Raffles are legal in Indiana, but only when a qualifying nonprofit runs them under a license from the Indiana Gaming Commission. Charity gaming is governed by Indiana Code Title 4, Article 32.3, and holding a raffle without the right license is a criminal offense. If you’re thinking about running one, or buying a ticket, the rules below are the ones that actually matter.
Who Can Legally Run a Raffle
Indiana limits charity gaming to “qualified organizations.” In practice, that means bona fide charitable, civic, fraternal, veterans, religious, or educational groups operating in the state.1Indiana General Assembly. Indiana Code 4-32.3-2-31 – Qualified Organization The group needs governing documents (a constitution, articles, charter, or bylaws) with a dissolution clause pointing remaining assets toward its nonprofit purposes, and it must hold federal tax-exempt status under Section 501 of the Internal Revenue Code.2Justia. Indiana Code Title 4 Article 32.3 – Charity Gaming
Individuals running the event have their own tenure rules. The operator in charge must have been a member in good standing for at least 60 days. Regular workers need at least 30 days of membership.3Indiana Gaming Commission. Indiana Code 4-32.3 The organization has to formally acknowledge the operator on a commission-prescribed form. Private individuals, for-profit companies, and informal groups cannot legally run a raffle in Indiana at all.
Getting Licensed Before You Sell Tickets
Every organization needs an IGC license before it conducts a raffle.4Indiana Gaming Commission. IGC Charity Gaming The application covers the event’s date, location, and how proceeds will be used, and the commission may run background checks on officers and board members while it verifies eligibility.
Three main license types cover most situations:
- Single Activity License, for a one-time event like a single raffle.
- Annual License, which covers charity gaming activities across a one-year period.
- Multi-Year License, available to certain groups such as veterans organizations.
The first-time license fee is $50. After that, fees are calculated from the organization’s gross receipts on its last event of the same license type.5IN.gov. What Is the Cost To Obtain a Charity Gaming Event License Once issued, the license controls what the organization can do and how often. Violating the terms can lead to revocation or denial of future applications.
Rules While the Raffle Is Running
Ticket Buyers Must Be 18
Only people 18 or older can buy raffle tickets. The organization is expected to verify age and refuse sales to anyone underage.6Indiana General Assembly. 68 IAC 21-10.7 – Electronic Raffles The drawing itself has to be conducted fairly, and the organization is on the hook for the integrity of the process.
Electronic and Online Raffles
Indiana permits electronic raffles, but only through systems the IGC has specifically approved.7Indiana General Assembly. Indiana Code 4-32.3-5-24.5 – Electronic Raffle Software System Downloading a raffle app and selling digital tickets on your own initiative doesn’t cut it. The software system needs commission sign-off and has to meet the IGC’s technical requirements before any tickets go out.
Prizes and Where the Money Goes
Indiana does not cap the value of individual or total raffle prizes under the current Article 32.3.3Indiana Gaming Commission. Indiana Code 4-32.3 The point of charity gaming, though, is charitable fundraising, and the IGC expects the bulk of proceeds to support the organization’s mission. Groups that spend raffle revenue mainly on overhead or non-charitable purposes invite compliance problems and license action.
The Federal Mailing Trap
This one catches organizations that otherwise do everything right. Federal law makes it a crime to mail raffle tickets, advertisements for raffles, or payments sent through the mail to buy tickets. Under 18 U.S.C. § 1302, a first offense carries up to two years in prison, and subsequent violations up to five.8Office of the Law Revision Counsel. 18 U.S. Code 1302 – Mailing Lottery Tickets or Related Matter The statute uses “lottery,” a term that includes raffles because they turn on chance. The USPS treats all such matter as nonmailable under 39 U.S.C. § 3001.9Postal Explorer. Publication 52 – Lottery
So no mailing tickets to donors, no flyers with mail-in order forms, and no accepting checks sent through USPS to buy in. Promotion has to move through other channels: email, social media, or the organization’s own website using an IGC-approved electronic raffle system.
Taxes on Prizes and Raffle Income
Reporting and Withholding on Winners
Federal tax rules put the reporting burden on the organization, not the winner. Starting in 2026, an organization must file Form W-2G when a raffle prize is at least $2,000 and at least 300 times the ticket price. That $2,000 reflects a new inflation adjustment; the prior threshold had been $600 for years. For prizes over $5,000 after subtracting the wager, the organization must withhold 24% of the prize value for federal income tax.10Internal Revenue Service. Instructions for Forms W-2G and 5754
Non-cash prizes complicate things. The organization determines fair market value and uses that figure for both reporting and withholding.11Internal Revenue Service. Instructions for Forms W-2G and 5754 Raffle off a $30,000 car and you may need to collect $7,200 in withholding from the winner before handing over the keys. Many organizations require winners to pay the withholding when they claim the prize, which needs to be spelled out in the raffle rules before ticket sales begin.
Unrelated Business Income Tax
The IRS treats gaming as a business activity, not a charitable one, no matter how the proceeds are spent. Raffle income can therefore trigger Unrelated Business Income Tax for tax-exempt organizations.12Internal Revenue Service. Exempt Organization Gaming and Unrelated Business Taxable Income The exception most nonprofits rely on is volunteer labor: if substantially all of the work running the raffle is done by unpaid volunteers, the activity is excluded from unrelated business income. Organizations that lean on paid staff to run gaming lose that protection and may owe federal tax on the net income.
Records the IGC Expects You to Keep
Recordkeeping is not optional. Organizations must retain all charity gaming records for three years plus the current year and make them available for inspection.13Indiana Gaming Commission. Charity Gaming Basics That covers ticket sales data, prize distributions, bank statements, deposit records, and disbursement logs showing who received money, how much, and why.
Financial reports are tied to the license. Single Activity Licensees file a report after each event. Annual Licensees file a gross receipts report when the license expires. Multi-Year Licensees file anniversary and renewal reports.14Indiana Gaming Commission. Charity Gaming Forms Organizations making charitable distributions also submit a Charitable Contribution Distribution List, and every event requires an Event Summary Report. The commission has unrestricted access to organizational records, including membership rolls and financial documents.
Penalties for Running an Unlicensed Raffle
Conducting a raffle without an IGC license is a Class A misdemeanor in Indiana, punishable by up to one year in jail and a fine of up to $5,000.15Indiana General Assembly. Indiana Code 35-50-3-2 – Class A Misdemeanor The IGC can also pursue administrative penalties on its own authority. Grounds include operating without a license, failing to ensure the integrity of gaming events, and selling tickets to minors.16Indiana General Assembly. Indiana Code 4-32.3-8-1 – Grounds for Penalties
Administrative consequences include fines, license revocation, and denial of future applications. Individuals who knowingly circumvent licensing rules or misuse charitable funds can face personal liability, including civil actions for restitution.