Raffles are legal in Missouri, but only when a 501(c)(3) charitable organization or a qualifying religious organization runs them under the rules set by the Missouri Constitution, state statute, and the Missouri Gaming Commission.1Missouri Revisor of Statutes. Missouri Constitution Article III Section 39(f) Everyone else is looking at a gambling offense. Because the felony exposure for an unauthorized raffle is real, the details below matter before you print a single ticket.
Who Can Legally Hold a Raffle
Missouri allows raffles from two kinds of groups: charitable organizations recognized under Section 501(c)(3) of the Internal Revenue Code, and religious organizations recognized under Section 501(c)(3) or Section 501(d).2Missouri Senate. SB 1021 – Introduced Bill Text Fraternal, veteran, and service organizations can run bingo under a separate constitutional provision, but they don’t get raffle authority unless they also carry 501(c)(3) or 501(d) status.
The organization also has to exist mainly for something other than holding drawings. A group formed primarily to run raffles doesn’t qualify. And every person who manages or works the raffle must be a bona fide member of the sponsoring organization: at least six months of membership, at least 18 years old, dues paid, and equal voting rights with other members.2Missouri Senate. SB 1021 – Introduced Bill Text Those members work as volunteers. Paying anyone to run the raffle, whether a member or an outside pro, makes the whole event illegal.
When You Need a License From the Gaming Commission
Licensing turns on volume. If your organization’s total raffle prizes stay at or below $5,000 for the calendar year and you hold no more than four raffles, no license is required.2Missouri Senate. SB 1021 – Introduced Bill Text Multiple raffles held during a single fair, festival, or carnival can count as one event, but that $5,000 annual prize cap still applies to unlicensed groups.3Missouri Senate. SB 525 – Perfected Bill Text
Once you cross either threshold, you have to apply for a license. The application fee is $50, and licensed organizations pay a 2% tax on all prizes awarded.4Missouri Senate. SB 1021 – Requires Charitable Organizations Conducting Raffles Unlicensed doesn’t mean unregulated: the Gaming Commission can still inspect your records and premises.
Prize Caps and the 50% Payout Rule
Missouri sets three hard ceilings on raffle prizes:
- No individual prize may exceed $300,000 in value.
- The total value of all prizes in a single raffle can’t exceed $500,000.
- An organization’s combined prize value across all raffles in a calendar year can’t exceed $3 million.
These caps measure the fair market value of the prizes, not the ticket revenue you collect.3Missouri Senate. SB 525 – Perfected Bill Text
For any raffle with prize value above $15,000, at least 50% of gross ticket receipts must be awarded as prizes, with donated prizes valued at fair market value as determined by the Gaming Commission.3Missouri Senate. SB 525 – Perfected Bill Text That rule catches organizations off guard. Sell $40,000 in tickets on a donated $18,000 car and you’ll need to award at least $20,000 in total prizes to stay compliant.
Prizes have to be tangible items or cash. Mechanical or electronic gaming devices are prohibited as raffle prizes, and the winner is always determined by random drawing from numbered tickets sold for a set price, with no skill element involved.2Missouri Senate. SB 1021 – Introduced Bill Text
Records You Have to Keep
Every organization holding a raffle, licensed or not, must keep detailed records for at least two years from the date of each raffle. Those records have to show gross receipts from each raffle, how the money was spent after expenses, the fair market value of every prize awarded, and the names of any winners of prizes worth $100 or more. The Gaming Commission can inspect them, and your premises, at any time.3Missouri Senate. SB 525 – Perfected Bill Text
All net proceeds have to go toward the organization’s stated charitable or religious purposes. Diverting raffle revenue to individuals, or to activities unrelated to the mission, violates the raffle statute and can put tax-exempt status at risk too.
The Federal Tax Layer
State compliance is only half of it. Federal law imposes reporting and withholding duties on the organization running the raffle. A raffle prize triggers Form W-2G reporting when the winnings reach at least $2,000 and are at least 300 times the ticket price for 2026, with that threshold adjusted annually for inflation starting in 2026.5Internal Revenue Service. Instructions for Forms W-2G and 57546Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026)
When a prize meets the reporting threshold, the organization withholds federal income tax at 24% of the winnings above the ticket cost. Backup withholding applies at the same 24% rate if the winner doesn’t give a correct taxpayer identification number.5Internal Revenue Service. Instructions for Forms W-2G and 5754 For non-cash prizes such as a car or vacation, the winner typically owes the organization 25% of the fair market value minus the ticket cost. If the organization covers the withholding itself, the effective rate rises to 33.33% of fair market value under the IRS gross-up formula.7Internal Revenue Service. Tax-Exempt Organizations and Raffle Prizes – Reporting Requirements and Federal Income Tax Withholding
There’s also the unrelated business income question. The IRS generally treats gaming revenue as unrelated business taxable income for 501(c)(3) organizations, because gaming isn’t inherently charitable even when the proceeds fund charitable work. One exclusion saves most Missouri raffles: if substantially all the work is done by unpaid volunteers, the income is excluded from unrelated business income tax under IRC Section 513(a)(1).8Internal Revenue Service. Exempt Organization Gaming and Unrelated Business Taxable Income Missouri already requires that only uncompensated bona fide members run the raffle, so most qualifying organizations meet this exclusion automatically. Pay someone for raffle work and you’ve broken state law and created a federal tax liability in the same move.
Selling Tickets Online
Missouri’s raffle statute predates online fundraising and doesn’t explicitly address internet ticket sales. Federal law complicates it further: the Unlawful Internet Gambling Enforcement Act defines a “bet or wager” to include buying a chance to win a prize that is predominantly subject to chance, which describes a raffle ticket.9eCFR. Part 132 – Prohibition on Funding of Unlawful Internet Gambling Payment processors such as PayPal require pre-approval for gambling-related transactions and restrict them to jurisdictions where the activity is clearly legal.10PayPal. Acceptable Use Policy
Selling raffle tickets through a website or accepting online payments carries real legal risk unless Missouri has clearly authorized it. Many organizations stay with in-person sales to avoid the gray area. If you want an online component, talk to an attorney who handles both Missouri gaming law and federal internet gambling rules before you launch it.
What Makes a Raffle Illegal, and What It Costs
A raffle crosses into illegal gambling when it misses any of the statutory requirements. The common failures:
- Holding a raffle without 501(c)(3) or 501(d) status, or as a for-profit entity.
- Compensating anyone, member or outsider, for running the raffle.
- Using proceeds for anything other than the organization’s charitable or religious mission.
- Awarding individual prizes over $300,000, per-raffle totals over $500,000, or annual totals over $3 million.
- Holding raffles with annual prizes above $5,000, or more than four raffles per year, without a Gaming Commission license.
- Failing to keep the required records for two years, or refusing inspection.
Licensed organizations that don’t pay the 2% prize tax face fines of up to three times the unpaid amount.2Missouri Senate. SB 1021 – Introduced Bill Text The bigger risk sits outside the raffle statute. Running an unauthorized raffle falls under Missouri’s general gambling laws, and promoting gambling in the first degree is a Class E felony carrying up to four years in prison.11Missouri Revisor of Statutes. Missouri Revised Statutes Section 572.030 That classification reaches anyone who knowingly advances gambling by organizing or managing it, which is what an unlicensed raffle looks like from a prosecutor’s chair.