Are sweepstakes different than raffles?

Yes. When run for charity, both sweepstakes and raffles typically involve donors contributing to a cause to be entered in a drawing for a prize. Raffles are technically considered gambling though, since you are exchanging money for a chance to win something. That’s why raffles are highly regulated.

Sweepstakes are not considered gambling because they provide a way for people to enter for free in addition to donating for entry. This also makes sweepstakes much more flexible than raffles. For instance, a sweepstakes can accept donations from all 50 states (and other countries) while raffles can’t

Will people donate if they can enter for free?

Definitely. Charity sweepstakes are focused on giving people a chance to be part of helping a cause, and people like doing that. Entering for free typically means printing out a form, completing it, and mailing it in. Most people would rather support the cause than do that, so free entries are usually a very small percentage of the total entries.

Are sweepstakes donations tax-deductible?

Unlike raffles, there are cases in which 501(c)(3) charities consider donations to a sweepstakes be to tax-deductible (depending, of course, on the donor’s personal tax situation). This decision is up to each nonprofit and their legal counsel, but we most often see nonprofits adding a statement of tax-deductibility to sweepstakes donation receipts.

Can I run an international sweepstakes?

Yes, but you have to exclude countries that disallow their residents to participate in these campaigns. Some countries also have arduous regulations that make it undesirable to include them in your sweepstakes. That said, there are many countries for which it’s not a problem. We can help you determine what countries you may want to include or exclude on an international sweepstakes.

Do I have to call it a sweepstakes?

No. The term “sweepstakes” can have a negative connotation due to unscrupulous for-profit operators that have run sweepstakes fraudulently. Most organizations call their campaign a “drawing” or other like term. Although the term “sweepstakes” appears in the official rules, that’s the only place it’s usually mentioned.

How are winners drawn?

Winners are drawn by the system at random using a certified algorithm. The drawing process accounts for free entries (including meeting legal “equal dignity” requirements), multiple prizes, and multiple quantities of the same prize.