally limited to qualifying nonprofit organizations, and why a permit is often required before the first ticket is sold.
Raffle fundraiser at a glance
- Core mechanic: paid tickets, random drawing, prizes to winners, revenue to the cause.
- Who can run one: in states that allow raffles, usually only specific categories of qualifying nonprofit organizations. For-profit businesses and private individuals generally cannot.
- Cost to run: low when prizes are donated. Permits, tickets, and promotion are the main expenses.
- Effort level: light to moderate. A small raffle can be run by a handful of volunteers alongside an existing event.
- Best used: as an add-on to a dinner, carnival, game night, or gala, or as a standalone campaign built around one strong prize.
- Biggest caveat: legality. Rules vary by state, permits are common, and a few states do not allow paid-ticket raffles at all.
What this guide covers
How a raffle actually works
Strip away the excitement and a raffle is a simple exchange. A supporter pays a small amount for a numbered ticket. The organization keeps one half of the ticket, or a matching stub, and drops the other half into the drawing pool. At an announced time and place, tickets are drawn at random, and the holders of the drawn numbers win the prizes. Everything else, from themed baskets to livestreamed drawings, is presentation layered on top of that core.
The economics explain the appeal. A raffle can start with donated prizes, a roll of tickets, and a promotion plan, so the upfront risk is small. When prizes are donated, a large share of ticket revenue becomes net proceeds once the permit, printing, payment processing, and promotion are paid for; the sample budget later in this guide shows how those pieces typically fit together.
The result is also easy to model in advance. Imagine a school raffle with a donated grand prize and tickets at 5 dollars each, or five for 20. If 400 tickets sell, the raffle grosses somewhere between 1,600 and 2,000 dollars before its modest running costs. Change the ticket price, the number of prizes, or the size of the audience and you can forecast the outcome before committing to anything. Treat numbers like these as an illustration rather than a promise: your result depends on your audience, your prizes, and how consistently the tickets are offered.
One thing that surprises first-time organizers: the drawing is a compliance moment, not just a fun one. Winners must be selected genuinely at random, the announced date must be honored, and depending on the jurisdiction and permit, the organization may need to retain records of ticket sales, winners, and how the proceeds were used. A raffle is easy to run, but it is not informal.
When a raffle is the right choice
A raffle is not the answer to every fundraising problem, and knowing where it fits is half the skill. It tends to outperform expectations in a few specific situations.
- You already have an event with a crowd. A raffle bolts onto a spaghetti dinner, carnival, trivia night, or gala with almost no added overhead. The audience is already gathered and already in a giving mood, which is why raffles appear in nearly every list of proven school fundraising ideas and church fundraiser ideas.
- You can get prizes donated. The moment a local restaurant, salon, or shop hands you a gift card, your cost problem is largely solved. Communities with strong small-business networks are natural raffle territory, and sports team fundraising leans on this constantly.
- Your supporters have modest budgets. Not everyone can bid 200 dollars at an auction, but nearly everyone can spend a few dollars on a chance to win something worth far more. Raffles let small donors participate meaningfully instead of feeling priced out.
- You have limited volunteers and limited time. Compared with organizing a full event, a raffle needs a prize committee, a ticket plan, and one honest drawing. Small groups punch above their weight with it.
- You want a repeatable annual fixture. The second year is easier than the first: buyers begin to expect it, and the prize pipeline from local businesses becomes a standing relationship.
It is the wrong choice when your state does not allow it, when your organization does not qualify, or when your fundraising goal is large and your audience is small. A raffle earns its money a few dollars at a time, so it needs volume. If your donor base is fifty people and your target is five figures, a major-gift ask or an auction will serve you better.
Why raffles are popular, and where they fall short
The format's popularity rests on a handful of durable advantages. The entry price is low enough that buying a ticket requires no deliberation, and the rules need no explanation because everyone already knows them. A ticket also offers something a plain donation does not: anticipation. Supporters who have already given will still buy raffle tickets on top, which is why a raffle added to an existing event raises money that would otherwise stay in pockets. And a well-chosen headline prize does much of the selling by itself, which makes prize selection the single most consequential decision in the whole plan.
There is a community layer too. Local businesses receive public recognition for donated prizes, winners are celebrated by name, and the drawing becomes a shared moment, all of which builds relationships that outlast the event. But popularity is not the same as suitability, so here is the honest balance sheet.
Where raffles genuinely shine
- Net proceeds. With donated prizes, running costs are modest, so a large share of ticket revenue reaches the cause. Few formats convert effort into net proceeds this efficiently.
- Accessibility. A low ticket price means the whole community can participate, not just the wealthiest supporters in the room.
- Stackability. A raffle adds a second revenue stream to any event you were already running, with relatively little additional overhead.
- Predictability and repeatability. Tickets, price, and audience are known in advance, so the outcome can be estimated before you start, and an annual raffle gets easier each year as prize donors and buyers become regulars.
Where raffles fall short
- Regulation. The big one. Permits, eligibility rules, ticket disclosures, and reporting obligations are real, they vary by state, and ignoring them creates genuine legal risk.
- A ceiling per buyer. Each supporter spends a small amount. A raffle rarely captures the large gift a well-run auction or direct ask can secure from one generous donor.
- Volume dependence. The format needs crowds. Small audience, small result, no matter how good the prize is.
- Ticket purchases are not tax deductible. Buyers receive a chance to win, so the IRS does not treat the purchase as a charitable contribution, and it is on you to say so clearly.
- Winner tax paperwork on big prizes. Large prizes can trigger federal reporting and withholding obligations for your organization, covered in the legality section below.
A useful way to place the raffle: it is the volume play, while the silent auction is the value play. The raffle earns a few dollars from many people, the auction earns many dollars from a few, and the two capture different donors, which is why they so often share an evening. If you are weighing the pairing, our companion piece on how to run a silent auction covers the other half in the same depth as this guide.
The main types of raffles
The classic format has spawned a family of variations, each solving a different problem. Choosing the right one is a strategic decision, not a cosmetic one.
Classic multi-prize raffle
The standard model: several prizes, one grand prize, tickets sold for days or weeks before a drawing at an announced time. It balances excitement across the prize table and gives more people a winning moment, which keeps them buying next year.
Best for: annual events, schools, churches, community organizations of any size.50/50 raffle
The winner takes half the ticket revenue and the cause keeps the other half. No prize sourcing at all, because the pot is the prize, and the growing jackpot markets itself as sales climb. Two trade-offs: you give away half the gross, and cash-prize raffles face additional restrictions in some states, so confirm your permit covers the format.
Best for: sports games, live events, and any situation where prize procurement is the bottleneck.Basket raffle, also called a tricky tray
Themed gift baskets are displayed with a container beside each one, and buyers drop tickets into the containers for the specific baskets they want to win. Because every ticket is a choice, people buy more of them, and the display itself becomes the marketing. Building baskets people compete over is its own craft, which is why we maintain a dedicated library of 120+ fundraising basket ideas for auctions and raffles.
Best for: galas, school events, and audiences with varied interests and budgets.Reverse raffle
Tickets are drawn and eliminated one by one, and the last ticket remaining wins the grand prize. The suspense builds all evening instead of ending in a single moment, which makes it a natural centerpiece for a dinner event. Sell a limited number of higher-priced tickets so the eliminations do not drag.
Best for: banquets and galas where the raffle is the entertainment, not a side act.Calendar raffle
Each ticket corresponds to entry in a series of drawings held daily, weekly, or monthly across a set period. Depending on the published rules, a winning ticket may be returned to the pool and stay eligible for later drawings, which can justify a higher price, and the repeated drawings keep your cause in front of supporters for weeks instead of one night. Whatever you decide about repeat wins, state it in the rules before selling.
Best for: sustained campaigns and groups that want engagement over time, not just a single spike.Golden ticket raffle
A small, fixed number of tickets sold at a premium price for one exceptional prize. Scarcity does the selling: with only a hundred tickets in existence, every buyer knows their odds, and the exclusivity itself becomes the appeal.
Best for: high-value prizes and donor bases comfortable with a bigger ticket price.Online raffle
Tickets are sold through a digital platform and the drawing is streamed or verified electronically. Reach expands far beyond the room, sales run around the clock, and record keeping is automatic. The catch is legal: several states restrict or prohibit online raffle ticket sales even for licensed nonprofits, and an in-person permit does not automatically cover the internet, so confirm your state's position before you build anything.
Best for: organizations with a real online audience, in states that expressly permit it.How to run a raffle, step by step
The whole process fits into eight steps. None of them is difficult, but the order matters, and the legal check comes before money changes hands, not after.
Set the goal and choose the format
Decide how much you want to raise and pick the raffle type that fits your audience and occasion. A clear target shapes every later decision, from ticket price to prize count, and it gives volunteers a number to rally around. If the raffle is part of a larger campaign, sketch the whole plan first; our guide on how to plan a fundraiser walks through that framework, and a public fundraising thermometer is a simple way to keep the goal visible once sales begin.
Check the rules before selling anything
Confirm that your organization qualifies to hold a raffle in your state, apply for any required permit or registration, and note the conditions attached: prize caps, frequency limits, ticket disclosure requirements, approved sales channels, and any reporting duties. This step can take weeks in some states, so start early. The legality section below explains what to look for and lists the questions worth asking your regulator directly.
Source prizes people actually want
Prizes decide the outcome more than anything else you control. Ask local businesses, board members, and community supporters for donations, and offer public recognition in return; most are glad to trade a gift card for visibility. Aim for one headline prize that sells tickets on its own, supported by a spread of smaller wins, or a set of themed baskets if you are running a tricky tray. If you are stuck, start with our list of raffle prize ideas your donors will love.
Price the tickets and design the bundles
Set a single-ticket price your audience will not hesitate over, then add a bundle that makes buying more feel obviously smart, such as one for 5 dollars or five for 20. Bundles raise the average purchase without raising the psychological barrier. Match the price to the prize: modest prizes suit low prices and volume, while a premium prize can justify premium tickets in a limited run.
Prepare tickets and records
Every ticket needs a unique number, and the buyer's half should capture name and contact details so winners do not need to be tracked down later. Check your state's disclosure rules: many require the organization's name, the drawing date and location, the ticket price, and prize descriptions printed on the ticket itself. Depending on the jurisdiction and permit, you may also be required to retain ticket-sales records, winner information, and documentation of how proceeds were used, so set up simple record keeping before the first sale.
Sell through every channel your permit allows
Tickets do not sell themselves; the prize display and the ask do. Sell at services, games, school pickup, and community events, give each volunteer a personal target, photograph the prizes well, and post the countdown. One caution before you widen the net: do not assume that permission to run an in-person raffle also permits online, mailed, or out-of-state ticket sales, and some states also restrict payment methods or who may sell. Confirm the approved channels first, then apply the tactics in our playbook on how to promote a fundraiser to every channel that is allowed.
Hold a drawing nobody can question
Draw at the announced time using a genuinely random method: a well-mixed drum with an uninvolved person pulling tickets, or a verifiable random selection for digital sales. A public or streamed drawing is not always a legal requirement, but it is the best transparency practice available, and some permits do dictate how and where the drawing happens, so follow yours exactly. Announce winners through every channel you used to sell, and record the results.
Close the loop after the drawing
Deliver prizes promptly, thank prize donors publicly, and tell everyone what the money will do; that last message is what turns ticket buyers into repeat supporters. File any post-event report your permit requires, and handle federal tax paperwork for large prizes as described below. Ready-made thank-you letters and donation request templates for all of this live in our free fundraising templates library.
Raffle rules and legality: what every organizer must know
This is the section that separates a raffle from every other idea in the fundraising toolbox. Because a paid raffle combines a prize, chance, and consideration, it can meet the legal definition of a lottery, and lotteries are generally unlawful unless a state specifically authorizes them, most often through a charitable-gaming exemption. Charitable raffles exist inside those exemptions, and an exemption always comes with conditions. Skipping this homework does not make the rules disappear; it just means finding out about them the unpleasant way.
Who is allowed to run a raffle
Eligibility is usually limited to specific categories of qualifying organizations, which depending on the state may include charitable, religious, educational, veterans, fraternal, or civic groups, often with a required tax status and a minimum period of operation. Not every tax-exempt organization automatically qualifies, so check the definitions in your state's statute rather than assuming. A for-profit business generally cannot lawfully run a paid-ticket raffle, even if every dollar goes to charity; businesses support raffles by donating prizes or sponsoring the event, while the nonprofit remains the legal organizer. Private individuals raising money for personal causes are likewise generally excluded.
Permits, registration, and state conditions
Many states require a permit, license, registration, or local approval before tickets go on sale, typically issued by the state attorney general, a charitable gaming commission, or in some states the county authorities, while exemptions sometimes apply to smaller raffles or particular organization types. The attached conditions vary enormously. Some states cap prize values, limit how many raffles an organization may hold per year, require a minimum share of proceeds to go to the charitable purpose, restrict cash prizes, or dictate exactly what must be printed on each ticket. A few states are famously light-touch, while others regulate every detail. The only safe assumption is that your state has rules, and the fastest way to learn them is the official website of your state attorney general or charitable gaming authority.
When you contact the regulator or read the statute, get answers to these questions before selling anything:
- Is our specific organization type eligible, and is a minimum operating period required?
- Which permit or registration applies, what does it cost, and how long does approval take?
- Are there prize caps, cash-prize restrictions, or limits on raffles per year?
- What must be printed on each ticket?
- Which sales channels are approved: in person, online, by mail, out of state?
- Are there age limits for sellers or buyers?
- What records must we keep, and is a post-event financial report required?
The states where paid raffles are off the table
As of 2026, conventional paid-entry charitable raffles are generally prohibited in Alabama and Utah, and Hawaii does not permit paid-entry raffles either. Organizations in those states typically pivot to a genuinely free-entry sweepstakes, which removes the paid-entry element and is a legally different animal from a raffle, or to a silent auction. Confirm current official guidance before relying on this summary, because state law changes.
Federal tax obligations
The IRS treats raffle prizes as gambling winnings, which creates duties on both sides of the table. Winners owe income tax on the value of what they win. Your organization, as the payer, may owe paperwork: as of 2026, you generally must file Form W-2G when raffle winnings meet or exceed 2,000 dollars and are at least 300 times the amount wagered. For reporting purposes, the payer may choose to subtract the wager when applying the 2,000-dollar threshold. This threshold replaced the long-standing 600-dollar rule and is adjusted annually for inflation, so verify the current amount in the official IRS instructions for Form W-2G before awarding a major prize.
Withholding is a separate test. When winnings minus the wager exceed 5,000 dollars, federal income tax withholding generally applies at 24 percent of the proceeds. For a noncash prize such as a car, the winner can pay the withholding amount to the organization before receiving the prize; if the organization pays the withholding on the winner's behalf instead, the IRS applies a grossed-up rate of 31.58 percent. Before releasing a reportable prize, collect the winner's taxpayer identification information and whatever identification the current Form W-2G instructions require; a completed Form W-9 supplies the taxpayer identification number, but it may not satisfy the photo identification requirement on its own. Keep thorough records, and read IRS Publication 3079 on tax-exempt organizations and gaming if your prizes are substantial.
Tell buyers the truth about deductibility
A raffle ticket is a purchase, not a gift. Because the buyer receives something of value in return, the chance to win, the IRS does not allow raffle ticket purchases to be deducted as charitable contributions, a point spelled out in IRS Publication 526 on charitable contributions. State this plainly in your materials. Donors respect clarity, and it spares your treasurer awkward conversations in April.
This guide explains the landscape in general terms and is not legal or tax advice. Raffle law is set state by state, sometimes county by county, and it changes. Before selling a single ticket, confirm the current rules with your state attorney general or charitable gaming authority, and involve a qualified professional for large prizes or anything unusual.
The tax and legality sections of this guide were checked against the January 2026 IRS Instructions for Forms W-2G and 5754, IRS Publication 3079 (Tax-Exempt Organizations and Gaming), IRS Publication 526 (Charitable Contributions), and current state charitable-gaming resources. State-level rules summarized here were last reviewed in July 2026.
Pricing tickets and a sample budget
Ticket pricing is where good raffles quietly become great ones. Three principles cover most situations.
Price for reflex, not deliberation. The single ticket should cost an amount your audience spends without thinking. For a school crowd that is usually a few dollars; for a gala crowd it can be considerably more. If people pause to consider the purchase, the price is wrong.
Let the bundle do the heavy lifting. A structure such as one ticket for 5 dollars, five for 20, or an arm's length of tickets for a flat price makes the larger purchase feel like the smart one. Bundles can increase the average amount each buyer spends, and buyers holding more tickets are more invested in the drawing, which lifts the atmosphere too.
Anchor the price to the prize. Buyers instinctively weigh the ticket against the headline prize. A 5-dollar ticket against a prize worth many hundreds feels like a bargain; the same ticket against a mug does not. If your prize table is modest, keep prices low and chase volume. If you have secured something spectacular, a golden-ticket format with a limited run of premium tickets may outperform a high-volume, low-price approach.
Run the arithmetic before committing, using your realistic audience size rather than your hopeful one. Here is what the numbers can look like for a small community raffle with fully donated prizes.
A sample raffle budget
| Line item | Amount |
|---|---|
| Gross ticket revenue (500 tickets, mostly five-for-20 bundles) | $2,200 |
| Prizes (fully donated by local businesses) | $0 |
| State raffle permit | $25 |
| Ticket printing | $40 |
| Promotion (flyers, signage) | $60 |
| Online payment processing (only where online sales are permitted) | $35 |
| Estimated net proceeds | $2,040 |
A hypothetical planning example, not a benchmark or a promise. Permit costs alone range from free to substantial depending on the state, and a purchased grand prize or a 50/50 payout changes the picture entirely. Rebuild this table with your own numbers before you commit.
Common mistakes that sink raffles
- Selling first, checking the law second. The permit process can take weeks, and unwinding tickets already sold is painful. Legal check first, always.
- A prize table nobody covets. Assorted leftovers do not sell tickets. One genuinely desirable headline prize outperforms a dozen token ones.
- No bundle pricing. Selling only single tickets leaves the easiest revenue in the room uncollected.
- Deciding the winners-present question too late. Requiring winners to be present without a strategic or legal reason suppresses advance sales from everyone who cannot attend. If you do require presence, decide before sales begin and disclose it clearly in the rules.
- A quiet final week. Ticket sales follow attention. The days before the drawing should be the loudest of the campaign, not an afterthought.
- Surprising a big winner with tax paperwork. If a prize is large enough to trigger reporting or withholding, say so in advance. Nothing curdles a celebration faster than an unexpected form.
- Treating it as a one-off. Keep records of what sold, which prizes pulled, and which businesses donated, and next year starts at a sprint.
Frequently asked questions
Is a raffle considered gambling?
In legal terms, generally yes. A paid raffle contains a prize, chance, and consideration, which can meet the definition of a lottery under US state law. Charitable raffles are lawful only because states create specific exemptions for qualifying organizations, and those exemptions come with conditions such as permits, prize limits, and reporting duties.
Do you need a permit to run a raffle?
Many states require a permit, registration, license, notice filing, or local approval, although exemptions may apply to certain organizations or smaller raffles. Approvals are typically issued by the state attorney general, a charitable gaming agency, or county authorities, and some states require post-event financial reports as well. Check the current state and local requirements before selling tickets.
Can a for-profit business or a private individual run a raffle?
Generally no. In states that allow raffles, eligibility is limited to specific categories of qualifying nonprofit organizations. A business or individual selling raffle tickets is usually operating an illegal lottery, even with charitable intentions. Businesses can support a nonprofit's raffle by donating prizes or sponsoring the event, but the nonprofit must be the legal organizer.
Are raffle tickets tax deductible?
No. The IRS treats a raffle ticket as a purchase, because the buyer receives a chance to win something of value in return. It is not a charitable contribution, even when the organizer is a registered charity, and organizations should say this clearly in their raffle materials.
How much money can a raffle raise?
It scales with audience size, ticket price, and prize appeal, from a few hundred dollars at a small community event to five figures for a large organization with a premium prize and weeks of promotion. When prizes are donated, a large share of ticket revenue can become net proceeds after permits, printing, and promotion, which is why the format rewards volume and consistent selling more than budget.
What is a 50/50 raffle?
A raffle in which the prize is half of the total ticket revenue, with the other half kept by the organization. It requires no prize sourcing, and the visibly growing jackpot encourages sales as the event goes on. It is generally subject to the same charitable-gaming and federal winner-reporting rules as other raffles, but cash-prize raffles face additional restrictions in some states, so confirm that your permit covers the format.
How do you draw a raffle winner fairly?
Mix all ticket stubs thoroughly in one container and have an uninvolved person draw at the announced time, or use a verifiable random selection method for tickets sold digitally. Record the winning numbers, announce them through every channel you used to sell, and keep the results on file.
What can you do if raffles are not allowed in your state?
Switch to a format without paid chance entry. A silent auction delivers similar excitement with no gambling element, and a genuinely free-entry sweepstakes preserves the prize drawing while removing the paid-entry requirement, though sweepstakes carry their own registration and disclosure rules.
Explore More on BusinessNES
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- Fundraising thermometer maker A free visual goal tracker to keep ticket sales moving.
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- How to run a silent auction: the complete guide The value play that pairs naturally with a raffle.
- How to plan a fundraiser: a 12-step guide From first idea to funded goal, in order.
- How to promote a fundraiser: 40 proven tactics The promotion engine that sells the tickets.
- How to run a bake sale: the complete guide Another classic, done properly from start to finish.
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