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Raffle laws vary by state. Navigating Texas raffle laws can feel overwhelming, but understanding the rules is crucial for nonprofit organizations looking to host a successful fundraiser.
Raffles are a proven way to raise significant funds and attract new donors, but compliance with state regulations is non-negotiable. Who can host a raffle? What are the legal requirements? How many fundraisers can a nonprofit have in Texas?
We’ll break it down and guide you through setting up your event on the Zeffy raffle platform. Plus, we’ll share expert tips to ensure your raffle meets legal standards and maximizes your fundraising potential.
The state of Texas makes holding a raffle pretty easy. But, before we go any further into these creative nonprofit fundraising events, both the Charitable Raffle Enabling Act (CREA) and Professional Sports Teams Charitable Foundation Raffle Enabling Act define 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."
So, a raffle may be their own fundraisers, or part of special occasions like casino night fundraising events to raise funds. Raffles are legal in Texas as long as only nonprofit organizations are hosting them.
To host a raffle in Texas, you must be a qualified tax-exempt nonprofit organization and fall into one of the following categories:
Qualified religious society: Must have existed in Texas for at least 10 years.
Qualified volunteer fire department: Must operate firefighting equipment, provide firefighting services, and not pay members beyond nominal compensation.
Qualified volunteer emergency medical service: Must not pay members beyond nominal compensation.
Qualified 501(c) tax-exempt nonprofit organization: Must have existed for at least three years.
Professional sports team charitable foundation: Under the Professional Sports Team Charitable Foundation Raffle Enabling Act, only foundations associated with a “professional sports team” as defined by statute may conduct raffles. To qualify, the foundation must:some text
Be associated with a professional sports team with a home or rodeo venue in Texas.
Be a 501(c)(3) tax-exempt nonprofit organization.
Have been in existence for at least three years.
(Individuals and for-profit businesses who are no tax exempt are prohibited from holding raffles in Texas.)
How does a nonprofit register for a raffle in Texas?
You do not have to register or obtain a license or permit to host a raffle in Texas. (Go Texas!) However, you must ensure your nonprofit organization qualifies and obtains a tax exempt status recognized in the state's office and the Internal Revenue Service (IRS).
This may require you to file Articles of Incorporation with the Texas Secretary of State to establish your organization as an official legal entity. The fee for filing by mail, fax, or online is $25.
From there, qualified organizations are ready to go. If an organization is not registered with the state as a tax exempt organization, raffles run the risk of being seen as illegal gambling.
Raffles are closely regulated and to avoid violating rules, we'll break down everything you need to know below.
Before you get started, knowing what to prepare for as you begin planning for your nonprofit raffle is essential. Texas law defines specific rules in place that can result in penalties if you don’t take the time to get acquainted.
The first thing you’ll need to do is establish the raffle’s draw date before selling tickets. If you can’t award the prize on the original date, you can reschedule it within 30 days or offer refunds.
From there, you’ll need to follow specific rules around the promotion of your raffle:
You cannot promote your raffle through TV, radio, or newspapers.
You may use your website, social media, emails, or newsletters to communicate with existing members about your raffle.
How many fundraisers can a nonprofit have in Texas?
Nonprofit organizations may hold up to four raffles per calendar year (January 1 to December 31)
Qualified professional sports team charitable foundations can conduct raffles during preseason, regular season, and postseason games at their home venue and rodeo events under HB 3012.
Raffle proceeds
When hosting a raffle in Texas, it’s essential to understand how proceeds can be used:
Nonprofits under CREA: Every dollar raised through your raffle must go toward your organization’s charitable purposes as defined by the Charitable Raffle Enabling Act (CREA). This means the funds should directly support your mission and programs.
Professional sports team foundations: If your raffle falls under the Professional Sports Team Charitable Foundation Raffle Enabling Act, proceeds can be used for charitable purposes after deducting reasonable operating expenses and cash prizes. However, keep in mind:some text
Operating expenses must be reasonable and clearly defined.
These expenses cannot exceed 10% of the gross proceeds from the raffle.
Following these guidelines ensures your raffle stays compliant while maximizing its impact on your cause.
When planning raffle prizes, it’s essential to know what’s allowed under Texas law:
Cash prizes:some text
Cash prizes are not allowed for nonprofits under CREA. This includes coins, paper money, and anything readily convertible to cash, like certificates of deposit. However, U.S. savings bonds and prepaid credit cards are allowed.
Professional sports team charitable foundations can offer cash prizes, but the value of the prizes cannot exceed 50% of the gross ticket sales.
Prize value limits:some text
Under CREA, the value of purchased prizes cannot exceed $75,000; for residential dwellings, the limit is $250,000. There is no value cap for donated prizes.
Sports team foundations don’t have the same limits on non-cash prize values.
Prize possession requirements:some text
CREA requires your organization to possess the prize or post a bond with the county clerk for its full value.
Sports team charitable foundations aren’t specifically required to post a bond for prizes.
Raffle ticket requirements
Raffle tickets in the state of Texas need to display the following information clearly:
For all nonprofit raffles under CREA, the ticket must clearly show:
The name of your tax-exempt organization
The address of your organization or a designated officer
The ticket price
A brief description of each prize worth over $10
The date when the prize(s) will be awarded
For raffles under the Professional Sports Team Charitable Foundation Raffle Enabling Act, tickets must also include:
The name of the raffle and the sales station where the ticket was purchased
The date of the drawing and how the winner will be announced
Instructions on how and where to claim a prize
The timeframe a winner has to claim their prize
The logo of the professional sports team foundation the sports team itself, or both
We think it’s also probably a good idea to include a ticket number and the information of the person who purchased the ticket so that you can contact the winners after the draw.
We’ve whipped up an example to give you a better idea:
Support for conducting raffles
When organizing and conducting a raffle, there are important rules about compensation and who can help:
Under CREA:some text
No compensation for raffle organizers: You cannot pay anyone directly or indirectly for organizing or running a raffle.
Volunteers only: A member of your organization can organize and conduct the raffle, but their duties should be a tiny part of their regular job.
Under the Professional Sports Team Charitable Foundation Raffle Enabling Act:some text
Only employees or volunteers of the professional sports team charitable foundation or the team can sell raffle tickets.
Online raffle laws
We won’t lie; this is a grey area in Texas. CREA states that an organization may not “sell or offer to sell tickets for a raffle statewide.” The term “statewide” is often thought to include the Internet, but it is unclear.
When it comes to running online raffles in Texas, there are some key rules you’ll need to follow:
Nonprofits cannot sell or offer to sell raffle tickets statewide, which is generally thought to include online sales.
You can advertise and promote the raffle on your organization’s website or through solicitations (such as newsletters, social media, or emails) only to supporters your organization already identifies.
Nonprofits in Texas should be aware of the severe penalties that can come with violating raffle laws:
Gambling violation: Under Texas law, running an unauthorized raffle is considered gambling, and it can result in a Class C misdemeanor, which can result in a fine of up to $500.
More serious consequences: If the violation falls under organized crime activity (Title 11 of the Texas Penal Code), it could result in a state jail felony. This could involve a fine of up to $10,000 and a potential sentence of up to two years in a state correctional facility.
Federal penalties: Federal violations carry even steeper consequences, with a potential prison sentence of up to 5 years and fines of up to $250,000 for individuals or $500,000 for organizations.
Legal actions: Violations may prompt legal action from county attorneys, district attorneys, or the Office of the Attorney General (OAG), who can bring an action in state court to stop a violation.
These penalties highlight the importance of following raffle laws to avoid serious legal and financial consequences.
Host your raffle without the added fees using Zeffy’s 100% free raffle software
Zeffy’s raffle software is designed to simplify fundraising while maximizing impact. As the only 100% free platform for nonprofits, Zeffy ensures that every dollar raised goes directly to your cause—no hidden fees or deductions.
Plus, Zeffy also has the tools to support all nonprofit fundraising activities you may want to explore.
With Zeffy, your nonprofit can:
Keep every dollar raised—Zeffy charges no platform fees, ensuring more funds go directly to your cause
Quickly create and launch raffles with an intuitive interface designed for simplicity.
Personalize your raffle page with branding to create a professional and engaging donor experience.
Save time with automated email confirmations and streamlined ticket management.
Monitor ticket sales and fundraising progress with built-in analytics tools.
Reach a broader audience and keep supporters engaged with seamless online functionality.
Not at all! In Texas, nonprofit organizations with a federal tax exempt status don’t need to register their raffles. That means you can focus on planning your fundraiser without worrying about extra paperwork or fees.
There’s no magic number here—it really depends on your organization’s goals, resources, and donor base. Some nonprofits benefit from running a few large events, while others thrive with multiple smaller campaigns.
One thing is for sure: diversifying your efforts, like adding a raffle to your annual fundraiser, is a great way to reach new supporters and maximize your impact. The key is to find a balance that works for your team and your mission.
Under CREA, if the raffle prizes cannot be awarded on the original date, the organization must set a new date within 30 days. If the prizes are not awarded within this timeframe, the organization must refund the ticket money to the purchasers.
The Professional Sports Team Charitable Foundation Raffle Enabling Act does not address this issue.
Sometimes things don’t go as planned, and that’s okay! Under the Charitable Raffle Enabling Act (CREA), if you can’t hold your raffle as scheduled, your organization must choose a new date within 30 days.
If, for some reason, you can’t award the prizes within that timeframe, you’ll need to refund ticket purchasers. However, the Professional Sports Team Charitable Foundation Raffle Enabling Act doesn’t cover this scenario, so double-check which rules apply to your raffle.
A nonprofit organization does not need to pay sales tax on raffle tickets because the sale of raffle tickets is considered the sale of the right to win an item.
Here’s a recap of all the links and documents mentioned in this article:
