Presumably to a certain degree this is a state by state q, I’m in Florida. However, any suggestions would be appreciated.
How can a non-profit organization legally host a “celebrity poker night” and not run afoul of any gambling / racketeering laws? I know you can give prizes at events, and I know you can take donations, and I guess you can’t really have contests you “must pay to win”… so if everyone “donates” an entry fee to play, and at the end of the night someone’s “prize” is a certain amount of cash… is that kosher?
When I taught my fundraising course this year one of my students was a police officer who was raising money for a police fitness center. We discussed different fundraisers, including a raffle or a “Chinese auction” (you buy a bunch of tickets, and drop each ticket in a bucket next to a prize…it’s a popular fundraiser around here). He had decided not to run one–too much hassle, he thought–but he said that other police fundraisers had run gaming nights or raffles. And if the police did that, how could they ding other fundraisers for doing it?
There are a lot of variables, and it might make sense to have a quick chat with an attorney in your state that works with nonprofits. That said, here are a few comments:
You may be able to work with another charity to pull it off. For example, your local Elks lodge might have a gaming license and be able to run the game for you.
Look carefully at your state’s definition of gambling. The “Chinese auction” mentioned in the previous post, for example, isn’t gambling here because there’s no element of chance involved; whoever drops in the most tickets wins.
Many of our local nonprofits use auctions (both live and silent) as fundraisers. They’re not gambling, but they can be a lot of fun, depending on what kind of auction items are donated.
I’ve been to at least one event in another state where they had blackjack and roulette at a nonprofit fundraiser and they told me that the state didn’t consider it gambling because you couldn’t win any money. As pan1 described, you “buy in” to the game and get a stack of chips. At the end of the evening, whoever has the most chips gets first pick of the prizes, the next most gets second pick, and so forth. Because it wasn’t formally “gambling,” it didn’t matter how you accumulated your chips. People could pool them, share them, trade them to each other for drinks, or whatever. Legally, the gaming was incidental.
Actually, what happens is the charity pulls one of the tickets out of the bucket at the end of the night. Obviously if you put in 30 tickets and someone else puts in one you have 30x the chance of winning…but it is still as much a gamble as picking lottery numbers.
Maybe, and IANAL, but that seems a pretty thinly-disguised method of gambling. Kind of like the Japanese pachinko parlors where you win a “prize” that you can take around the back of the store for money. After all, you are still winning an object of value, whether that is a gift basket valued at $50 or $50 in cash, in a game of chance. That sounds like gambling to me.
50-50s for charity are legal in PA, which until recently had the strictest anti-gambling measures, so I’d (heh) wager that they’re OK in many states.
Historically Connecticut specifically allowed charities to run gambling nights. This was a key argument used in the court case which opened the door to the two full-time casinos now run by two Indian tribes in the state. See below site for details:
First… don’t be sure the charity could actually do it. Plenty of charities get away with stuff because a bunch of people on a committee don’t know the laws and there aren’t any complaints to draw legal action. For example, Washington state requires a registration for charities that solicit donations in any way. I have dealt with more than one organization that solicited donations before filing the proper forms… and in one case before even properly registering as a nonprofit. They just assumed everything was OK if it was for a good cause.
Second, states do have various laws that permit nonprofits to use gambling for fundraising. The laws vary from state to state, and might even be different within certain cities and counties. Sometimes those laws specify how the gambling can be done (pan1 describes one way that might be done), just to make sure the nonprofits don’t try to open a casino under their looser rules.
I do fund raising for a 501c3 in PA. When I did our Bingo Night, we had to apply for a bingo license. For a 501c3, the fee was nominal, $15 for one night of Bingo. If you are running any game of chance, you require a license in PA. They do not require licensing for raffles and auctions under a certain value for 501c3’s.
Our Bingo license allowed us a top cash prize of $1000, IIRC.
It was a really good money maker and we plan to repeat it again this year.