Colorado raffle laws limit raffles to nonprofit organizations that have been active for at least five years, require a bingo-raffle license from the Secretary of State, and control how tickets are sold, how prizes are awarded, and where the proceeds go. Run a raffle without meeting those conditions and it is illegal gambling under state law, no matter how worthy the cause.
Who Can Legally Run a Raffle
Only nonprofit organizations qualify, and only after five continuous years of operation. Throughout that entire five-year window, the group must have kept a dues-paying membership actively pursuing the organization’s stated purpose.1Colorado Secretary of State. Bingo and Raffles FAQs For-profit businesses and individuals cannot hold raffles in Colorado at all.
The five-year rule is stricter than it sounds. A group that incorporated five years ago but only started collecting dues last year does not qualify. The state is looking for a real track record, not a paper entity that decided to run a fundraiser.
Getting Licensed Through the Secretary of State
The Colorado Secretary of State handles bingo-raffle licensing. The application asks for a roster of active members who will help run the raffle, proof of continuous existence through bank statements, tax returns, publications, or other independent records, and documentation of the organization’s structure.2Colorado Secretary of State. Apply for a Bingo-Raffle License The current fee schedule is on the Secretary of State’s website, and applications can be filed online.
Licenses last one year and must be renewed annually. Selling tickets under a lapsed license is the same as selling them without one, so build the renewal date into your organizational calendar.
What Has to Appear on Every Ticket
Colorado’s statute says the licensing authority cannot force organizations to use tickets in a form or with information that would cause undue expense and interfere with fundraising.3Justia. Colorado Code Title 24 – Conduct of Raffles – Rules Even so, the state’s administrative regulations require each printed ticket to show the licensee’s name exactly as it appears on the license, the date, time, and place of the drawing, and the ticket cost.4Cornell Law School. Colorado Code 8 CCR 1505-2-8 – Raffles
Consecutive numbering on every ticket is not required by the regulation but makes the drawing verifiable and helps with financial reconciliation. The drawing itself must be conducted publicly, and prizes must be awarded exactly as advertised.
Where the Money Has to Go
All raffle revenue has to go toward the organization’s legitimate charitable purposes. Diverting proceeds for personal gain or for expenses unrelated to the mission can trigger license revocation and criminal charges. Colorado does not set a fixed percentage that must reach the charitable purpose versus overhead, but the purpose of the raffle is to fund the mission, not the officers.
Keep documentation showing exactly how every dollar of raffle revenue was spent. If the Secretary of State’s office audits your operations, a paper trail that runs from ticket sales through to charitable expenditures is the cleanest way to demonstrate compliance.
Age Limit on Buyers
Raffle tickets cannot be sold to anyone under 18 in Colorado. The organization is responsible for verifying age, which is easy at an in-person event and one more reason to be cautious about selling online. An inadvertent sale to a minor is still a violation.
Progressive Raffles and the $15,000 Cap
Colorado permits progressive raffles, where the jackpot grows over multiple drawings until someone wins. The maximum progressive jackpot is $15,000, not counting consolation prizes.3Justia. Colorado Code Title 24 – Conduct of Raffles – Rules A licensee can set a lower self-imposed cap, but once the jackpot hits the maximum, it has to be awarded.
If a licensed organization plans to shut down, close a location, or let its license expire, it must award any progressive jackpot before that happens. If the closure is unexpected, the organization has to contact the Secretary of State for approval of an alternative way to determine a winner.4Cornell Law School. Colorado Code 8 CCR 1505-2-8 – Raffles Walking away from an active progressive jackpot is not permitted.
Online and Out-of-State Ticket Sales
Colorado’s licensing framework is built around in-state organizations running in-state events. Federal law does not impose a blanket ban on online or interstate charitable raffles, but selling to residents of other states means complying with each buyer’s home state raffle laws, and some states prohibit raffles outright.5Maine State Legislature. Online Internet Raffle Considerations
There is also a payment-processing wrinkle. Credit card processors classify raffle ticket purchases under Merchant Category Code 7995, which Visa designates as a high-integrity-risk category for card-absent transactions.6Visa. Visa Merchant Data Standards Manual Many standard processors will decline the transactions or refuse to open the account. Keeping sales inside Colorado is the safest posture; if you want to sell online to Colorado residents, get advice from a lawyer who knows both the state’s bingo-raffle regulations and the payment landscape before you invest in a platform.
Tax Reporting for Winners and the Organization
Raffle prizes are taxable income to the winner under federal law, and the organization has reporting duties. Starting with payments made in calendar year 2026, the reporting threshold for Form W-2G is $2,000, adjusted annually for inflation. The organization must file a W-2G for any winner whose prize meets or exceeds $2,000 and is at least 300 times the ticket price. With inexpensive tickets, the 300-times rule is almost always satisfied, so the $2,000 floor is what actually controls. When tickets are sold in bundles (say, five for $1), each individual ticket counts as a $0.20 wager for this calculation.7Internal Revenue Service. Instructions for Forms W-2G and 5754
When a prize’s fair market value exceeds $5,000 after subtracting the ticket price, the organization must also withhold 24% for federal income tax. Cash prizes make this straightforward. Non-cash prizes like a car do not, because you cannot withhold cash from a vehicle. The IRS allows two approaches: the winner pays the withholding to the organization before receiving the prize, or the organization pays the tax itself at a higher effective rate of 31.58% of the net prize value, because the tax payment becomes additional income to the winner.7Internal Revenue Service. Instructions for Forms W-2G and 5754 Fair market value should be supported with published retail prices, dealer quotes, or a formal appraisal for unique items.
The organization has its own filings to think about. A nonprofit filing Form 990 that reports more than $15,000 in gross gaming income, raffles included, must complete Schedule G, Part III.8IRS. Instructions for Schedule G (Form 990) The IRS generally treats gaming income as unrelated business income even when the money funds the mission, but there is a key exception: if substantially all the work of running the raffle is done by unpaid volunteers, the income is excluded from unrelated business tax.9Internal Revenue Service. Exempt Organization Gaming and Unrelated Business Taxable Income Most small charitable raffles qualify, but if you hire outside help to manage ticket sales, marketing, or logistics, the exclusion may not apply.
Penalties for Getting It Wrong
Running an unlicensed raffle, misappropriating proceeds, or committing fraud in connection with a raffle can bring fines, license revocation, and criminal charges. Individuals involved in unauthorized raffles can face misdemeanor charges, so the exposure reaches the people making the decisions and not just the organization.
Revocation carries a long tail. Because a new license requires five continuous years of qualifying activity, losing one effectively closes off raffle fundraising for years. Less serious problems like sloppy recordkeeping or missed tax forms can still draw penalties from the Secretary of State and the IRS. The organizations that stay out of trouble treat compliance as part of planning the raffle, not something to sort out after the drawing.