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Raffle

A raffle is a type of lottery in which participants purchase tickets or entries for a chance to win prizes, with winners determined by random selection, often through drawing tickets from a container or using electronic means.^[1] The term originates from Middle English "rafle," referring to a dice game, derived from Middle French "rafle" and ultimately from Middle High German "raffel," meaning a rake or tool for gathering.^[1] Raffles have a long history as a method of chance-based distribution and fundraising, with the first recorded lotteries to offer tickets for sale with prizes held in the Low Countries in the 15th century.^[2] Over time, they evolved into popular tools for charitable causes in Europe and later became staples of nonprofit fundraising in the modern era.^[3] Legally, a raffle is classified as a form of gambling in most jurisdictions, requiring participants to pay for chances while prizes are awarded by chance alone, though it differs from broader lotteries by typically involving fewer participants and specific items as prizes.^[4] Regulations vary widely; for example, in the United States, many states permit nonprofits to conduct raffles under specific licensing to ensure proceeds benefit charitable purposes, prohibiting for-profit operations to prevent exploitation.^[5] Contemporary raffles often occur at events, schools, and online platforms, blending tradition with digital accessibility to support causes ranging from community projects to disaster relief, while strict compliance with local laws mitigates risks of illegality.^[6]

Overview

Definition

A raffle is a gambling or fundraising activity in which participants purchase tickets for a chance to win one or more prizes, with winners selected through a random drawing process.^[7] This form of chance-based competition typically involves selling numbered tickets, each representing an entry into the draw, and is commonly used by organizations to raise funds for charitable causes or events.^[8] The term "raffle" originates from Middle English "rafle," denoting a dice game, which itself derives from Old French "rafle" or "raffle," meaning a game of chance or act of seizing, likely from the verb "rafler" (to snatch or carry off), possibly of Germanic origin.^[9] By the mid-18th century, around 1766, the word had evolved in English to describe a lottery-like method of assigning prizes by drawing lots among ticket holders.^[9] This etymological shift reflects the activity's roots in games of chance, transitioning from simple dice play to structured prize distributions by the 18th century.^[9] Essential elements of a raffle include the sale of tickets to participants, a mechanism for randomly selecting winners—such as drawing from a container or using a random number generator—and the subsequent distribution of prizes, which may consist of goods, services, or cash equivalents.^[8] Unlike broader lotteries, which are often state-operated and offer primarily cash prizes, raffles typically feature physical or specific prizes and may use tangible tickets, emphasizing their community or event-based nature.^[10]

History

The practice of raffles traces back to ancient civilizations where chance-based draws were used to distribute prizes and resources. In ancient Rome, during the era of the Empire, lotteries served as entertainment at banquets and dinner parties, with guests receiving tickets to draw for prizes known as apophoreta—items such as small gifts or terra cotta vessels that participants could carry home. These draws, often held during festivals like the Saturnalia, ensured every ticket won something, though prize values varied, reflecting an early form of structured chance for amusement rather than profit.^[11] In medieval Europe, similar mechanisms reemerged in the 15th century in the Low Countries, where lotteries were employed to fund public works and religious institutions. The earliest documented instance occurred in Ghent, Flanders, around 1445, supporting fortifications and civic improvements, while churches used chance draws for fundraisers to maintain buildings and aid the community. These events laid the groundwork for raffles as a tool for collective benefit, evolving from pure entertainment to purposeful revenue generation. By the Renaissance, Italian variants like the lotto formalized the process, influencing broader European practices.^[12] The 18th and 19th centuries marked the rise of raffles as a charitable instrument in England and America, shifting focus toward societal funding needs. In England, state-sanctioned lotteries from the 1740s financed wars and infrastructure, while in the American colonies, they supported education, roads, and public projects. A notable example is the 1768 Mountain Road Lottery in Virginia, authorized by the colonial assembly to raise funds for building a road through the Appalachians, demonstrating raffles' role in colonial development amid limited taxation options. This period solidified raffles' association with philanthropy, with proceeds often directed to non-profits and community causes.^[13]^[12] In the 20th century, raffles expanded globally for non-profit fundraising, particularly after World War II, as organizations rebuilt communities and addressed social needs. Italy's tombola, originating in Naples in the 1730s as a bingo-like raffle to evade gambling bans, saw organized popularity surge in the early 1900s for festive and charitable events. Postwar growth in the U.S. and Europe saw raffles become staples for charities, funding everything from hospitals to schools. The late 1990s introduced online raffles with internet proliferation, enabling remote participation and broader reach for causes. After 2000, regulatory adaptations in many jurisdictions, including restrictions from anti-gambling laws like the U.S. Unlawful Internet Gambling Enforcement Act of 2006 on payment processing for unlawful online gambling, have shaped online charity raffles, which remain legal in various states under strict licensing to ensure transparency and prevent abuse.^[14]^[15] By 2025, raffles have increasingly incorporated digital and interactive elements, such as mobile apps and virtual draws, enhancing accessibility for fundraising.^[16]

Mechanics

Standard Process

The standard process of a raffle begins with the organization of tickets, typically consisting of pre-printed forms with unique sequential numbers and detachable stubs for record-keeping. Each ticket purchaser receives the main portion, while the organizer retains the stub, often including the buyer's contact information for verification purposes. This setup ensures traceability from purchase to potential prize claim.^[17] Tickets are sold in advance of the event or on-site, allowing participants to buy one or multiple entries at a fixed price, thereby entering the pool of potential winners. The participant flow starts with payment, issuance of the ticket, and retention of the stub by the organizer; buyers keep their ticket number for reference during the draw. This phase builds anticipation while generating funds, with sales continuing until the draw time to maximize participation.^[17] The draw is conducted to select winners randomly, using methods such as a physical spinning drum filled with ticket stubs or digital software that generates unpredictable outcomes from ticket numbers. To assure randomness and prevent fraud, the process employs techniques like sealing stubs in envelopes before mixing or involving a neutral third party to oversee the selection, ensuring no manipulation occurs and every ticket has an equal chance.^[18]^[17] Winners are announced publicly immediately following the draw, often at the event venue or via broadcast for remote participants, with the winning ticket number clearly stated. Prize handover involves verifying the winner's ticket against the stub, confirming identity, and distributing the prize on-site if present; absent winners are contacted using provided details for later collection. Throughout, the basic odds of winning a single prize are calculated as the probability equals 1 divided by the total number of tickets sold, providing participants with a clear sense of their chances.^[17]^[19] Common tools for the process include physical items like raffle drums for manual draws and cash boxes for sales, contrasted with digital alternatives such as mobile apps or online platforms that automate ticket numbering, sales tracking, and random selection via certified algorithms.^[17]^[20]

Key Variations in Mechanics

In multi-prize or tiered raffles, organizers select multiple winners for prizes of varying values, such as a grand prize, second-place award, and consolation items, to increase participant engagement and perceived value. This variation modifies the standard single-draw process by conducting sequential draws without replacement—where each winner is removed from the pool for subsequent prizes—ensuring no single ticket wins multiple times unless specified.^[17] Digital adaptations leverage online platforms for ticket sales and automated draws, streamlining the process and expanding reach beyond physical events. Participants purchase tickets via web interfaces, with draws conducted using pseudorandom number generators or verifiable algorithms to select winners instantly upon closure. Blockchain integration further enhances this by recording all transactions on a public ledger, ensuring immutable proof of ticket issuance, sales, and draw execution. For transparency, protocols like decentralized random beacons (e.g., DRAND) generate provably fair randomness, allowing participants to audit outcomes without trusting a central authority, while smart contracts automate prize distribution to verified winners.^[21]

Types

Tombola

Tombola is a traditional Italian lottery-style game akin to bingo, characterized by a cage or drum from which numbered balls are drawn. Originating in 18th-century Naples, it emerged as a legal alternative to the prohibited national lottery during Christmas, stemming from a dispute between King Charles III of Bourbon and Dominican friar Father Gregorio Maria Rocco, who viewed gambling as sinful. The game was initially permitted only for holiday periods to provide family entertainment without the risks of broader lotteries.^[22]^[14] In tombola, players purchase pre-printed cards featuring a 3x9 grid with 15 randomly selected numbers from 1 to 90, arranged across three rows with blanks in the remaining spaces. An announcer, or tombolone, draws balls sequentially from a rotating cage or panariello basket and calls the numbers aloud, often using colorful Neapolitan nicknames from the smorfia tradition, such as "66" for nave (ship). Players mark matching numbers on their cards with beans, tokens, or chips, aiming to complete predefined patterns; the game proceeds in rounds until all prizes are claimed. This multi-round format emphasizes progressive matching over a single draw, with a large display board (tabellone) showing the numbers for transparency.^[22]^[23]^[24] Culturally, tombola holds a prominent place in European community events, particularly in Italy where it fosters social bonding during holidays, family gatherings, and local fairs. It spread through 19th- and 20th-century Italian emigration, influencing variants across the continent. In Britain, a similar version called housie employs 90-ball mechanics with cards featuring three rows with five numbers each (15 numbers total) and distinct caller phrases, often used in charitable raffles.^[22]^[14] The prize structure in tombola focuses on incremental achievements rather than a sole grand prize, awarding wins for partial completions like ambo (two numbers in a line), terno (three), quaterna (four), cinquina (five in a row), and culminating in tombola (full card). Prizes, typically small items, cash, or tokens scaled to ticket sales, are distributed immediately upon each call-out, encouraging ongoing participation and multiple winners per session.^[22]^[25]

Chinese Auction

A Chinese auction is a hybrid fundraising format that merges elements of auctions and raffles, where participants submit sealed bids in the form of multiple tickets for specific items, and the highest bidder typically wins, with random draws resolving any ties. Participants purchase entry, receiving a unique paddle number, and then buy sheets of perforated tickets pre-printed with that number. Each sheet allows multiple bids (often 5 to 25 tickets per sheet, priced at $1 to $5 per ticket), which are detached and placed into item-specific containers or bidding sheets displayed alongside the prizes. A minimum bid, such as five tickets, is commonly required per item to ensure meaningful participation.^[26]^[27] The process unfolds during an event where items—ranging from gift baskets to experiences—are showcased, and bidders strategically allocate tickets to desired prizes without revealing others' submissions, creating a sealed-bid dynamic. At the conclusion, organizers tally the tickets per bidder for each item; the participant with the highest number of tickets wins the prize outright. In cases of ties for the highest bid, a random draw is conducted among the tied bidders using their submitted tickets or names, introducing an element of chance. This mechanic encourages calculated bidding while adding excitement through potential draws, and events often last 1-2 hours with an emcee announcing results sequentially.^[28]^[29] This format emerged in the United States during the late 19th century, gaining popularity among immigrant communities and later nonprofits as an accessible way to raise funds, though the term's origins carry historical connotations of discrimination against Chinese laborers, associating "Chinese" with inexpensive or unconventional methods. Unlike pure silent auctions, it incorporates raffle-like randomness to resolve competitions, making it distinct from standard sealed-bid variations where the highest bid always prevails without draws.^[26]^[30] Chinese auctions offer advantages over traditional raffles by blending strategic bidding with luck, which heightens participant engagement as bidders weigh value against competition, often leading to higher revenue—events can generate thousands in ticket sales alone through repeated purchases. The format fosters community interaction at live events while being adaptable to hybrid or virtual setups, ultimately boosting funds for causes by incentivizing generous contributions without guaranteeing wins solely on chance.^[26]^[31]

Cash Alternative

A cash alternative raffle, commonly known as a 50/50 raffle, is a fundraising mechanism where participants purchase tickets for a chance to win a monetary prize equivalent to half of the total ticket sales proceeds, with the remaining half allocated to the sponsoring organization or cause.^[32] This structure incentivizes participation by offering a variable cash payout that grows with sales volume, distinguishing it from fixed-prize raffles.^[33] The mechanics mirror those of a standard raffle, involving the sale of numbered tickets followed by a random draw to select the winner, but the prize pool is dynamically determined by the aggregate revenue from ticket sales rather than a predetermined amount.^[34] Organizers typically set ticket prices (e.g., $1 to $5 each) and may allow unlimited purchases to maximize the pot, with the draw conducted publicly at the event's conclusion to ensure transparency.^[35] These raffles are particularly prevalent in North America due to their straightforward appeal and ease of administration, often featured at sports events, community gatherings, and online platforms to engage audiences seeking quick cash wins.^[36] For instance, professional sports teams like the Edmonton Oilers have popularized large-scale versions, with jackpots reaching millions through multi-game accumulations, boosting their status as a staple in venues across the US and Canada.^[37] A key operational risk in cash alternative raffles is the dependency on ticket sales volume, where low participation can result in diminished profits for the cause, as the organization's share is directly halved from the total pot.^[38] To address this, many organizers implement fixed minimum prizes—such as a guaranteed $500 or $1,000 payout regardless of sales—to maintain winner interest and ensure baseline funding, as seen in events by groups like the Junior Achievement of Arizona.^[39]

Private Raffle

A private raffle is an informal lottery organized within limited social circles, such as among friends, family members, or small organizations, without requiring official licenses due to its restricted scope and absence of widespread ticket distribution to the general public.^[40] These events emphasize personal participation over commercial intent, often involving nominal contributions or no monetary entry fees, distinguishing them from regulated public lotteries that involve broader sales and oversight.^[15] In terms of mechanics, private raffles typically rely on straightforward, do-it-yourself approaches, including homemade or simply printed tickets that record participant names and entries, followed by basic random selection methods like drawing slips from a hat or box to ensure chance-based outcomes.^[41] Prizes are usually personal or modest items, such as donated goods, gift cards, or experiential rewards contributed by participants, keeping the process accessible and low-stakes without the need for professional equipment or vendors.^[42] Examples of private raffles include office pools, where coworkers collectively contribute to purchase lottery tickets or similar chances and share any winnings, fostering team camaraderie in a non-public setting.^[43] Similarly, they appear in birthday celebrations among close friends, with giveaways of small items via ticket draws, or in community group swaps where members raffle surplus belongings to redistribute resources informally. Unlike public raffles, these lack external regulation, relying instead on group consensus for organization. Some may incorporate basic digital tools for ticket tracking or random number generation to simplify the process.^[44] One key challenge in private raffles is the potential for disputes arising from perceived unfairness in ticket handling or draws, given the absence of formal rules or authorities. To mitigate this, organizers often designate neutral witnesses to oversee the selection and establish clear, agreed-upon guidelines upfront, promoting transparency and preserving relationships within the group.^[41]

Legal Considerations

Global Regulations

Most countries classify raffles as a form of gambling or lottery under their national gambling laws, integrating them into broader regulatory frameworks designed to oversee chance-based activities. These laws typically mandate licenses for public raffles to mitigate risks of fraud, money laundering, and unfair practices, ensuring that operators adhere to strict operational standards such as random draws and verifiable prize distribution.^[45]^[46] Key regulatory principles often distinguish between for-profit and charitable raffles, with many jurisdictions prohibiting or heavily restricting for-profit operations to prioritize public welfare and prevent exploitation. Charitable raffles, by contrast, are frequently permitted but subject to limitations, including caps on prize values—for instance, [$500](/page/500) in certain U.S. states—to maintain proportionality and focus on fundraising integrity.^[45]^[15] International bodies, such as the World Lottery Association (WLA), contribute to global standardization by promoting responsible gaming frameworks and security controls applicable to lotteries and raffles, emphasizing player protection, ethical operations, and cross-border best practices among member operators in over 80 countries.^[46] Universal prohibitions commonly include barring participation by minors to safeguard vulnerable groups from gambling risks, alongside mandates for transparent accounting of ticket sales and proceeds to enable regulatory oversight and prevent illicit financial flows.^[47]^[45]

Regional Variations

In North America, raffle regulations exhibit significant variation at the subnational level. In the United States, licensing requirements for charitable raffles are determined state by state, with 48 states permitting nonprofits and 501(c)(3) organizations to host them under specific conditions, such as registration or permits for larger events, while Alabama and Hawaii prohibit them outright.^[15] For federal tax reporting, organizations must include raffle revenue on IRS Form 990, and if gross gaming receipts exceed $15,000, complete Schedule G (Form 990) to detail raffle activities, ensuring compliance with unrelated business income tax rules if applicable.^[48] In Canada, oversight is provincial, with each of the 13 provinces and territories imposing distinct controls; for instance, Ontario requires a license from the Alcohol and Gaming Commission for raffles with a total prize value exceeding $50,000, while British Columbia mandates registration for all charitable gaming events. Strict advertising rules apply nationwide, prohibiting misleading promotions and requiring clear disclosure of odds, prizes, and eligibility in all materials, as enforced by provincial gaming authorities to protect consumers.^[49]^[50] Europe's framework balances supranational principles with national sovereignty. Under the EU's Treaty on the Functioning of the European Union (TFEU), particularly Article 56, online gambling services including lotteries are treated as cross-border services, allowing operators licensed in one Member State to potentially serve others, though host countries may impose restrictions justified by public interest objectives like consumer protection. However, no harmonized EU directive exists for lotteries, necessitating national permits in each operating jurisdiction, with some states recognizing foreign licenses via "white lists" while others require dual authorization.^[51] In the United Kingdom, the Gambling Act 2005 delineates exemptions for small society lotteries promoted by non-commercial societies, which do not require a Gambling Commission operating license if the total value of tickets sold per draw does not exceed £20,000 and aggregate annual proceeds stay under £500,000, though registration with the local licensing authority is mandatory.^[52] In the Asia-Pacific region, restrictions often prioritize state control over private initiatives. Australia prohibits private, for-profit raffles across all states and territories, classifying them as unauthorized lotteries under gaming acts like the Gaming and Betting Act 1994 (Tasmania) or the Charitable and Religious Organisations Act 2012 (Victoria), with only registered nonprofits eligible to conduct them via state-specific permits for events exceeding thresholds such as $22,340 in Victoria or $30,000 in New South Wales.^[53]^[54] India's Lotteries (Regulation) Act, 1998, confines legal lotteries to those organized by state governments, banning private operations and interstate ticket sales without central approval, thereby limiting raffles to 13 states that have enacted enabling legislation as of 2025, with Himachal Pradesh approving revival of its lottery in August 2025; the central government is empowered to prohibit any contravening activities.^[55]^[56] Other regions display heterogeneous enforcement patterns. In Latin America, Mexico maintains federal oversight through the Ministry of the Interior's Gambling and Raffles Bureau, which authorizes all private lotteries and raffles under the Federal Gaming and Raffles Law of 1947, requiring detailed applications processed in Mexico City and prohibiting operations without prior approval, while the state-run National Lottery for Public Assistance handles public draws.^[57] In Africa, South Africa regulates raffles for fundraisers via the National Lotteries Commission under the Lotteries Act 57 of 1997, permitting society lotteries only for registered nonprofits to support good causes, with small incidental lotteries at exempt events tolerated under prescribed conditions without full licensing, though all must comply with registration and transparency mandates to curb unauthorized gambling.^[58]

Applications

Fundraising Uses

Raffles play a central role in nonprofit fundraising by enabling organizations to raise revenue for essential causes, including educational institutions, healthcare facilities, and community events. Participants purchase tickets for a chance to win prizes, with at least 90% of net proceeds after deducting prize costs directed toward the charitable mission, as required in many jurisdictions.^[59]^[60] For example, schools frequently organize raffles to support sports programs or infrastructure improvements, fostering community involvement while generating vital funds.^[61] Effective strategies maximize returns with minimal expenses, such as curating themed prizes from donated goods—like wellness baskets with spa certificates or gourmet food collections from local donors—to reduce outlays.^[62] Ticket pricing typically ranges from $5 to $20 per entry to ensure accessibility and encourage multiple purchases, while promotion through social media platforms and email campaigns amplifies reach and participation.^[63] These approaches allow nonprofits to allocate more resources to their causes, often under legal frameworks permitting such activities for charitable entities.^[64] High participation rates, driven by strong community ties, are key success factors, as they transform raffles into engaging events that build loyalty and support. Case studies illustrate this impact; for instance, school sports team raffles have netted thousands of dollars, with some standard events averaging $1,500 in proceeds to fund equipment or travel.^[65]^[66] Ethical practices are paramount, particularly in ensuring transparency about fund allocation to sustain donor trust and avoid perceptions of mismanagement. Nonprofits achieve this by publicly reporting how proceeds benefit specific programs, such as detailing percentages used for direct aid versus administrative costs.^[67]^[68]

Commercial and Promotional Uses

Raffles serve as a key tool in commercial marketing to drive customer engagement by incentivizing purchases through entry opportunities, thereby enhancing brand loyalty and increasing sales volume. Businesses often integrate raffle entries with product acquisitions, such as offering tickets for every item bought, which encourages repeat visits and higher spending. For example, retail chains use this approach during promotional periods to boost foot traffic and transaction values.^[69] In product launches, particularly for limited-edition items, raffles create scarcity and excitement, positioning the brand as exclusive and desirable. Consumers enter lotteries to secure purchase rights, which stimulates demand and elevates perceived value through psychological thrill and social status. A 2022 study by Lee et al. demonstrated that raffle marketing significantly enhances purchase orientation and conspicuous consumption among participants, resulting in improved post-purchase satisfaction and stronger repurchase intentions, especially among younger demographics valuing unique possessions.^[70] Notable examples include Nike's "The Draw" system for limited sneaker releases, where applicants vie for buying slots, and BMW's raffles for customized vehicles in collaborations like the M4 Competition with Kith, attracting thousands of entries and amplifying brand buzz.^[71] Raffles are frequently embedded in events such as store openings, trade shows, and entertainment venues to elevate attendance and participation. At retail events, in-store raffles draw crowds by promising prizes like electronics or gift cards, directly tying excitement to on-site sales. Similarly, in concert or promotional gatherings, raffle draws during the event heighten interactivity and encourage immediate purchases of merchandise or tickets.^[72] From a profit perspective, commercial raffles allow organizers to retain the majority of proceeds from ticket sales, with prizes accounted for as marketing expenses that yield broader returns through heightened visibility and customer acquisition. This model is evident in retail "spin-to-win" variants or ticketed draws, where the net revenue from entries often exceeds prize costs, supporting overall business growth.^[73] The rise of digital platforms has expanded raffle use in social media promotions, where brands host online draws to amplify reach via user shares and interactions. These digital raffles, often requiring simple actions like following accounts or tagging friends for entry, comply with advertising standards while driving viral engagement and lead generation for e-commerce sales. For instance, fashion and tech brands leverage platforms like Instagram for entry-with-purchase raffles on new collections, extending promotional impact beyond physical locations.^[71]

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A 50 50 raffle fundraiser is as simple as it sounds. Your supporters buy ... However, to avoid disappointment, consider setting a “guaranteed minimum prize ...<|control11|><|separator|>
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### EU Stance on Cross-Border Online Gambling and Lotteries, and National Permit Requirements
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Learn about different types of raffles to raise more funds for your cause. From 50/50 raffles to prize draws, find the perfect option to engage supporters!
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A fundraising raffle is a game of chance where donors buy tickets for a chance to win prizes, raising money for a cause. It's simple and affordable.
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In the United States, 501c3 raffle rules are complex. Here we review the IRS laws that govern charitable raffles for nonprofits.
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