California bingo laws allow the game only when a qualifying nonprofit runs it under a permit from the city or county where the game is held, with prizes capped at $500 per game and every worker serving as an unpaid member of the sponsoring organization. The framework sits in Penal Code Section 326.5, and getting any piece of it wrong is a misdemeanor.1California Legislative Information. California Penal Code PEN 326.5
Who Can Legally Run Bingo
Bingo in California is a nonprofit fundraiser, not a commercial activity. The organizations that qualify to host games are those exempt from California’s bank and corporation tax under specific Revenue and Taxation Code sections: religious, charitable, educational, and scientific groups, along with civic leagues, social welfare organizations, labor organizations, fraternal lodges, and veterans’ groups.2California Legislative Information. California Revenue and Taxation Code 23701d Mobilehome park associations, senior citizens organizations, and charitable groups affiliated with a school district also qualify.
Being an eligible nonprofit is only half the equation. The city or county where the game will take place must have passed an ordinance authorizing bingo. Not every jurisdiction has one. Before an organization does anything else, it needs to confirm the local law actually permits the game.
Getting a Local Permit
Once an organization confirms its jurisdiction allows bingo, it applies for a license from that city or county. Requirements vary. Most jurisdictions ask for proof of tax-exempt status, articles of incorporation or bylaws, and sometimes fingerprinting and background checks for the people who will oversee the games. Many ordinances also require the organization to have existed for a minimum period, commonly three years, before applying.
Fees range from modest annual charges to several hundred dollars, and some jurisdictions add per-session fees on top. Missing a renewal deadline suspends the organization’s right to hold games, so tracking dates matters.
The $500 Prize Cap
The maximum prize for any single bingo game is $500, whether in cash, merchandise, or a combination.1California Legislative Information. California Penal Code PEN 326.5 Non-cash prizes count at fair market value, so a $500 gift card hits the ceiling the same way cash does. Prizes must be awarded in full, with no deductions for expenses, fees, or any other costs.
This is one of the lowest per-game caps in the country, and that is by design. It keeps California bingo in the community-fundraiser category rather than letting it grow into something that looks like commercial gambling.
Members Only, and No One Gets Paid
Every person who promotes, operates, or staffs a bingo game must be a member of the sponsoring organization. Hiring an outside company to run the games is not permitted. The rule exists to keep commercial operators from using nonprofits as a shell for otherwise illegal gambling.
It is a separate misdemeanor for anyone to receive or pay a profit, wage, or salary from bingo. The one exception is security personnel hired to protect the event, who may be paid from bingo revenues. Everyone else is a volunteer. Stipends, honoraria, or “thank you” payments to game operators all violate the statute, even if the amounts are small. Reimbursing actual expenses like transportation is a different question, but anything that looks like compensation for the work done crosses the line.
Overhead Limits and Where the Money Goes
All bingo proceeds must go to charitable purposes, with a limited carve-out for operating costs. An organization can spend on rent, bingo equipment, administrative costs, security equipment, and security personnel, but only up to the lower of two limits: 20 percent of gross proceeds before prizes, or $3,000 per month. That $3,000 figure began adjusting annually for inflation based on the California Consumer Price Index on January 1, 2025.1California Legislative Information. California Penal Code PEN 326.5
If an organization’s monthly gross bingo receipts exceed $5,000, local ordinances may require that a minimum percentage of proceeds go to charitable purposes unrelated to running the bingo games themselves. The point is that a group cannot funnel all its bingo revenue back into bigger bingo events. The money has to reach the charitable mission.
Keep detailed records of revenue, prize payouts, overhead expenses, and charitable disbursements. Local ordinances typically require records to be kept for at least a year and produced on request.
Paper Cards Only
California bingo means paper or cardboard cards. The California Department of Justice has taken the position that electronic systems using computers with stored bingo matrices in place of physical cards are not authorized under Section 326.5, and running such a game is an unlawful lottery, a separate misdemeanor.3California Department of Justice. Electronic Bingo: Law Enforcement Advisory Number 9
There is one narrow allowance. Electronic devices that help a player track physical cards they have already purchased are permitted. If a player buys paper cards and uses a device that alerts them when a card wins, that is legal. The paper card remains the official entry; the device is only a notification tool.
Where Games Can Be Held and Who Can Play
Bingo games must take place on property the sponsoring organization owns, leases, or otherwise occupies, and the facility must primarily serve the nonprofit’s regular activities. Renting a warehouse just to run bingo nights would not qualify. Local zoning rules may further restrict games to specific building types like community centers, churches, or fraternal halls, and fire safety and occupancy limits apply as they would for any assembly. Some jurisdictions require a site inspection before issuing a permit.
No one under 18 can participate in a bingo game. Organizations should verify player ages, especially at events held in family-oriented venues where younger attendees might drift over to the tables.4California Legislative Information. California Penal Code PEN 326.5
Tax Reporting
Players owe federal income tax on all gambling winnings, including bingo, regardless of amount. The common belief that small winnings are tax-free is wrong. Every dollar is reportable, whether or not a tax form changes hands.5Internal Revenue Service. Gambling Income and Expenses
For 2026, the threshold at which a bingo operator must issue a Form W-2G to a winner is $2,000, up from the previous $1,200, due to an annual inflation adjustment that took effect for calendar years after 2025.6Internal Revenue Service. Instructions for Forms W-2G and 5754 (Rev. January 2026) If a winner does not provide a taxpayer identification number, the organization must withhold 24 percent as backup withholding.
On the organization side, bingo revenue is generally excluded from federal unrelated business income tax, but only if the games comply with state and local law and bingo is not ordinarily carried out on a commercial basis in that jurisdiction.7eCFR. 26 CFR 1.513-5 – Certain Bingo Games Not Unrelated Trade or Business Because only nonprofits can run bingo in California, that condition is easily met. Violating state bingo law, though, forfeits the federal tax exclusion for the revenue involved.
Penalties
Any violation of Section 326.5 is a misdemeanor. Under California’s default misdemeanor sentencing, that carries up to six months in county jail, a fine of up to $1,000, or both.8California Legislative Information. California Penal Code PEN 19 The violations that most often catch organizations are exceeding the $500 prize cap, paying operators from bingo funds, letting an unqualified group host games, and using electronic bingo machines instead of paper cards.
Paying or receiving wages from bingo is its own separate misdemeanor. Diverting proceeds for personal use or non-charitable spending can escalate into fraud or embezzlement charges with significantly harsher penalties.
Local governments can also suspend or revoke a bingo license, impose additional fines, or bar an organization from reapplying for a period. Losing a license stops the games and can damage an organization’s ability to fundraise through other channels.