Many non-profits, community organizations and religious organizations consider conducting raffles as a form of fund raising. If you are considering a raffle for your organization, it is important to be aware of certain requirements with respect to the conduct of raffles in New Jersey. Here are seven important things to know about running a raffle in New Jersey:
- Plan In Advance
There are multiple steps to be taken before conducting your raffle so give yourself time to prepare in order to ensure you follow all the necessary steps.
First, your charitable organization needs to register with the New Jersey Legalized Games of Chance Control Commission (“Commission”) and obtain a registration number. The registration form can be found here.
Once a registration number has been obtained from the Commission, your next step is to prepare a sample raffle ticket. See “The Ticket – Do’s and Don’t’s, ” Number 4 below for more information on this.
You will then file an application with the municipality in which you will be conducting your raffle. You must submit four original copies of the application with the municipal clerk along with two copies of your sample raffle ticket. The municipal clerk will then forward your application and ticket to the Commission. Approval by the municipal clerk of your raffle ticket cannot be given for at least 14 days after the municipal clerk forwards the application to the Commission.
- Be Careful Where You Conduct Your Raffle
As mentioned above, in order to conduct a raffle, you must obtain approval from the municipality in which you want to conduct the raffle. Thus, the logical conclusion is that raffles can only be conducted in municipalities that allow them. There are 22 municipalities that do not permit raffles within their borders.
- This Is New Jersey – There Is A Fee For Everything
Are you surprised that there are multiple fees associated with this process? The initial registration fee to become an organization qualified to conduct games of chance is $100.00.
Each type of raffle has a different fee structure. Generally, there is a sliding scale for the licensing fee based on the amount of the prizes being offered. The sliding scale is in $20.00 increments. Since we are discussing off premises raffles for merchandise, the fee to the Commission is $20.00 for each $1,000 or part thereof of the total retail value of the prize(s) to be awarded. Each municipality also adds their own fee for the administration of the process. Check with the municipal clerk for the appropriate municipal fee associated with this process.
- The Ticket – Do’s And Don’t’s
There is a lot of required information that must be present on your raffle ticket. Unfortunately, the orange rolls of raffle tickets you bought at Party R Us won’t cut it.
Your raffle ticket must include (1) the name and registration number of your organization; (2) a space for your municipal license number; (3) date, time and location of the drawing; (4) a list of the prizes and their retail values; (5) the ticket number; (6) the price of the ticket; (7) the purpose to which the net proceeds will be devoted; and (8) the statement “No substitution of the offered prize may be made and no cash will be given in lieu of the prize.” If you are also requiring a winner to be present at the time of the drawing of the raffle in order to collect the prize, you must include the language “NOT VALID UNLESS HOLDER IS PRESENT AT THE DRAWING.”
If you are awarding a cash prize, you must also include the language “This is a 50/50 cash raffle and the winner will receive 50 percent of the amount received for all tickets or rights to participate” or if the cash prize is to be divided among multiple winners, the ticket must layout the percentages of the prize pool. Additionally, instead of “No substitution of the offered prize may be made and no cash will be given in lieu of the prize,” you must include the language “No substitution of the offered prize may be made.”
The stub which must be kept by your organization to identify the winner(s) must contain the name and address of the ticket holder; the ticket number; the registration number and the municipal license number.
For a sample merchandise prize raffle ticket, click here.
- Your Duties Do Not End After You Pull The Winning Ticket
So you’ve now conducted a successful raffle, made somebody very happy with their new iPad3 and made some money for your charitable organization. Time to pat yourself on the back and call it a day. Unfortunately, your duties are not complete just yet. After your raffle is conducted you are required to file a Raffle Report of Operations by the 15th day of the calendar month immediately following the calendar month in which the raffle was held. That means if you conduct a raffle on any day in June, your Raffle Report of Operations is due no later than July 15th. Give yourself more time by conducting the raffle at the beginning of a month rather than the end.
The Report details the number of tickets sold, ticket price, gross receipts, expenses, the net proceeds, use of the proceeds and must include a copy of the printer’s certificate and a sample ticket. To view a sample Raffle Report of Operations click here but be sure to fill out the proper type of Raffle Report of Operations based on the type of raffle you conducted.
Additionally, you are required to retain all unsold raffle tickets for a period of two years from the date of the drawing.
- Play It By The Book, Avoid Fines
The State of New Jersey is the only winner when you try to bypass the raffle licensing laws. A violation of the raffles licensing laws or the regulations can result in a fine of up to $7,500 for a first offense and not more than $15,000 for the second and each subsequent offense. You could also be required to repay all participants in your raffle as a result of a violation of the rules.
These fines could negate any proceeds your organization was able to collect from the raffle or even end up costing your organization more money. It’s not worth the chance trying to get around the rules.
- This Isn’t Everything, So Check With A Professional
Remember there are many types of raffles – off-premise versus on-premise, door-prize raffles, calendar raffles, duck race raffles, instant raffles to name a few. The rules, regulations and fees may differ for each raffle. Also, certain exemptions exist for senior citizen clubs.