Could a North Carolina nonprofit run a raffle as a fundraiser, and could they sell or serve alcohol in the same building?
Plain-English summary
A raffle is a lottery. Lotteries are illegal in North Carolina unless they fit into a narrow exception. Section 14-309.15 carved out one such exception for nonprofits running fundraising raffles, but the exception came loaded with conditions. The AG opinion walks through those conditions and then handles a follow-up question about serving alcohol at the same event.
The structural rules in 1993 were these. A qualifying nonprofit could run at most two raffles per year. The maximum cash prize was $5,000 (raised from $1,000 by the 1993 session laws effective June 28, 1993). The maximum non-cash, non-redeemable merchandise prize was $25,000. Real property could not be offered as a prize. The raffle could not run jointly with a bingo game. At least 90% of net proceeds (gross receipts minus the cost of the prizes) had to go to charitable, religious, educational, civic, or other nonprofit purposes. And none of the net proceeds could be used to pay someone else to conduct the raffle or to rent space to sell tickets, receive tickets, or hold the drawing.
Any failure to follow those rules dropped the raffle out of the safe harbor and turned it into ordinary gambling under § 14-309.15(a).
The alcohol question turned on § 18B-308, which prohibited the sale or consumption of alcohol "where" a raffle or bingo game was being conducted. The opinion noted that earlier in the same section the statute used the word "premises", but for this particular prohibition the Legislature used "room". That word choice mattered. The AG concluded that alcohol could be sold and consumed elsewhere on the premises so long as it was not in the same room where the raffle activity actually happened.
The next question was what "being conducted" meant. The AG identified three triggering events that would make a room one where the raffle was being conducted: a prize was won (including the announcement of the winning name or number), a random drawing by name or number occurred, or a person purchased chances. If none of those three things happened in the bar or beer-garden room, the alcohol sale and consumption there were lawful. If even one occurred, sale and consumption in that room were unlawful.
The drafting choice gave nonprofits a workable structure: hold the actual drawing in a side room or auditorium with no bar, while letting people drink in the main hall.
Currency note
This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina has substantially amended the charitable raffle statute in the years since 1993, including increases in prize caps and adjustments to the allowable number of raffles per year. Anyone planning a current raffle should confirm the current statutory limits and any ABC Commission rules.
Background and statutory framework
North Carolina is one of the states whose constitution and statutes have historically been skeptical of gambling. The general anti-lottery law in N.C.G.S. § 14-289 made it a crime to operate a lottery, with several carve-outs for specific charitable activities. Bingo got its own statutory section. Raffles got § 14-309.15.
The 1993 amendment that raised the cash prize cap from $1,000 to $5,000 was a meaningful policy shift. A $1,000 prize had become too small to draw ticket buyers willing to pay $25 or $50 a ticket, the kind of pricing that made a nonprofit fundraiser actually generate net proceeds. The five-fold increase in the cap was enacted to make raffles a viable fundraising tool again. The non-cash cap of $25,000 (often a vehicle donated by a dealership) was already permitted under the prior statute and was preserved.
The 90% net-proceeds-to-charity rule was the core fairness requirement. It meant a raffle that spent more than 10% of net proceeds on overhead (paid emcees, rented sound systems, salesperson commissions) fell out of the safe harbor. The "net proceeds" definition explicitly subtracted prize cost first, which is how a $5,000 cash prize raffle that grossed $25,000 in ticket sales would have $20,000 in net proceeds, of which $18,000 (90%) had to go to the cause.
The alcohol question was an ABC Commission issue as much as a criminal law one. Many fundraising events were held at fraternal lodges, fire halls, or country clubs that held ABC permits. Allowing alcohol service to continue in the bar area while the raffle drawing took place in a side room let those events continue to operate without losing their alcohol revenue or running afoul of § 18B-308.
Common questions
What counted as "being conducted" for the alcohol rule?
Three things triggered it: a prize being won (including the announcement of the winning ticket), a random drawing by name or number occurring, or a person purchasing chances in that room. None of those three happening meant alcohol was fine in that room.
Could the same volunteer run both the bar and the raffle ticket sales?
The opinion did not address volunteer assignments, only the location of activity. As long as the ticket sales and drawing physically happened in a different room from where alcohol was served or consumed, the personnel arrangement did not change the analysis.
Did the 90% rule have to be calculated event by event, or could it be averaged across the year?
The statute spoke in terms of "net proceeds from such an event", suggesting an event-by-event calculation. A nonprofit could not bury a money-losing first raffle in averages with a profitable second one and claim 90% on aggregate.
What happened if a raffle violated the rules?
It became ordinary gambling under § 14-309.15(a), which made participants and organizers potentially liable under the general anti-lottery laws.
Could a charity offer a car as a prize and have its value count under the $25,000 non-cash cap?
Yes, as long as the prize was non-cash and not redeemable for cash, the $25,000 cap on non-cash prizes applied rather than the $5,000 cash cap. A car valued at up to $25,000 was within the rules.
Citations
- N.C.G.S. § 14-309.15 (charitable raffle exception)
- N.C.G.S. § 14-309.15(a) (consequences of noncompliance)
- N.C.G.S. § 18B-308 (alcohol where a lottery is conducted)
- 1993 N.C. Sess. Laws 219 (cash prize cap raised to $5,000 effective June 28, 1993)
Source
- Landing page: https://ncdoj.gov/opinions/raffles-drawings/
Original opinion text
- No more than two raffles per year.
- The maximum cash prize is $5,000 and the maximum non-cash, non-redeemable merchandise prize is $25,000. See 1993 N.C. Sess. Laws 219 (maximum cash prize raised from $1000 to $5000 effective June 28, 1993).
- Real property is not offered as a prize.
- The raffle is not conducted in conjunction with bingo.
- No less than 90% of the net proceeds from such an event can be used for charitable, religious, educational, civic or other nonprofit purposes. Net proceeds equal receipts of the event less the cost of the prizes awarded.
- None of the net proceeds are used to pay for another person to conduct the raffle or to rent premises to sell or receive raffle tickets or to conduct the raffle. N.C.G.S. 14-309.15 (1986).
If the drawing is conducted as provided herein, it is lawful. Any failure to follow these procedures will result in the raffles being considered gambling. N.C.G.S. 14-309.15(a).
The second question is whether it is unlawful to sell or consume alcoholic beverages in a building when the drawing of the winning raffles ticket is made in a room where no alcoholic beverages are being sold or consumed. N.C.G.S. 18B-308 addresses the sale or consumption of alcoholic beverages where a lottery is being conducted. Sale or consumption of alcohol cannot occur in the same room while a raffle or bingo game is "being conducted." However, it appears the statute would permit the drawing to occur in an adjacent room where alcohol is not sold nor consumed. The statute clearly makes reference to "premises" earlier in the section. The Legislature apparently intended only to prohibit the raffle from occurring in the "room" where alcohol is sold or consumed.
One issue is what constitutes "being conducted?" A raffle is being conducted when a "prize is won," a "random drawing by name or number" occurs, or a person "purchases chances." Winning a prize includes, but is not limited to, the awarding of the prize to the drawing winner by announcing his or her name or number. If none of these events occur in the same room as the one in which alcoholic beverages are being sold or consumed, the sale or consumption of such beverages is not unlawful under N.C.G.S. 18B-308. If any one does occur, the sale or consumption is unlawful.
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