Raffles under Utah Law
Utah has a very strict interpretation of what constitutes gambling, and as a result, all forms of gambling are illegal. According to Utah Code 76-10-1101(5), gambling is defined as "a contrivance that is used, sold, kept, or manufactured to be used to engage in gambling." A raffle fits squarely into that definition. Further, under Utah Code 76-10-1111, a raffle is considered a lottery, and the law prohibits the promotion of a lottery "in any manner."
Under Utah law, any individual or organization wishing to have a raffle must apply for and obtain a license through the state. Any "drawings for gifts or prizes," whether termed auctions, lotteries, or raffles , require licensure under Utah law. All proceeds from the raffle must be allocated to "the charitable or benevolent purposes of the licensee."
The law specifically applies to the distribution of "prizes" as part of a "lottery," including "gambling pools, or other distributed prizes." Ut. Code Ann. § 76-10-1110. Although Utah laws concerning lotteries exist, there is no law specifically defining the word "raffle." Because a raffle would likely qualify as a lottery under Utah law, and because most raffles operate in a manner that would qualify as "drawing[s] for gifts," any organiztion planning to complete a raffle in Utah should seek licensure with the state.
Key Definitions
Gambling: "Gambling" means to stake or risk something of value upon the outcome of a contest of chance, race, or a future contingent event not under the control or influence of the person who is selling the chance or setting up the wagering activity. Gambling may include the selling of chances, establishing a lottery of any kind, and establishing or using a policy game. A contest of chance or future contingent event includes an event in which the whole or a dominant or determining element is the element of chance. A person engages in gambling if the person is engaged in gambling as defined in Section 76-10-1101. Gambling does not mean: (A) playing a game where the outcome is determined by skill, including blackjack or a poker game such as Texas hold’em that uses a standard deck of cards; (B) engaging in a social bet that meets the requirements of Subsection (3); or (C) participating in a private social bet engaged in for profit: (I) in which the participants are friends and are gathered at a specified location; (II) that occurs as a part of and contemporaneously with a game or contest; and (III) that is not in interstate commerce. Lottery: "Lottery" means: (A) a game of chance that requires the payment of a sum for the opportunity to win a prize; and (B) in which one or more winning prizes is to be distributed through a drawing from among the persons paying the sum. The terms "lotto", "raffle", "lottery", "pools" and "poker bet" are defined in Utah Code Ann. Section 76-10-1110.
Exemptions and Special Licenses
In some cases, the usual limitations placed on the conduct of raffles by non-profit groups do not apply because of one of the following exemptions: Some groups may also engage in raffles through a special permission granted by the Utah Attorney General. These various exemptions and special permissions provide options for those who wish to conduct raffles through non-profit organizations and associations but who do not have the time or resources to devote to the process of seeking approval of the grantor of the registration process. There is still the issue of meeting the requirements of the federal government for providing a tax-exempt status. The most significant requirement placed on exempt and authorized groups is the need to keep a complete set of records for all of the money that is raised in the conduct of any raffle or occasional raffle.
Impact on Organizations
The legality of raffles implicates a number of statutes, various regulatory agencies, and even the police. Nonprofit organizations or even other groups that would like to hold raffles in Utah need to be aware of all of the legal implications of holding a raffle. Unfortunately, notwithstanding the popularity of the lottery, there is no specific law that permits an organization to hold a raffle.
As noted above, the only exceptions to the rule against gambling are for charitable gaming under Utah law. The current statutes that permit charitable gaming specifically include functions known as "bingo , a raffle, or a casino night." Utah Code Ann. § 13-32-201(1).
First, Utah law does not define a "raffle." Therefore, it is unknown whether something that is known as a raffle in another state would have the same result in Utah. Second, there are a variety of laws that govern charitable gaming that include raffles, including obtaining a charitable gaming license and operating under rules established by the State Tax Commission.
Penalties for Illegal Raffles
Upon conviction for a violation of the relevant sections of the Utah Criminal Code, the sponsor of a lottery would be guilty of an infraction; such an infraction constitutes a class C misdemeanor. That means a sponsor’s fine would be between $65 and $629. The penalty does not require jail time. Upon conviction for a violation of Utah’s laws on illegal gambling, an operator, promoter, or manager would be guilty of a class B misdemeanor, which is a class above an infraction. That means the operator, promoter, or manager’s fine would be between $1,000 and $1,675; that class of felons can also go to jail for up to six months. In regards to those who participate in an illegal lottery: any person who participates in a lottery is guilty of a class C misdemeanor, which is a class below a B misdemeanor; that means a person’s fine could be between $65 and $629.
If a person has been wrongfully accused of operating or sponsoring an illegal lottery, the complaint should be quashed or dismissed. A motion to quash must be brought prior to trial; dismissal, on the other hand, can be requested at any time. A prosecutor can file a motion for forfeiture if a sponsor, operator, promoter, or manager is found guilty of sponsoring or operating an illegal lottery. The court can seize all of his or her tangible and intangible property or money used to sponsor, operate, put in motion, or play in the illegal lottery. Both the winners and losers of the lottery must account to the court for their winnings and losses.
Raffle Alternatives
Additional Options for Nonprofits and Other Fundraising Groups in Utah
If a group’s goal is to raise money and they are uncertain about the legality of raffles in Utah, other ways of raising funds may include:
- Vesper services. Some groups associated with a house of worship may have the ability to hold a vesper service. The group evinces a desire to hold a special worship-type service, or vesper service, and this is a proper means of raising funds while retaining the aspect of faith.
- Rummage sales. In a rummage sale, the goods sold are all the property of the sellers. It is up to them whether they want to give anything to the church or organization. It goes on record exactly what items are contributed, and the church keeps a quiet distance. The sellers are allowed to take home any unsold items if they do not want them to be sold again in a future rummage sale.
- Italian dinners or pancake dinners. These meals are typically offered at $3 to $5 per person. As many members of the community are on tight budgets, these meals are typically affordable for almost anyone . When collecting money, church members may say that the meals are free, but that donations are gratefully accepted. (Ask for a suggested donation amount or allow diners to pay what they feel is right.) The church members may decline the person’s offer to pay for the meal and then ask if the person would like to donate $1 or $2 toward the meal. Many people will be happy to help out when not asked directly for money.
- Dessert auctions, breakfast serving, penny auctions or hog rallies. During an auction, either the entire group will eat together or ask diners to wait until they have gotten their food to ask for bids on items being auctioned. After they have won any items they like, they can sit down and eat. During a hog rally, the group will auction off an entire pig in its own container. The cost per pound should be displayed, and ask for bids as usual. Some may not want the entire pig, making it necessary for you to cut it into manageable portions after the auction concludes.
