Raffles are an excellent fundraising tool for Maine nonprofits, charitable organizations, and other eligible groups, allowing them to engage supporters while raising funds for their missions. However, Maine’s raffle laws, governed by the Gambling Control Unit under the Department of Public Safety and outlined in Title 17 of the Maine Revised Statutes, impose specific regulations to ensure compliance. For organizations, a key decision is whether to use a Payment Management System (PMS) for non-Internet raffles or an Internet Raffle Platform for fully online raffles. This article explains Maine’s raffle laws, clarifies prize limits based on recent research, and helps organizations choose the right system for their fundraising needs.
Understanding Maine’s Raffle Laws
In Maine, raffles are considered games of chance, and only specific organizations—such as charitable, educational, civic, or religious nonprofits, agricultural societies, volunteer fire departments, or auxiliaries (as defined in Title 17, §1832)—can conduct them. Below are the key legal requirements for all raffles:
- Eligibility: Only eligible organizations can host raffles, and they must state a verifiable charitable purpose for the proceeds.
- Prize Limits:
- Raffles with prizes valued at $2,500 or less do not require registration with the Gambling Control Unit.
- Raffles with prizes up to $10,000 are exempt from registration for eligible organizations under certain conditions.
- For raffles with noncash prizes up to $150,000 or cash prizes up to $20,000 (with no single cash prize exceeding $10,000 per winner), registration is required. Only one such raffle can be conducted at a time per organization.
- Age Restrictions: Ticket buyers must be at least 18 years old, and advertising must not target minors.
- Transparency: Tickets and promotional materials must clearly state raffle terms, including prize details, draw dates, and ticket prices.
- Tax Considerations: For prizes where the value (minus ticket price) is $600 or more and at least 300 times the ticket cost, organizations must report to the IRS. For winnings over $5,000, 25% withholding is required, which may necessitate including a cash prize to cover taxes.
Maine allows two primary methods for managing raffles online: a Payment Management System for non-Internet raffles and an Internet Raffle Platform for fully online raffles. The choice depends on your organization’s goals, raffle scale, and operational preferences.
Clarification on Prize Limits
Recent research indicates that the prize limit for noncash prizes in Maine raffles was updated in 2023 to $150,000 (not $75,000, as previously noted in older sources). This applies to registered raffles conducted by eligible organizations, with the limit adjusted every two years starting December 1, 2024, based on the Consumer Price Index, rounded to the nearest $100. For cash prizes, the total limit is $20,000, with no single winner receiving more than $10,000. These limits apply to both non-Internet and Internet raffles, but only one registered raffle with prizes in this range can be conducted at a time.
Payment Management System (PMS) for Non-Internet Raffles
A Payment Management System is a digital platform or mobile app that facilitates online ticket sales for non-Internet raffles, where the draw is conducted manually (e.g., pulling a ticket from a drum). This system suits organizations that want to combine traditional raffle methods with online convenience.
Key Features of a PMS:
- Online Ticket Sales: Supporters can buy tickets via a secure app or website using debit cards or digital wallets.
- Manual Draw: Winners are selected offline, such as at a live event, preserving the traditional raffle experience.
- Compliance Tools: The system verifies that buyers are 18+ and located in Maine or states where the raffle is legal, ensuring compliance with state regulations.
- Record-Keeping: Organizations must retain physical ticket stubs for one year and submit an annual report to the Gambling Control Unit detailing raffle activities and gross receipts.
When to Choose a PMS:
- Small to Medium Raffles: Ideal for raffles with prizes valued at $10,000 or less, which may not require registration, making it cost-effective for smaller fundraisers.
- Hybrid Events: Perfect for organizations hosting in-person events (e.g., festivals or galas) but wanting to expand reach through online ticket sales.
- Multiple Raffles: Allows concurrent raffles if prizes are $10,000 or less, suitable for organizations running frequent, smaller-scale fundraisers.
- Limited Resources: Simpler to implement than a fully online raffle, requiring less technical expertise.
Example Use Case:
A community arts nonprofit hosts a raffle at its annual festival, offering a $7,500 prize package of local art. Using a PMS, it sells tickets online and at the event, then conducts a live draw during the festival. The system ensures compliance by verifying buyer age and location, and the nonprofit keeps physical ticket stubs for records.
Internet Raffle Platform for Fully Online Raffles
An Internet Raffle Platform manages both ticket sales and winner selection entirely online, using a cryptographically strong random number generator for fairness. This system is designed for organizations seeking a modern, fully digital fundraising approach.
Key Features of an Internet Raffle Platform:
- Fully Digital Process: Handles ticket sales and winner selection online, eliminating physical tickets or in-person draws.
- Advanced Compliance: Verifies buyer age (18+), restricts purchases to Maine residents, and includes parental controls to prevent minor access.
- Security and Transparency: Protects user data and provides a detailed revenue report to the organization after the draw.
- Record-Keeping: Maintains digital records of ticket buyers and winners for at least three years.
When to Choose an Internet Raffle Platform:
- Large-Scale Raffles: Best for raffles with noncash prizes up to $150,000 or cash prizes up to $20,000, which require registration and robust compliance measures.
- Online-Only Fundraisers: Ideal for organizations with a strong digital presence or targeting Maine-based supporters remotely.
- Streamlined Operations: Suits groups that prefer an automated, low-maintenance raffle process with built-in compliance features.
- Single Raffle Focus: Only one Internet raffle can be conducted at a time, making it suitable for high-impact, standalone campaigns.
Example Use Case:
A statewide environmental nonprofit raffles a $100,000 eco-friendly car to fund conservation efforts. Using an Internet raffle platform like Maine Online Raffles, it sells tickets online to Maine residents, verifies eligibility, and conducts the draw digitally. The platform handles compliance and provides a revenue report post-draw.
Comparing PMS and Internet Raffle Platforms
| Aspect | Payment Management System | Internet Raffle Platform |
| Raffle Type | Non-Internet (online sales, manual draw) | Fully online (digital sales and draw) |
| Best For | Small to medium raffles, hybrid events | Large-scale raffles, online-only fundraisers |
| Prize Limits | Up to $150,000 (noncash) or $20,000 (cash, max $10,000 per winner) | Same prize limits, but only one raffle at a time |
| Draw Method | Manual (e.g., physical ticket draw) | Digital (random number generator) |
| Concurrent Raffles | Multiple raffles allowed if prizes are $10,000 or less | Only one Internet raffle at a time |
| Record-Keeping | Physical ticket stubs for 1 year; annual report required | Digital records for 3 years; immediate revenue report |
Practical Tips for Nonprofits
- Assess Your Raffle Scale: For smaller raffles ($10,000 or less), a PMS offers flexibility and lower overhead. For larger, high-value raffles, an Internet raffle platform provides the necessary infrastructure and compliance tools.
- Leverage Approved Platforms: Use state-approved systems like Maine Online Raffles to ensure compliance with age, location, and payment rules. These platforms often include analytics to track ticket sales and donor engagement.
- Plan for Taxes: For high-value prizes, include a cash component to cover IRS withholding (25% for winnings Minus ticket price over $5,000) to avoid burdening winners.
- Promote Responsibly: Avoid marketing to minors and clearly disclose raffle terms to maintain transparency and trust.
- Consult Experts: Work with legal counsel or contact the Gambling Control Unit to confirm compliance, especially for registered raffles.
Conclusion
Maine’s raffle laws allow nonprofits to host engaging fundraisers, with options for both traditional and digital approaches. A Payment Management System is ideal for smaller raffles or hybrid events, offering online ticket sales with a manual draw and flexibility for multiple raffles. An Internet Raffle Platform suits large-scale, fully online raffles, providing automation and compliance for prizes up to $150,000 (non-cash) or $20,000 (cash). By understanding prize limits, compliance requirements, and your organization’s needs, you can choose the right system to maximize fundraising success while staying within Maine’s legal framework. For more details, visit the Maine Gambling Control Unit website or consult legal counsel to ensure your raffle is a success.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Contact the Maine Gambling Control Unit or a qualified attorney for specific guidance.