North Carolina Bingo Law: Licensing, Limits, and Penalties

North Carolina bingo law allows only IRS-recognized tax-exempt nonprofits to run bingo games, and only after they obtain a license from the Alcohol Law Enforcement (ALE) Division of the Department of Public Safety. The statute caps how often games can be held, how much winners can take home, and who is allowed to call numbers or handle the money. Getting any of these details wrong can cost an organization its license or bring criminal charges.

Who Can Get Licensed and How

The gatekeeper is the IRS determination letter. Religious, charitable, civic, and fraternal groups are all contemplated by the statute, but without a current federal tax-exempt determination, no license is possible. Applications go to ALE, not the Department of Revenue, and must include the names and home addresses of the organization’s officers and directors, the names of the members on the special operating committee, a copy of the IRS exemption letter, and the specific location where games will be held.¹

The annual fee is $200. If the organization does not own its bingo location, a copy of the lease or rental agreement has to be filed with the application. The license runs one year and is renewed with the same information.¹

Session and Prize Limits

A licensed organization is limited to two bingo sessions per week, and no session may run longer than five hours. Prizes for a single game are capped at $500. Total prizes across an entire session cannot exceed $1,500.²

All prizes must be awarded during the session. Holding money over for a future game night is not permitted. Electronic devices are limited to card-minding assistance for players tracking multiple cards; they do not replace the traditional game.²

Who Can Be Paid to Run the Game

An exempt organization member must be on the premises at all times during play, and that member is responsible for receiving, reporting, and depositing all revenue. The organization may pay one member to conduct the game, but only at an hourly rate no higher than 1.5 times the state minimum wage, and only for the hours bingo is actually being played.¹

That paid member must have been in good standing with the organization for at least one year. They cannot be the landlord of the bingo venue, or an employee or agent of the landlord. No one else may be compensated for conducting bingo out of game revenue or any activity running alongside it, including concessions. Outside contractors cannot be hired to run the games; the operation stays in-house.¹

This is a frequent source of trouble. Hiring a professional caller or splitting concession revenue with a third party can put a license at risk, even when the arrangement looks harmless on paper.

Where Games Can Be Held

Games must take place on property the exempt organization owns or leases directly from the property owner or a bona fide property management agent. The building must be a permanent structure. Subleasing does not qualify. If a group is renting space from another tenant rather than from the owner, the venue does not meet the statute.¹

Annual Audit and Recordkeeping

Every licensed organization must keep a separate bank account used only for bingo funds. An annual audit report covering the preceding calendar year is due by January 31 on ALE’s BL-2 form, filed with both the Alcohol Law Enforcement Division and the local law enforcement agency. The report itemizes gross receipts, prizes, allowable expenses such as rent and utilities, and charitable disbursements including donations to religious groups, civic organizations, education, animal cruelty prevention, and amateur sports.³

The report is certified by the exempt organization member responsible for the audit, not by an outside accountant. A conviction for failing to complete the report properly under N.C. Gen. Stat. § 14-309.5 bars the organization from conducting bingo for one year.³

All books, records, and documents related to bingo operations must be available for inspection by law enforcement, the district attorney, or ALE at reasonable times, and records should be retained for at least three years.⁴

Federal Tax Treatment

Unrelated Business Income

Nonprofits usually owe federal tax on income from activities unrelated to their charitable mission, but bingo has its own carve-out. Under 26 CFR § 1.513-5, bingo income is excluded from unrelated business taxable income as long as the games are legal under state or local law and bingo is not ordinarily carried out on a commercial basis in the jurisdiction. Because North Carolina limits bingo to nonprofits, licensed organizations in the state generally qualify.⁵

The exclusion covers traditional bingo only: cards with randomly called numbers where winners are determined in the presence of all players. Keno, dice games, card games, and lottery-style games do not qualify, even if they run alongside a bingo event.⁵

Form 990 and Schedule G

Organizations filing Form 990 or 990-EZ have to complete Schedule G, Part III if they report more than $15,000 in gaming revenue. The schedule requires a full accounting of gross revenue, direct expenses, and net income.⁶

Late filing carries a penalty of $20 per day, up to $10,500 or 5% of the organization’s gross receipts for the year, whichever is less. Skipping the return for three consecutive years automatically revokes federal tax-exempt status.⁷

Reporting Winners

For 2026, the IRS requires Form W-2G on bingo winnings of $2,000 or more. The threshold is adjusted annually for inflation beginning with calendar years after 2025.⁸

If a winner does not provide a correct taxpayer identification number, the organization must withhold 24% of the winnings as backup withholding.⁹

With the state’s $500 per-game prize cap, most routine winnings fall below the W-2G threshold. Winner records should still be kept; the IRS can request documentation even when no W-2G is required, and winners remain personally responsible for reporting all gambling income.

Penalties

Running bingo without a license is a misdemeanor under § 14-309.12, and repeat or aggravated violations can bring escalated charges.¹⁰

For groups already operating, the license consequences often hurt more. Exceeding prize limits, running too many sessions per week, or paying unauthorized workers can lead to suspension or revocation. A conviction for a defective annual audit report bars the organization from conducting bingo for a full year.³

Federal problems compound the state ones. Losing tax-exempt status for failing to file Form 990 for three consecutive years also ends bingo eligibility, because the license requires a current IRS determination letter.⁷

Beach Bingo Is Separate

The rules above cover standard licensed bingo. North Carolina treats “beach bingo” as a separate category under § 14-309.14, with its own set of rules for certain coastal and resort settings. It is also overseen by ALE, and records must be open for inspection at reasonable times.¹¹

1
North Carolina General Assembly. North Carolina Code 14-309.7 – Licensing Procedure
2
North Carolina General Assembly. North Carolina Code 14-309.8 – Limit on Sessions
3
North Carolina Department of Public Safety. BL-2 Annual Audit Report of Bingo
4
North Carolina General Assembly. North Carolina Code 14-309.11 – Accounting and Use of Proceeds
5
eCFR. 26 CFR 1.513-5 – Certain Bingo Games Not Unrelated Trade or Business
6
Internal Revenue Service. Instructions for Schedule G (Form 990)
7
Internal Revenue Service. Annual Exempt Organization Return – Penalties for Failure to File
8
Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026)
9
Internal Revenue Service. Instructions for Forms W-2G and 5754
10
North Carolina General Assembly. North Carolina Code 14-309.12 – Violations
11
North Carolina General Assembly. North Carolina Code 14-309.14 – Beach Bingo