Are sweepstakes different than raffles?

Yes. Sweepstakes and raffles are alike in that they both involve people supporting your cause by getting entries into a drawing for a prize(s). But they are regulated differently.

Raffles are most often considered a form of gambling by government regulators since donors make a payment in exchange for a chance to win something (like you’d do at a casino).

Despite this, raffles for charitable purposes can be allowed at the federal level for 501(c)(3) organizations (US). But they must still comply with all the state and local raffle laws that apply to them. This makes it very difficult to run an interstate raffle, and impossible to run them nationally.

By law, sweepstakes must offer a free method of entry (typically by mail-in form) in addition to donation-based entries. Because of this, sweepstakes may not be considered a gambling activity in the same way that raffles would be (you can’t gamble for free).

This difference in structure means that raffles and sweepstakes are regulated differently. Accordingly, charitable organizations may be able to run a sweepstakes in all 50 states and even internationally.

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.