Planning a raffle in Kentucky? You’re not alone. Thousands of churches, schools, and charities run them every year. But Kentucky has real rules you need to follow before you sell a single ticket.
Getting it wrong can cost your organization big. Let’s walk through what you need to know.
What Is a Raffle?
A raffle is a game of chance. Participants buy tickets for a chance to win a prize. A winner is chosen through a random drawing. Pretty simple, right?
In Kentucky, raffles fall under what the state calls “charitable gaming.” That means only nonprofit and charitable organizations can legally run them. This is not something a for-profit business can do. Kentucky law under KRS Chapter 238 makes that very clear.
Honestly, this is the part most people miss. They assume anyone can hold a raffle. They can’t.
Who Can Hold a Raffle in Kentucky?
Okay, this one’s important. Not just any group can run a raffle in Kentucky.
Your organization must be a nonprofit. It needs to have tax-exempt status. That means qualifying under IRS categories like 501(c)(3), 501(c)(4), 501(c)(8), 501(c)(10), or 501(c)(19). Churches, schools, veterans’ groups, and civic organizations often qualify.
Wondering if your group qualifies? Check your IRS determination letter. If you have one, you’re likely on the right track.
Private individuals and for-profit businesses cannot run raffles in Kentucky. There is one narrow exception we’ll cover later, but it’s very limited.
Do You Need a License?
Most organizations need a license from the Kentucky Office of Charitable Gaming. That’s the state agency that oversees all charitable gaming in Kentucky.
Here’s where things get a little more nuanced. Kentucky law does offer some exemptions. If your nonprofit’s raffle income is $25,000 or less per year, you may qualify for an exemption from the full licensing process. That said, you still need to meet all other legal requirements.
Think of it like a driver’s license versus a CDL. You still have to follow the road rules either way.
If your raffle income goes above $25,000 per year, you need a full charitable gaming license. No shortcuts. You also need to apply at least 60 days before your first raffle event.
Small Group Exception
Here’s something a lot of people don’t know about. Kentucky law has a small exception for groups that don’t qualify as charitable organizations.
A non-nonprofit group or informal collection of individuals can hold a very small raffle if total gross receipts don’t go above $500. All proceeds must go entirely to charity. No one involved can personally profit from it.
That’s a very tight limit. Most fundraisers would exceed $500 pretty fast. Don’t bank on this exception unless your event is truly tiny.
Raffle Ticket Rules
Hold on, this part is important. Kentucky has specific rules for how raffle tickets must work.
Each ticket must be sold separately. Every ticket must have an equal chance to win. You can’t force anyone to buy more than one ticket. You also can’t require someone to purchase anything else alongside a ticket.
All tickets must be sold at the price printed on the ticket. No markups. No deals for bulk purchases that change the odds.
Winners are determined by a random drawing. Not by a sporting event outcome. Not by any other method. A true random draw is required by law.
Paper Tickets vs. Online Raffles
Kentucky now allows online raffle systems. That’s a relatively new option for nonprofits.
Here’s the catch. You must choose one format and stick to it. You can run an entirely paper-ticket raffle or an entirely online raffle. You cannot mix both in the same raffle event. The only exception is paper receipts printed from an online system.
Online raffles must use a state-approved electronic raffle system. You can’t just set up a website and start selling. The system has to meet state standards.
The Drawing Rules
Every raffle ticket holder has the right to watch the drawing. That’s the law. Your organization can also live-stream the drawing online to let ticket buyers watch remotely.
Nobody is required to be present to win. If the winner isn’t at the drawing, your organization must contact them within 7 days. Then the winner has 30 days to claim their prize.
Pretty straightforward. But missing those deadlines can create real problems for your organization.
Age Restrictions
No one under 18 can purchase a raffle ticket in Kentucky. This applies to all charitable gaming, including raffles. It’s not optional and it’s not something you can waive.
Make sure your ticket sellers know this rule. It’s one of those things that seems obvious but can get overlooked at a busy event.
Recordkeeping Requirements
This part can be tricky, honestly. Kentucky requires licensed organizations to keep detailed records of all raffle activity.
Your raffle income must be kept in a separate bank account used only for charitable gaming. Money from raffles cannot be mixed with your regular operating funds.
If your raffle tickets are sold for $100 or more each, even more detailed records are required. The state can audit these records. Make sure everything is accurate and organized.
Prizes and What You Must Do With the Money
All raffle prizes must be awarded exactly as stated on the ticket. If the prize is listed as a $500 gift card, that’s what you give. No substitutions without notifying ticket holders.
If your raffle gets postponed, you must make reasonable efforts to notify all ticket holders of the new drawing date.
Net receipts from raffles must go toward your organization’s charitable purposes. Kentucky law is strict about this. Using raffle money for non-charitable expenses can put your license at risk.
Penalties and Consequences
So what happens if you break the rules? The consequences are real.
The Kentucky Office of Charitable Gaming can place your organization on probation. They can issue cease and desist orders. They can suspend or revoke your charitable gaming license. They can also impose financial fines.
Running an unlicensed raffle when one is required is a serious violation. It can put your organization’s tax-exempt status at risk. It can also expose your officers and members to personal liability.
Think of it like running a business without the required permits. The state will catch up with you eventually, and the penalties grow.
Special Event Raffle Licenses
Some organizations qualify for a special event raffle license. This is a different type of license than the standard charitable gaming license.
Organizations that qualify under a specific IRS section and want to hold a single large raffle can apply using Form CG-APP-SER. The gross receipts for these special raffles cannot exceed $500,000.
All net proceeds from a special event raffle must go to a licensed charitable organization. One hundred percent of the net must be distributed. This isn’t a fundraiser where you keep some money for overhead. Every dollar of profit must go to charity.
How to Apply for a License
Ready to get started? Here’s what you need to do.
Start by confirming your nonprofit status. You’ll need your IRS determination letter and your organization’s legal information.
Submit your application to the Kentucky Office of Charitable Gaming. Standard charitable gaming organizations use Form CG-APP-ORG. Special event raffle applicants use Form CG-APP-SER. Apply at least 60 days before your first expected raffle date.
The state will review your application and notify you of any missing information. You have 30 days to respond to any deficiency notices. If you miss that window, your application is automatically withdrawn.
You can reach the Office of Charitable Gaming at 500 Mero Street, Frankfort, Kentucky 40601. Their office is open Monday through Friday from 8 a.m. to 4:30 p.m.
Frequently Asked Questions
Can a church hold a raffle in Kentucky without a license?
Yes, if the church qualifies as a charitable organization and keeps annual raffle gross receipts under $25,000. Above that threshold, a full license is required.
Can a for-profit business run a raffle in Kentucky?
No. Only nonprofit and charitable organizations may legally conduct raffles in Kentucky.
Can kids buy raffle tickets in Kentucky?
No. Anyone under 18 is prohibited from purchasing raffle tickets under Kentucky charitable gaming law.
Can I sell raffle tickets online in Kentucky?
Yes, but only using a state-approved electronic raffle system. You also cannot mix online and paper ticket sales in the same raffle.
What happens if someone wins but doesn’t claim their prize?
Unclaimed prizes go back to the charitable organization. You must notify the winner within 7 days and give them 30 days to claim their prize.
Can an informal group of friends hold a raffle?
Only if the total gross receipts stay under $500 and all proceeds go entirely to charity. Above that, you need to be a qualifying nonprofit.
Final Thoughts
Kentucky raffle laws exist to protect both nonprofits and the public. They make sure funds actually go where they’re supposed to go.
If you’re planning a raffle, start early. Apply for your license at least 60 days ahead of time. Keep clean records. Follow the ticket rules. And make sure only eligible adults are buying tickets.
Now you know the basics. When in doubt, contact the Kentucky Office of Charitable Gaming directly or talk to an attorney familiar with nonprofit law. A little preparation upfront saves a lot of headaches later.
References
- Kentucky Revised Statutes Chapter 238 – Charitable Gaming
- 820 KAR 1:050 – Raffle Standards (Kentucky Administrative Regulations)
- Kentucky Office of Charitable Gaming – Forms and Documents
- KRS 238.535 – Licensing and Exemptions via FindLaw
- 820 KAR 1:005 – Charitable Gaming Licenses and Exemptions via Cornell LII
