May Our Charity Run a Raffle?

Q: Our charity which runs several soup kitchens and homeless shelters wants to raffle off a Tesla X. We want to offer the raffle tickets to donors across Canada and the USA. Do we have to register for a raffle license in each province and state where our potential donors are located, even though we are not located there (we are located in Ontario)?

A: You You have hit one of the “third rails” of fundraising. Lotteries are something that charities run all the time, but often don’t comply with the relevant laws.

A lottery or a raffle requires three elements: It must (1) offer a prize (2) to someone who provides consideration, usually cash, for (3) an opportunity to win the prize determined by lot or chance, as opposed to skill. Most states regulate raffles and lotteries in some way. Some states have both state and local regulation of lotteries.

Whether you can sell your tickets online will be a matter of the law of every province or territory in which you are promoting them. Whether you need a license to sell them may be up to the local municipality in which you are trying to sell them. You need to check the law of every province in which you want to sell. You will probably find a lot of obstacles.

You should also know that the U.S. Postal Service has strict rules against mailing promotions or tickets for lotteries in most situations. And the CRA refuses to grant a charitable contribution deduction for the payment on the theory that what the purchaser pays is the value of the opportunity to win the prize.

We once explained to a client that she needed to get a license from her local municipality to raffle off a new car at her annual fundraiser. She said she was aware of the rule but didn’t worry about it because the municipality's lawyer in charge of enforcement was her best ticket seller!

Even without that connection, a whole lot of charities take the risk because there isn’t a great deal of enforcement of the rules. The problem is that if someone wants to get you, the proof is easy to obtain and there is no defense.

Thinking about partnering with outside fundraisers? Learn how Canadian charities can work with third-party fundraisers while staying compliant.

2025 UPDATE: What's New in Canadian Raffle Regulations

Ontario's Current Rules

In Ontario, both the Alcohol and Gaming Commission of Ontario (AGCO) and municipalities issue raffle licenses. Your choice depends on your prize value and ticket type.

Municipal License (Under $50,000):

• Total prize value under $50,000
• Must use paper-based tickets only
• Apply with your local municipality

Provincial License (Over $50,000):

• Total prize value over $50,000
• Electronic raffles (any amount)
• Apply through AGCO

Key Requirements for 2025

Charities must be registered and operating for at least one year in Ontario. Two adult members (18+) must oversee each raffle.

Application Timing:

• New applicants: Submit 45 days before your event
• Previous licensees: Submit 30 days before your event

Electronic Raffles Are Now Common

Electronic raffles use computers for ticket sales, winner selection, and prize distribution. These require provincial licensing regardless of prize value.

Popular online platforms now help charities run compliant electronic raffles. But you still need proper licensing first.

Multi-Province Sales: Still Complex

Selling across Canada remains challenging. Each province has different:

• Licensing requirements
• Prize value limits
• Ticket format rules
• Reporting obligations

British Columbia allows online sales for Class A (over $20,000) and Class B ($20,000 or less) events. But you need separate licenses for each province.

Cross-Border Sales to the US

Selling to US donors adds more complexity. You'd need to comply with:

• Canadian provincial laws
• US state lottery laws
• US postal service restrictions
• Currency exchange rules

Most legal experts recommend staying within Canada only.

Financial Reporting Requirements

Financial reports must be filed within 30 days of your raffle's conclusion. This includes detailed tracking of revenue, expenses, and net proceeds.

What Happens If You Don't Comply?

The AGCO penalizes non-compliance through education, warnings, monetary penalties, and license suspension or revocation.

Penalties vary by province. But they're getting stricter as online raffles grow more popular.

Charity Raffle Best Practices for 2025

Start Early: Begin your application process at least 60 days before your event.

Stay Local: Consider limiting sales to your home province to reduce legal complexity.

Keep Records: Document everything - ticket sales, expenses, winner selection, and prize distribution.

Get Expert Help: Consult with a lawyer familiar with gaming law in your target provinces.

Use Approved Systems: If going electronic, only use gaming suppliers registered with your provincial authority.

Thinking of raffles or fundraisers? Discover the official fundraising guidelines for Canadian nonprofits to ensure your efforts stay compliant and impactful.

Conclusion

Running a multi-province raffle is legally complex and risky. The Tesla X might be exciting for donors. But the legal headaches could outweigh the benefits.

Consider simpler fundraising options first. If you proceed with a raffle, start with your home province only. Get proper legal advice before expanding elsewhere.

Remember: Your supporters can't get tax receipts for raffle tickets. Make sure they understand this before they buy.

Need Expert Guidance for Your Charity's Fundraising Plans?

At B.I.G. Charity Law Group, we help Canadian charities navigate fundraising regulations and ensure compliance with provincial gaming laws. Our team understands the intricacies of charity law and can guide you through the licensing process, help structure compliant fundraising activities, and protect your organization from legal risks. Don't let regulatory uncertainty hold back your fundraising efforts.

Ready to discuss your charity's fundraising plans? Contact B.I.G. Charity Law Group today. Call us at 416-488-5888, email dov.goldberg@charitylawgroup.ca, or visit CharityLawGroup.ca to learn more. Schedule your FREE consultation to get expert advice tailored to your organization's specific needs.

Frequently Asked Questions About Charity Raffles in Canada

Got questions about running a charity raffle? Here are quick, direct answers to help you understand the basics and stay compliant with Canadian law.

Are raffles legal in Canada?

Yes, raffles are legal in Canada when properly licensed. Each province regulates raffles differently. You must get a license from your provincial gaming authority or local municipality before selling tickets.

Can I hold a raffle without a licence?

No. Running an unlicensed raffle is illegal across Canada. You risk fines, penalties, and potential criminal charges. Always get proper licensing before selling any raffle tickets.

Can I run a raffle for charity?

Yes, but only registered charities and eligible non-profit organizations can get raffle licenses. Your organization typically needs to operate for at least one year before applying. Individual fundraisers cannot get licenses.

How to start a raffle fundraiser?

1. Check eligibility - Ensure your charity is registered and operating for 1+ years
2. Choose your prize - Determine total prize value to know which license you need
3. Apply early - Submit applications 30-45 days before your event
4. Get licensed - Apply to your municipality (under $50K prizes) or province (over $50K)
5. Follow rules - Use approved tickets, keep records, file reports after your draw

What are the rules for raffles in Canada?

Key rules include:

• Must have proper provincial or municipal license
• Tickets must include specific information (license number, draw date, prize details)
• Two adults must oversee the raffle
• Winners must be selected fairly by chance
• Financial reports required within 30 days
• Proceeds must support charitable purposes
• No charitable tax receipts for ticket purchases

What is a charity raffle?

A charity raffle is a licensed fundraising event where people buy numbered tickets for a chance to win prizes. Winners are selected randomly. Only registered charities and eligible non-profits can run raffles. All net proceeds must support the organization's charitable mission.