Charity golf raffles and auctions: what to know

Quick answer

Raffles, silent auctions, live auctions, and on-course games of chance each carry different regulatory and tax considerations. The most commonly overlooked facts: many states require a specific permit or license to run a raffle, even for a nonprofit; auction winners may owe income tax on the fair market value of what they win; and the record-keeping requirements for charitable gaming and fundraising events vary significantly by state. Before adding any of these to your event, verify the rules with a qualified attorney, accountant, and your state's charitable gaming authority.

Why raffles and games of chance are regulated at all

The regulation of raffles, lotteries, and games of chance has a long history rooted in anti-gambling law. In most U.S. states, conducting a lottery — broadly defined as any game that combines a prize, chance, and consideration (something of value given to participate) — is either prohibited or restricted to specifically licensed operators. Charitable organizations are commonly given an exemption or a streamlined licensing path, but the exemption is not automatic and the requirements are not trivial.

The key point for charity golf organizers: your organization's charitable status does not automatically make your raffle legal. The legality depends on whether you have obtained any required permits, whether the structure of the raffle meets your state's requirements, and whether proceeds are handled in the way the law specifies. The consequences of running an unlicensed raffle vary by state but can include fines, permit revocations, and reputational harm.

Raffle permits: what many states require and what varies

Raffle and charitable gaming regulation is handled at the state level in the U.S., which means the requirements vary significantly from state to state. What is legal and straightforward in one state may require a formal license, a waiting period, strict financial controls, and post-event reporting in another. A few broad patterns hold across many states — but verify every one of these for your specific jurisdiction:

• Many states require a charitable gaming or raffle permit issued before the event takes place. The application process, fees, and lead time vary.
• Many states restrict who can run a qualifying raffle. The organization typically must be a registered nonprofit, and in some states, it must have been operating for a minimum period before applying.
• Some states restrict the use of raffle proceeds — requiring that a certain percentage go directly to the charitable purpose rather than to operational expenses.
• Some states require post-event financial reporting on raffle proceeds, expenses, and net amounts.
• Rules on who can sell tickets, how tickets must be structured, what information must appear on the ticket, and how winners must be selected and notified can vary widely.
• Some states distinguish between different types of charitable gaming: bingo, pull-tabs, raffles, and 'Las Vegas Nights' (table games) may each be regulated under separate authorities and rules.

The starting point for your organization is your state attorney general's office (many AGs publish a charitable gaming guide) or a local attorney familiar with charitable fundraising law. Do not rely on the rules from another state or what another organization told you they do — rules vary enough that this approach is risky.

Silent vs. live auctions: how they differ and what to know

Auctions at charity golf events generally fall into two categories. A silent auction runs in the background during the event — items are displayed with bid sheets, and golfers write in bids throughout the round and dinner. A live auction is run by an auctioneer during the awards dinner, with competitive bidding on a smaller number of high-value items. Mobile bidding platforms have created a third category that blends elements of both: items are listed digitally, participants bid from their phones in real time, and the platform handles outbid alerts and checkout automatically.

Auctions at charity events generally are not subject to the same gaming permits as raffles, because auctions involve competitive bidding rather than chance. However, they have their own set of tax and acknowledgment considerations that organizers commonly overlook.

Fair market value and auction winners: what the tax rules say (generally)

When someone purchases an item at a charity auction, the tax treatment of what they paid depends on the relationship between the amount paid and the fair market value (FMV) of the item. This is an area where many charity event organizers give donors incorrect information — sometimes unknowingly. Confirm the specifics with your CPA or tax advisor before your event.

• If a bidder pays more than the fair market value of an item, the excess above FMV may be treated as a charitable contribution — not the full amount paid.
• If a bidder pays exactly the fair market value or less, there is generally no charitable contribution component to the purchase — they are simply buying something.
• The organization is typically responsible for providing a written disclosure to bidders that states the fair market value of each item. This allows bidders to determine their own potential deductible amount.
• What constitutes fair market value for auction items (donations of experiences, sporting events, travel packages, etc.) can be nuanced. This is a question for your CPA, not an approximation.
• If the auction item was donated to your organization, the donor of the item and the winning bidder have separate and distinct tax considerations. The donor's ability to deduct the donated item's value depends on their own circumstances.

Mulligans and on-course games: donations or purchases?

Mulligans and on-course contest buy-ins are common at charity golf events and are often presented as donations. The question of whether they are actually deductible contributions is one that many organizers handle incorrectly.

For a payment to be a charitable contribution, it generally must be made with donative intent — meaning the donor receives nothing of substantial value in return. When a golfer pays $20 for a mulligan pack, they are receiving something of value in return (extra shots). When a golfer pays $5 to enter a closest-to-pin contest, they are receiving a chance to win a prize. In both cases, the payment may not be a deductible contribution in the way that a direct donation to the cause would be.

How you describe these purchases to participants — and what you state in any receipts you provide — matters. Representing mulligan purchases as fully tax-deductible charitable contributions when they may not be is a compliance issue. This is a question for your CPA or tax advisor to answer for your specific situation and organization type.

Record-keeping: what to track before, during, and after the event

Good record-keeping serves two purposes: it supports the donation acknowledgments you issue to participants, and it is the foundation of any post-event reporting your state may require. The specific records you need to keep depend on your jurisdiction and your organization's setup — these are general starting points.

• Keep a record of every item offered in your auction, including the item's description and your documentation of its fair market value.
• Record the winning bid amount for every auction item and the identity of the winning bidder.
• If you run a raffle, keep records of tickets printed, tickets sold, ticket proceeds, and how winners were selected — your state's permit conditions may specify exactly what records are required.
• Track all gaming and fundraising revenue separately by stream (registration, auction, raffle, donations, sponsorships, on-course games) so you can report and account for each accurately.
• Retain records long enough to support any tax filings or regulatory reports your organization is required to submit. Your attorney or CPA can advise on the appropriate retention period.
• Issue acknowledgment letters promptly. Many organizations set a goal of 30 days after the event, but check whether your jurisdiction or contribution size triggers a shorter requirement.

Donation acknowledgments: what they typically need to include

Written acknowledgment of charitable contributions is required in many jurisdictions above a certain dollar threshold. What a proper acknowledgment must include varies — but common elements include the name of the organization, the date of the contribution, a description of what was given, the amount (for cash contributions), and a statement about whether the donor received any goods or services in return and, if so, a good-faith estimate of their value. Confirm the exact requirements with your attorney or CPA — this is an area where missing elements can cause problems for donors trying to claim deductions.