Washington’s gambling laws can come as a surprise to nonprofits. Gambling is a popular way to raise funds for many nonprofit organizations. However, under Washington’s gambling laws, gambling is illegal unless specifically authorized by statute.
In Washington, any activity that includes a prize, consideration, and chance is considered gambling and must be conducted in accordance with Washington’s gambling laws. Activities that require skill, rather than chance, such as an essay contest or where there is no consideration (where entry is free) are not gambling activities and are not regulated by the Gambling Commission.
Can my organization use gambling activities for fundraising?
In general, charitable organizations and other nonprofits are permitted to engage in certain gambling activities. While some activities such as card games and casino nights always require a gaming license, others such as bingo, raffle, and golfing sweepstakes may not.
Charitable or nonprofit organizations that are organized for charitable, civic, educational, fraternal, social, or similar purposes and have been organized and operating for at least 12 months may offer unlicensed gambling activities so long as they comply with the Gambling Commission’s rules.
To apply for a license, organizations must meet the qualifications listed above and be able to show significant progress towards their stated purposes and have at least 15 voting members who elect the organization’s governing body. The Gambling Commission has interpreted the voting member requirement to include either a membership organization where members elect the governing body or a non-member organization with a board of at least 15 members.
Thus, a non-member organization with fewer than 15 directors is not eligible to apply for a gaming license. This severely restricts the type of gambling activities a non-member organization can conduct as the type and amount of unlicensed activities an organization can conduct is limited.
Recognizing that this is cumbersome for many nonprofit organizations, the legislature is currently considering legislation that would decrease the number of voting members and organization is required to have to apply for a license.
Qualified organizations may engage in certain gambling activities without first applying for and receiving a gaming license; however, many of the authorized unlicensed gaming activities are restricted to an organization’s members and their guests. Thus, non-member organizations are not able to offer these activities.
Qualified organizations may engage in the following activities:
- Golfing sweepstakes based on the scores or playing ability of a golfing contest between individual players or teams of players provided that only members and their guests may participate,
- Turkey shoots where only members and their guests participate and the shooter is a member of the organization. All income must go to support the organization’s stated purpose and gross revenue may not exceed $5,000,
- Raffles where tickets are sold and prizes are awarded solely to the organizations members and their guests where guests do not exceed 25% of members present. An organization can hold an unlimited amount of member-only raffled provided that the combined gross revenue does not exceed $5,000 in any year,
- Public raffles, bingo, and amusement games provided that the organization does not hold more than two events in any year and the combined gross revenue from any events does not exceed $5,000 in any year.
Nonprofit and charitable organizations are required to have a gambling license in certain situations.
A nonprofit/charitable organization is required to obtain a gambling license:
- If the organization is hosting a raffle and tickets are sold by someone other than a member,
- tickets are bundled/sold at a discount,
- winners are chosen using an alternative drawing format,
- the prize is a firearm, or
- the organization is holding a joint raffle with another organization
- if an organization wants to offer more than two public raffles, bingo, or amusement game events in a calendar year
- any organization receiving more than $5,000 in gross sales from raffles in any year
The myriad of gambling rules and regulations in Washington State can be complicated to navigate and may require the assistance of a legal professional. To avoid embarrassing mistakes, ensure that your organization is armed with all the information necessary to ensure compliance with state gambling rules.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations. Ellis is licensed to practice in Washington and Arizona and advises nonprofits on federal tax and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.