Raffles/Drawings

July 20, 1993

This is a response to your recent inquiry of this office requesting an opinion concerning the legality of raffles and drawings conducted by nonprofit organizations. The question you have presented is twofold. One, does a drawing for door prizes at a fee-generating function sponsored by a charitable organization constitute a raffle? The answer is yes. Second, is it unlawful to sell or consume alcoholic beverages in the building if the drawing of the winning raffle tickets is conducted in a room where no alcoholic beverages are being sold or consumed? The answer is no, as long as none of the factors constituting the raffle occurs in the room in which the alcoholic beverages are being sold or consumed.

The first scenario is one in which a non-profit organization holds a function where patrons donate or "pay" a fee to attend. Entertainment, food, and alcoholic beverages are provided for the patrons. Each patron is given a ticket stub or coupon to be used in a random drawing for door prizes during the course of the evening. The prizes have been donated to the non-profit organization.

N.C.G.S. 14-309.15 defines a "raffle" as a game in which the prize is won by random drawing in the name or number of one or more persons purchasing chances. Clearly, the drawing for door prizes is included within the definition of a raffle.

The next issue is whether such a raffle is legal. Any nonprofit organization (as recognized by the Department of Revenue as tax exempt) and any governmental agency (see 1993 N.C. Sess. Laws 219) is authorized to conduct raffles if the following conditions are met:

1. No more than two raffles per year.

2. The maximum cash prize is $5,000 and the maximum non-cash, non-redeemable merchandise prize is $25,000. See 1993 N.C. Sess. Laws 219 (maximum cash prize raised from $1000 to $5000 effective June 28, 1993).

3. Real property is not offered as a prize.

4. The raffle is not conducted in conjunction with bingo.

5. No less than 90% of the net proceeds from such an event can be used for charitable, religious, educational, civic or other nonprofit purposes. Net proceeds equal receipts of the event less the

cost of the prizes awarded.

6. None of the net proceeds are used to pay for another person to conduct the raffle or to rent premises to sell or receive raffle tickets or to conduct the raffle. N.C.G.S. 14-309.15 (1986).

If the drawing is conducted as provided herein, it is lawful. Any failure to follow these procedures will result in the raffles being considered gambling. N.C.G.S. 14-309.15(a).

The second question is whether it is unlawful to sell or consume alcoholic beverages in a building when the drawing of the winning raffles ticket is made in a room where no alcoholic beverages are being sold or consumed. N.C.G.S. 18B-308 addresses the sale or consumption of alcoholic beverages where a lottery is being conducted. Sale or consumption of alcohol cannot occur in the same room while a raffle or bingo game is "being conducted." However, it appears the statute would permit the drawing to occur in an adjacent room where alcohol is not sold nor consumed. The statute clearly makes reference to "premises" earlier in the section. The Legislature apparently intended only to prohibit the raffle from occurring in the "room" where alcohol is sold or consumed.

One issue is what constitutes "being conducted?" A raffle is being conducted when a "prize is won," a "random drawing by name or number" occurs, or a person "purchases chances." Winning a prize includes, but is not limited to, the awarding of the prize to the drawing winner by announcing his or her name or number. If none of these events occur in the same room as the one in which alcoholic beverages are being sold or consumed, the sale or consumption of such beverages is not unlawful under N.C.G.S. 18B-308. If any one does occur, the sale or consumption is unlawful.

If we can be of any assistance to you in the future, please do not hesitate to call us.