Alaska Gaming Permit: Requirements, Application, and Fees

An Alaska gaming permit is issued by the Alaska Department of Revenue’s Tax Division to municipalities and qualifying nonprofit organizations that want to run bingo, raffles, pull-tabs, fish derbies, and similar games of chance. Fees start at $20 a year, but eligibility is the real hurdle: your organization must have existed continuously in Alaska for at least three years and have at least 25 Alaska-resident members. Below is what qualifies, what the permit lets you do, how to apply, and what you owe the state once you have it.

Who Qualifies for a Permit

Individuals and for-profit businesses cannot hold a permit. The law restricts them to municipalities and “qualified organizations,” a defined category that includes civic and service groups, religious organizations, charities, fraternal organizations, veterans’ groups, labor unions, political organizations, educational institutions, police and fire departments, dog mushers’ associations, outboard motor associations, fishing derby associations, and nonprofit trade associations.¹ The common thread: the group cannot operate for the profit of its members.

On top of fitting one of those categories, your organization must have been in continuous existence in Alaska for at least three years before you apply.² You also need at least 25 members who are Alaska residents.³ A new organization, or one whose membership sits mostly out of state, will not qualify no matter how legitimate its mission.

What the Permit Lets You Do

A permit authorizes a defined list of activities: bingo, raffles and lotteries, pull-tab games, fish derbies, dog mushers’ contests, Calcutta pools, and the Alaska “classics” (freeze-up, ice, rain, snow, salmon, and others). Contests of skill are also permitted.⁴

What the permit does not cover matters just as much. Alaska prohibits playing cards, dice, roulette wheels, and coin-operated gaming machines under a charitable gaming permit.⁵ A charity poker night or a casino-themed fundraiser falls outside the permit system entirely. The department can also refuse authorization for any game method not expressly allowed.

A few additional limits: players must be at least 19 to play bingo, and no activity can be licensed under this chapter unless it existed in Alaska in substantially the same form before January 1, 1959, with exceptions for newer games specifically listed in the statute.

Members-in-Charge

Every application must name a primary member-in-charge and at least one alternate. These are the people legally responsible for the organization’s compliance with gaming laws. Each must be a natural person, at least 21 years old, and must have been an active member, board member, or employee of the organization for at least six months before the application date.⁶ Both must pass a gaming knowledge test administered by the Department of Revenue.²

Members-in-charge also have to consent to a criminal history check.⁷ A disqualifying conviction bars that person from serving in the role.

How to Apply

Applications go to the Alaska Department of Revenue, Tax Division (which houses the Gaming Unit). The application form and instructions are on the department’s website. You will need to submit:

Proof the organization qualifies, typically an IRS 501(c) determination letter or state incorporation records showing at least three years of continuous existence in Alaska.
Evidence of at least 25 Alaska-resident members.
Your primary and alternate member-in-charge designations, with both having passed the gaming test and consented to criminal history checks before the permit issues.
A gaming plan describing the activities you intend to run, where you will run them, estimated revenue, and how net proceeds will be used.
The permit fee, payable by check or ACH debit.

The department reviews for compliance and will request more information if something is missing. Once approved, the annual permit must be posted in a clearly visible location at every gaming site. If the application is denied, you can request reconsideration or reapply after correcting the issues.

Fees

The annual permit fee is tiered to your organization’s gaming revenue from the prior year:⁸

$20 for first-time applicants and organizations with prior-year gross receipts under $20,000.
$50 for gross receipts between $20,000 and $100,000.
$100 for gross receipts over $100,000.

Organizations with gross receipts of $20,000 or more also owe an additional fee equal to one percent of the prior year’s net proceeds.⁸ On $80,000 of net proceeds, that adds $800 to the permit fee.

If your organization contracts with an outside operator to run gaming activities on your behalf, that operator carries separate obligations: a $500 annual license fee, a surety bond of $25,000 per permit up to a $100,000 cap, liability insurance, and the department’s gaming test.⁵

How Net Proceeds Must Be Used

This is where permit holders most often get into trouble. Gaming revenue is not general operating money. Net proceeds must be dedicated to educational, civic, charitable, patriotic, religious, or public purposes within Alaska, or to the welfare of the organization’s own membership within the community, and the money has to reach a qualifying use within one year.⁹ If you need longer, you must apply to the department for an extension and show good cause.

Political spending is restricted. Bingo and pull-tab proceeds cannot go to lobbyists, political candidates, political parties, or groups working to influence elections. Raffle and lottery proceeds have more flexibility on political spending, but only for in-person ticket sales, not online raffle sales.⁹

Expense Caps and Prize Limits

Alaska caps both expenses and prizes. For pull-tab games, total expenses cannot exceed 70 percent of adjusted gross income from those games. For all other gaming activities, the cap is 90 percent of adjusted gross income.⁵ Consistently pushing those limits invites department scrutiny of why the games are producing so little for the charitable purpose they exist to fund.

Prize limits are equally specific. For non-bingo activities, an organization running games directly can award up to $1,000,000 in prizes per year; that ceiling drops to $500,000 if you use an operator. Door prizes are capped at $20,000 per month or $240,000 per year, whether measured by permittee or by bingo hall. For Calcutta pools, prizes and expenses combined cannot exceed 50 percent of gross receipts.

Reporting After You Get the Permit

Every permit holder files an annual report by March 15 covering the previous year’s gross receipts, authorized expenses, prizes awarded, and net proceeds for each type of gaming activity. The one-percent net proceeds fee, if you owe it, is paid with the annual report.¹⁰

If your gross receipts exceed $50,000 in any calendar quarter, you also file a quarterly report within 45 days of that quarter’s end, itemizing dates, locations, game types, gross receipts, expenses, and prizes.¹⁰ Raffles, lotteries, and Calcutta pools do not trigger the quarterly requirement until the event is completed, even if the quarter has ended.

All gaming records and supporting documents must be kept for three years from the later of the report’s due date or filing date.¹¹ Organizations that use operators must include the operator’s gross receipts and net proceeds on the annual report.¹²

Federal Tax Consequences

A state permit does not settle the federal tax question. The IRS treats gaming as an activity that generally does not further a nonprofit’s exempt purpose, so the revenue can be subject to unrelated business income tax even if your organization is tax-exempt.¹³

Gaming income becomes taxable as unrelated business income when three conditions are met: the activity qualifies as a trade or business, it is regularly carried on, and it is not substantially related to the organization’s exempt purpose. An annual fundraiser raffle typically will not meet the “regularly carried on” standard; a pull-tab operation running most of the year almost certainly will.

Two exceptions can shield the income. If at least 85 percent of the total labor running the gaming activity comes from unpaid volunteers, the income is excluded. Bingo games meeting the IRS’s narrow definition qualify for a separate statutory exclusion. Raffles do not fall under the bingo exception.¹³ If gaming becomes a substantial part of overall activities, tax-exempt status itself can be at risk, and the IRS has no bright-line percentage for what counts as “substantial.”

Enforcement and Penalties

The Department of Revenue can audit gaming operations, demand records, and immediately revoke permits, licenses, or vendor registrations for violations of the statute or regulations.⁵ Audits typically look for unreported income, improper prize distributions, expenses over the statutory caps, and net proceeds that never reached a qualifying charitable use.

Criminal liability is also on the table. Stealing gaming proceeds valued at $750 or more but less than $25,000 is theft in the second degree, a Class C felony carrying up to five years in prison and a $50,000 fine.¹⁴ Larger-scale fraud involving $10,000 or more, or schemes with five or more victims, can be charged as a scheme to defraud, a Class B felony with steeper penalties.¹⁵ Organizations facing enforcement actions or revocation can appeal through the Office of Administrative Hearings, but a successful appeal turns on documentation built before an audit begins.

1
Justia. Alaska Code 05.15.690 – Definitions
2
Alaska Department of Revenue. Alaska Gaming Permit Application Instructions
3
Alaska Department of Revenue. Overview of Charitable Gaming
4
Justia. Alaska Code 05.15.100 – Issuance of Permits and Licenses
5
Alaska Department of Revenue. Alaska Code Chapter 05.15 – Games of Chance and Contests of Skill
6
Legal Information Institute. Alaska Code 15 AAC 160.970 – Member in Charge Restriction
7
Legal Information Institute. Alaska Code 15 AAC 160.934 – Criminal History Checks
8
Justia. Alaska Code 05.15.020 – Annual Permit and Fees
9
Justia. Alaska Code 05.15.150 – Limitation on Use of Proceeds
10
Justia. Alaska Code 05.15.080 – Reports and Fees Required of Municipalities and Qualified Organizations
11
Legal Information Institute. Alaska Code 15 AAC 160.870 – Retention of Records
12
Legal Information Institute. Alaska Code 15 AAC 160.850 – Permittee Annual Report
13
Internal Revenue Service. Tax-Exempt Organizations and Gaming (Publication 3079)
14
Justia. Alaska Code 11.46.130 – Theft in the Second Degree
15
Justia. Alaska Code 11.46.600 – Scheme to Defraud