Many California nonprofit corporations receive a significant amount income from various types of gaming, such as bingo, poker tournaments, and raffles.

Both state and federal laws govern these activities, prohibit certain forms of gaming and mandate registration and reporting. Each state has different rules on gaming. This brief overview looks at California laws governing these activities as well as touching federal tax implications.

It does not discuss auctions which are not considered gaming under California law. Under section The authorizing ordinance must be enacted under section 19 of Articles IV of the California Constitution. Such ordinances generally can be found in the local municipal code, the content of which may be available online or through local government officials. The bingo game must be conducted consistent with the California Penal Code and the authorizing ordinance.

Under the Penal Code, the following requirements apply:. An example of an california bingo game ordinance from my hometown of Alameda is here.

Who california bingo game participate: Minors under 18 years old may not participate in the bingo game and the game must be open to the public. Participants must be physically present at the time and place where the bingo game is conducted. Who can operate the game: The game must be operated and staffed only by members california bingo game the nonprofit organizing it.

Neither those members nor california bingo game other person may receive a profit, wage, or salary from the game with the exception of security personnel. Where the game can take place: The california bingo game must conduct the game on property either owned or leased by it, or the use of which is link to it, and that property must be used by the nonprofit as an office or for the performance of its tax exempt purposes.

What california bingo game be included as prizes: The total value of prizes cannot exceed five hundred dollars in cash or kind for each game. Local laws may reduce this web page amount. How proceeds from the game can be used: For c 3 charities, all profits from the game must be kept in a segregated account and used only for charitable purposes.

California bingo game other eligible nonprofit organizations, all proceeds of the game must be used for charitable purposes with continue reading exceptions please click for source outlined in California law.

What organizations are eligible: Organizations must be qualified to conduct business in California california bingo game at least three years prior to holding the poker night and must be exempt from taxation under one of the following sections border casino the Revenue and Taxation Code: a, b, d, e, f, g, k, l or w.

Registration requirements: Eligible organizations must register annually with the Bureau of Gambling Control. In addition, local ordinances may impose additional registration and california bingo game requirements. Each fundraiser can last a maximum of five consecutive hours and no more. Who can participate: Participants must be 21 years or older.

What can be included as prizes: Cash prizes are prohibited. All prizes must be donated. Individual prizes cannot exceed a cash value of five hundred california bingo game and the total cash value of all prizes cannot exceed five thousand dollars per event.

How proceeds from the game can be used: At least ninety percent of the gross revenue from the fundraiser must go directly to a nonprofit organization; no more than ten percent can be paid as compensation to anyone conducting the fundraiser exclusive of any facility rental costs.

California Penal Code section What is a raffle: In California, a raffle is a california bingo game 1 for the distribution of prizes, 2 by chance, 3 among persons who have paid money for paper tickets, and 4 the paper tickets provide the opportunity to win these prizes.

What entities are eligible: Organizations must be nonprofits qualified to conduct business in California for at least one year prior to conducting the raffle and exempt from taxation under Revenue and Taxation Code Section a, b, d, e, f, g, k, l, t or w.

How the raffle must be conducted: The paper raffle tickets must be sold click a detachable stub california bingo game coupon, and have a unique matching identifier on both the ticket and the stub. The draw must determine the winner of the prize from among the detached stubs. It must be conducted under supervision of a natural person 18 years or older. It cannot be conducted california bingo game gaming machine.

How proceeds from the raffle can be used: At least ninety percent of the gross receipts from the sale of raffle tickets must be used to support a beneficial or charitable purpose or another nonprofit organization that performs beneficial or charitable purposes. Restrictions on online raffles: The raffle may not be operated over the Internet and raffle tickets cannot be sold, traded, or redeemed over the Internet. However, the organization can advertise the raffle on the Internet if the information includes: 1 lists, descriptions, photographs or videos of raffle prizes, 2 lists of the prize winners, 3 rules of the raffle, 4 Frequently Asked Questions, 5 raffle entry forms that can be manually downloaded and sent or submitted to the organization NOT through the Internetand 6 raffle contact information.

Raffle reporting: Nonprofits must prepare and submit a Nonprofit Raffle Report located here after all raffle events for the registration year have occurred. The nonprofit must also retain records of the following: date and location of raffle, total funds received from each raffle, total expenses for conducting each raffle, charitable or beneficial purpose for which the raffle proceeds were used or the amount and organization to which proceeds were directed.

California bingo game particular, it should review its gaming practices under:. Qualification for Tax Exemption: Gaming is a business and recreational activity; it is not charitable in nature nor does it promote social welfare. There are a number of exceptions to UBI such as for qualified bingo games and activities conducted with substantially all volunteer labor that may apply in the context of charitable gaming and should be reviewed.

In addition there may be other tax and reporting requirements that apply. The IRS publication on Charitable Gaming provides a good overview for use by exempt organizations and their advisors on the tax laws governing gaming activities. Practice Areas. In particular, it should review its gaming california bingo game under: Qualification for Tax Exemption: Gaming is a business and recreational activity; it is not charitable in nature nor does it promote social welfare.