Here are some of the issues that games of chance raise for charitable nonprofits: The IRS regulates games of chance too, as well as the taxable income that is earned by victorious game-players. If it does, it is likely your nonprofit will need to apply for a license from the state beforehand. Your state may, or may not, permit charitable nonprofits to conduct raffles, Bingo, auctions, and other games of chance. From fantasy leagues to casino nights, nonprofits and games of chance are a misunderstood minefield. Even an auctions that is raising money for a charitable cause, can result in unintended consequences for donors and charitable nonprofits alike, unless you know and follow the rules.
So that poker night or silent auction that created such a buzz…make sure that the buzz is not the vibration of your cell phone letting you know that your nonprofit is being cited for criminal penalties. Many nonprofits use games of chance and auctions as fundraising vehicles – without realizing that “legalized games of chance” are regulated activities, and indeed illegal in many states.
