Can a Nebraska nonprofit run a 'duck race' lottery or raffle, and when does it need a license and permit?

Plain-English summary

A "duck race" is a charity fundraiser in which numbered floating objects (classically rubber ducks) are released onto a waterway, and the order they cross a finish line decides the winners. This ruling confirms Nebraska nonprofits may run one — as a lottery or raffle — and sets the rules of play. It supersedes Revenue Ruling 35-97-1.

The authorization. Under LB 248 (effective June 6, 1997) and LB 1086 (effective July 13, 2000), a nonprofit organization may conduct a lottery or raffle using a race of inanimate buoyant objects to determine winners, subject to the Nebraska Lottery and Raffle Act or the Nebraska Small Lottery and Raffle Act and their regulations, together with this ruling.

When you need a license and permit. An organization must first obtain a lottery/raffle license and special permit if potential gross proceeds exceed $1,000 for a lottery or $5,000 for a raffle. Below those thresholds, no license or special permit is required. A licensed applicant must give the Department the race's official rules, sample tickets, a description of the objects and the waterproof numbering method, the race course and location, and the method for catching the objects at the finish.

Objects and tickets. All objects in a race must be substantially the same size, shape, and weight and must not absorb water; each bears a unique waterproof number that corresponds to a ticket sold. One participant may hold several objects if the organization keeps a hard-copy register and provides it to the member in charge at the finish line at least an hour before the race. Licensed lotteries/raffles over the thresholds must use tickets meeting Lottery and Raffle Regulation 35-404.

Running the race. The course is on water with a distinctly marked, publicized finish line; the race must be able to finish within about an hour. Only objects tied to real tickets may enter; all are released at the same place and time and get no human assistance. A boom or barrier funnels objects single-file into a trap so an order of winners can be determined. If wind or turbulence prevents completion, winners are set by a physical drawing of the gathered objects.

Bad weather. A race may be postponed only if the official rules or ticket sales provided an alternative date; that date must be printed on all tickets and promotional materials and fall within seven days of the original. Otherwise, winners are determined by a random drawing on the original date.

What this means for you

A nonprofit planning a duck-race fundraiser

Decide first whether your expected proceeds clear the $1,000 (lottery) or $5,000 (raffle) thresholds — if so, get the license and special permit and submit the required race details in advance. Number every object to a ticket, run the race with no interference and a finish-line trap, and build an alternative rain date (within seven days) into your printed rules and tickets.

A small fundraiser under the thresholds

If potential gross proceeds stay at or below $1,000 (lottery) or $5,000 (raffle), you don't need a license or special permit — but the object, ticket, and race-conduct rules of play still frame how a compliant race is run.

Common questions

Q: Does a duck race need a gaming license in Nebraska?
A: Only if potential gross proceeds exceed $1,000 for a lottery or $5,000 for a raffle; below those amounts no license or special permit is required.

Q: Can people help the ducks along or free stuck ones?
A: No. Once released, objects receive no human assistance, and any that become lodged are left undisturbed until the race is completed.

Q: What happens if the weather ruins the race?
A: You may postpone only to an alternative date printed on the tickets and materials and within seven days; otherwise winners are set by a random drawing on the original date.

Citations and references

• LB 248 (effective June 6, 1997) and LB 1086 (effective July 13, 2000) — authorize lotteries/raffles decided by a race of inanimate buoyant objects.
• Nebraska Lottery and Raffle Act; Nebraska Small Lottery and Raffle Act — the governing acts and thresholds ($1,000 lottery / $5,000 raffle) for licensing.
• Lottery and Raffle Regulation 35-404 — ticket construction and information requirements for licensed lotteries/raffles.
• Revenue Ruling 35-97-1 — the prior duck-race ruling that this ruling supersedes.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr350001.pdf

Original ruling text

Revenue Ruling 35-00-1
Supersedes Revenue Ruling 35-97-1

December 20, 2000

Bingo, Lottery by Pickle Card, Lottery, and Raffle - Rules of Play for “Duck Races” in Nebraska.
IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN LB 248, EFFECTIVE JUNE
6, 1997, AND LB 1086 EFFECTIVE JULY 13, 2000, A NONPROFIT ORGANIZATION MAY
CONDUCT A LOTTERY OR RAFFLE USING A RACE OF INANIMATE BUOYANT OBJECTS
AS A METHOD OF WINNER DETERMINATION. A NONPROFIT ORGANIZATION
USING THIS METHOD OF WINNER DETERMINATION IS SUBJECT TO ALL OF THE
REQUIREMENTS, CONDITIONS, AND RESTRICTIONS CONTAINED IN THE NEBRASKA
LOTTERY AND RAFFLE ACT OR THE NEBRASKA SMALL LOTTERY AND RAFFLE ACT
AND ACCOMPANYING REGULATIONS WHICH APPLY TO TRADITIONAL LOTTERIES
AND RAFFLES, UNLESS OTHERWISE PROVIDED BY THIS REVENUE RULING. IN
ADDITION, THE ORGANIZATION SHALL COMPLY WITH THE REQUIREMENTS,
CONDITIONS, AND RESTRICTIONS OF THIS REVENUE RULING.
Advice has been requested regarding the proper conduct of a lottery or raffle when a nonprofit
organization chooses to conduct such lottery or raffle using a race of inanimate buoyant objects
to determine the winner(s). Such lotteries and raffles shall be conducted in accordance with the
Nebraska Lottery and Raffle Act or the Nebraska Small Lottery and Raffle Act and accompanying
regulations, in conjunction with this revenue ruling.
I. DEFINITIONS
A. Inanimate buoyant object means an object made of inorganic material, which is capable of
floating on water. Inanimate buoyant object may be referred to hereafter in this ruling as
the “object” or “objects”.
B. Race means a method of winner determination using inanimate buoyant objects floating
along a waterway, whereby the order in which one or more of the objects reaches a
predetermined finish line is associated with the winning of a predetermined prize.
II. APPLICATION FOR LICENSE AND SPECIAL PERMIT
A. A nonprofit organization wishing to conduct a lottery with potential gross proceeds
exceeding $1,000 or a raffle with potential gross proceeds exceeding $5,000 using a race to
determine winners must first obtain a lottery/raffle license and special permit.
B. Upon applying for the license and special permit the organization shall provide the
Department with following information:

1. A copy of any official rules for the race;
2. A sample of the proposed tickets to be sold to participants;
3. A description of the objects to be used in the race;
4. A description of the waterproof method to be used to number the objects;

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 35-00-1

December 20, 2000

Page 2 of 3

5. A description of the race course including location; and
6. The method to be used to trap or otherwise collect the objects at the finish line.
   C. A nonprofit organization wishing to conduct a lottery with potential gross proceeds which
   will not exceed $1,000 or a raffle with potential gross proceeds which will not exceed
   $5,000 using a race to determine winners is not required to obtain a lottery/raffle license
   or special permit and such organization shall not be required to submit the aforementioned
   information.
   III. OBJECT CONSTRUCTION AND NUMBERING REQUIREMENTS
   A. All objects used in a particular race shall be substantially the same size, shape, and weight.
   Care shall be taken to ensure that the objects are not cracked or otherwise susceptible to
   taking on or absorbing water in such a manner that their size, shape, or weight could be
   altered.
   B. Each object shall bear a unique number which is imprinted on or otherwise attached to
   the object using some type of waterproof method. The unique number on the object shall
   correspond to a lottery or raffle ticket sold to a participant.
7. More than one unique object number may correspond to a participant’s single lottery
   or raffle ticket number when the participant has paid for more than one object to be
   entered in the race. For example, a participant purchasing three entries may have objects
   numbered one, two and three registered to his or her single ticket number. However, if
   the organization permits more than one object to correspond to a single ticket number,
   the organization must:
   a. Create a hard copy register of all the ticket numbers sold for the race showing the
   corresponding object number(s) which match each ticket;
   b. Provide the register to the organization’s member in charge of the race at least one
   hour PRIOR to the start of the race. The member in charge, along with the register,
   must be physically present at the finish line of the race; and
   c. Provide any requesting participant who has paid to enter more than one object, with
   the numbers of the objects which correspond to his or her ticket PRIOR to the start
   of the race.
   IV. CORRESPONDING LOTTERY OR RAFFLE TICKET REQUIREMENTS
   A. A nonprofit organization using a race to determine winners must do so by selling sequentially
   numbered tickets which correspond to objects used in the race. Each participant must be
   provided with a ticket or stub as evidence of payment to participate in the race.
   B. A licensed organization conducting a lottery with potential gross proceeds exceeding $1,000
   or a raffle with potential gross proceeds exceeding $5,000 using a race to determine winners
   must sell lottery or raffle tickets meeting the construction and information requirements
   contained in Nebraska Lottery and Raffle Regulation 35-404.

Revenue Ruling 35-00-1

December 20, 2000

Page 3 of 3

V. RACE CONDUCT
A. The race course shall be on water and have a distinctly marked finish line. The race course
shall be clearly established and publicized prior to the race, so that participants in the lottery
or raffle may have the opportunity to observe the race.
B. The length of the race course shall be such that the race can reasonably be completed within
one hour.

1. If unforeseen circumstances occur which preclude the successful conduct or completion
   of the race (such as wind or turbulent water), the winners shall be determined by a
   physical drawing of the objects which have been gathered into a contained area.
   C. Only objects which correspond to actual lottery or raffle tickets sold shall be permitted to
   enter the waterway.
   D. All objects shall be released on the waterway at substantially the same location and time.
   E. Once the objects have been released, they shall not receive human assistance to navigate or
   complete the race course. Objects which become lodged or otherwise immobilized during
   the course of the race shall not be disturbed by human intervention until after the race has
   been completed and the winners have been determined.
   F. The organization shall have a sufficient number of workers or volunteers stationed along
   the race course to ensure that no one enters the race course during the race or attempts to
   interfere in any manner with the race course or the objects in the race.
   G. A boom or other barrier shall be used at the finish line which is capable of ensuring that no
   object crosses the finish line without being funneled into a trap or chute capable of catching
   the objects in single-file order, so that an order of winners can be determined.
   VI. INCLEMENT WEATHER
   A. A nonprofit organization may postpone a race due to inclement weather only if the
   organization has provided for an alternative race date in its official rules for the race or
   at the outset of ticket sales. If the organization has not designated an alternative race date
   as provided in subsection 1 of this section, the winners shall be determined by a random
   drawing of the objects on the race date originally scheduled.
2. If the organization wishes to conduct the race at a later date in the event of inclement
   weather, an alternative race date must be printed on all lottery or raffle tickets and other
   promotional materials distributed to advertise the race. The alternative race date must be
   within seven days of the original race date.
3. If the alternative race date is beyond the expiration date of a licensed organization’s
   special permit, the licensed organization shall not be permitted to sell any additional
   chances to participate in the race after the expiration date of the permit, but shall be
   allowed to conduct the race and award the prizes after the expiration date of the special
   permit.
   APPROVED:

Mary Jane Egr
State Tax Commissioner
December 20, 2000