Improvements to the Local Option Small Games of Chance Act for School District Raffles

The January 27, 2014 amendments to the Act removed some of the restrictions for school-based booster clubs and organizations to raise funds through raffles.  A “Raffle Auction” is defined as a game of chance in which a participant buys a ticket for a chance to win a prize as follows: tickets are placed in a location assigned to a particular prize; and the winner of each prize is determined by a random drawing of a ticket that corresponds to the ticket held by the participant “Raffle auctions” are also referred to as Basket Raffles and Chinese Auctions.

Additionally, the definition of “public interest purpose,” which qualifies an entity as an eligible organization to participate in raffles, has been amended to include “nonprofit youth sports activities.” Raffle tickets, at a minimum, must include the date, time and location of the drawing; the name of the licensee; the license number; the cost of the ticket; and a description of the available prizes.  Tickets must be sequentially numbered with a detachable stub printed with the same number; the stub must contain the purchaser’s name, address and phone number; a logbook must be maintained to show who received the tickets to be sold.

Small Game of Chance individual prize limits have been increased to $2000 for any single chance and all weekly prizes count towards $35,000 weekly limit. However, for a raffle there is a limit to $15,000 per calendar month in total prizes.  A monthly license requires the sale of all chances and the award of all prizes occur during the licensing period.

With a standard license, a nonprofit organization is entitled to operate all lawful small games of chance, including 50/50 raffles, provided that the prize received is no more than $2,000.  If a nonprofit organization decides to have a 50/50 raffle with an anticipated prize that will exceed $2,000 or $15,000 per month, it must obtain a “special raffle permit” from the County Treasurer, which is a one-time license covering prizes greater than $2000.  A licensed eligible organization can receive ten special permits (increased from eight) per year. Only one raffle may be conducted under each special permit issued. The total of all prizes awarded shall be no more than $150,000 per calendar year (increased from $100,000 per year). The need for a special permit can be eliminated by having multiple 50/50 raffles and limiting the prize in each 50/50 raffle to $2,000 or less.

A new section of the law provides expanded opportunities for the sale of raffle tickets that may be issued at a discounted price; as part of the sale of other tickets; free of charge or as part of the sale of other tickets; as bonus tickets as part of the sale of other tickets; and as prizes, including prizes at auctions.

Reporting requirements have been removed from the Act. However, record keeping remains, and if an individual prize exceeds $600, the record shall include the name and address of the winner. The eligible organization shall provide each winner with a value of prize receipt when the prize exceeds $600. It is no longer necessary to maintain a separate bank account for the eligible licensed organization unless the proceeds of games of chance exceed $40,000 per year.  Officers of organizations no longer are required to undergo background checks.  A license is required to conduct or operate games of chance and must be renewed annually at a cost of $125 (previously at a cost of $100).

The Pennsylvania State Police have provided a detailed power point at http://www.psp.pa.gov/LCE/Pages/Small-Games-of-Chance.aspx that fully explains the new changes to the Small Games of Chance Act. If you have any questions please contact Judy Shopp at js@mbm-law.net.

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