Election Day is November 3, and if Proposition 4 passes, the Texas Constitution would be amended to allow professional sports team charitable foundations to conduct raffles with more lenient rules than those applied to other organizations.
Current state law limits raffles to two per year for each qualifying organization and prohibits cash prizes. The amendment would authorize a 50/50 raffle specifically for professional sports team charitable foundations at home games. This type of raffle, a popular money-maker for sports teams in many other states, gives 50% of raffle ticket proceeds as cash prizes and 50% is used for charitable purposes. Not only would cash prizes be allowed, but these types of raffles would not be subject to the two per year limitation.
Other nonprofits have questioned whether this is fair since Texas’ raffle rules would remain unchanged for organizations that are not professional sports team charitable foundations. Since they are a form of legal gambling, raffles are subject to a substantial set of rules that vary from state to state. In Texas, raffles may only be held by a qualifying organization, which is typically a nonprofit organization that has existed at least three years and has a charitable purpose. For-profit organizations may not hold raffles in Texas.
A raffle occurs when someone purchases the chance to win a prize. If an organization offers a door prize and there is no purchase necessary to win, there is no raffle. Raffle ticket sales are not donations since the value received is the chance to win a prize. However, raffles can be very lucrative, especially if cash prizes are an option. To mitigate against abuse of the proposed new rules for professional sports team charitable foundations, the organizations must be in existence as of January 1, 2016 to utilize the new raffle rules. The portion of raffle proceeds not given out as prizes must still be used for charitable purposes, just like any other Texas raffle.
Will approval of this proposition lead to more changes in Texas’ raffle laws? It’s a gamble to assume the answer is yes, but there’s definitely a chance.
