For raffles, 50/50 drawings, bingo nights, calendar raffles, duck races and casino nights
Raffle ticket receipts: nothing is deductible, and the letters you do owe
A raffle ticket is a wager, not a gift. The IRS has said so since Revenue Ruling 67-246, and Publication 526 lists raffle, bingo and lottery tickets as non-deductible — even for the buyer who loses, even when the ticket says "donation". So the one letter a raffle buyer must not get is a donation acknowledgment. What a raffle does generate is other paperwork: the "not tax-deductible" line on the ticket, a Form W-2G (and sometimes 24% withholding) for a winner whose prize is $2,000 or more and 300 times the ticket price, an in-kind thank-you to whoever donated the prize, and a polite reply to the buyer who asks for a receipt in January. Four templates below.
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What each raffle payment is, and what to send
| Money or item | Tax character | What you send |
|---|---|---|
| Raffle, 50/50, bingo, pull-tab or calendar-raffle ticket | Wager — not deductible in any part (Rev. Rul. 67-246; Pub 526) | Ticket with "not tax-deductible" line (template 1); no acknowledgment |
| Buyer pays more than the ticket price and says keep the change | The excess is a gift | Acknowledgment of the excess only (template 4, second part) |
| Person gives money and declines any ticket | Gift | Ordinary acknowledgment |
| Prize of $2,000+ (less wager) and 300× the ticket price | Gambling income to the winner; reportable | Form W-9 request, winner letter (template 2), Form W-2G by Jan 31 |
| Prize less wager over $5,000 | Reportable and subject to 24% withholding | Withhold from cash, or collect 24% before releasing a non-cash prize |
| Winner refuses to give a TIN | 24% backup withholding on a reportable prize | Withhold; W-2G shows it |
| Business or person donates the prize | In-kind contribution to you | In-kind acknowledgment, described, no value (template 3) |
| Sponsor pays for the raffle and gets tickets in the package | Sponsorship with a return benefit (the tickets' price) | Sponsorship letter — see Sponsorship page |
| Donor-advised fund grant "for raffle tickets" | Prohibited benefit (IRC §4967) | Return or re-designate; no tickets |
| Gala dinner ticket (no chance to win) | Quid pro quo — deductible excess over the meal's value | §6115 disclosure — see Auction page |
Raffle ticket and stub wording
The lines your ticket should carry: license number where your state issues one, prizes and drawing details, the W-2G and ID notice for large prizes, age and void-where-prohibited language, the 'not a tax-deductible contribution' statement, and a stub with a 'decline the ticket — treat as a donation' box so a true gift is documented at the point of sale.
[Organization name] — [Event or raffle name] [State raffle license / permit no. 000000, if your state issues one] TICKET No. [0001] Drawing: [date, time, place] $[price] each / [n] for $[price] Prizes: [1st prize — description, approx. retail value $0,000; 2nd prize — …] Need not be present to win. Winner is responsible for all applicable taxes; prizes of $[2,000] or more (less the ticket price) will be reported to the IRS on Form W-2G and the winner must provide a Social Security number and photo ID before the prize is released. [Cash equivalent / no substitution rules.] Must be 18 or older. Void where prohibited. The purchase price of a raffle ticket is NOT a tax-deductible charitable contribution (IRS Pub 526). Proceeds benefit [Organization name], a 501(c)(3) tax-exempt organization, EIN [00-0000000]. - - - - - - - - - - - - - - - - - - - - - - - - - stub - - - - - - - - - - - - - - - - - - - - - - - - - No. [0001] Name ______________________ Phone ______________ Email ______________________ Sold by _____________ [ ] I decline the ticket — treat my $______ as a donation.
Prize-winner letter (Form W-2G and withholding)
Congratulates the winner, explains why the prize is reportable, asks for Form W-9 and photo ID before release, and has optional paragraphs for 24% withholding on a cash prize, the collect-or-gross-up choice on a non-cash prize, backup withholding if no TIN is given, and Form 5754 for a group that shares a prize.
[Organization letterhead — name, address, EIN] [Date] [Winner name] [Address] Dear [First name], Congratulations — your ticket No. [0001] was drawn on [date] as the [first-prize] winner of the [raffle name], and you have won [cash prize of $[amount] / the [description of prize], which has an estimated fair market value of $[amount]]. Because the value of your prize, less the $[ticket price] you paid, is $2,000 or more and at least 300 times the ticket price, federal law requires [Organization name] to report it to the IRS on Form W-2G. Before we can release the prize we need you to complete the enclosed Form W-9 (name, address and Social Security number) and show photo identification. You will receive your copy of Form W-2G by January 31; the prize is taxable income to you for [year], and the amount withheld below is credited on your return. [Cash prize over $5,000: Federal law also requires us to withhold 24% of the prize less the ticket price. We will therefore pay you $[net amount] and remit $[withheld] to the IRS on your behalf.] [Non-cash prize over $5,000: Federal law requires 24% withholding on the value of the prize less the ticket price, which comes to $[amount]. Please bring a check for that amount payable to [Organization name] when you collect the prize, and we will remit it to the IRS in your name. — or — [Organization name] will pay the withholding tax on your behalf; the amount we pay is additional income to you and is included on your W-2G.] [If you decline a TIN: If we do not receive your Social Security number, federal law requires us to withhold 24% of the prize as backup withholding.] [If the prize is shared: If the ticket was bought by a group, please complete the enclosed Form 5754 so we can issue a Form W-2G to each person in his or her own share.] Thank you for supporting [Organization name]; the raffle raised $[amount] for [program]. Please contact [name] at [phone/email] to arrange collection. Warm regards, [Signer name] [Title] [Organization name] Enclosures: Form W-9 [, Form 5754]
Thank-you to the donor of a prize
An in-kind acknowledgment for the business or individual who gave the basket, gift card, trip or quilt: describes the item, gives the date, states no goods or services were provided, leaves the value to the donor, and optionally confirms the name recognition you promised.
[Organization letterhead — name, address, EIN] [Date] [Donor or business name] [Address] Dear [First name / Mr./Ms. Surname], Thank you for donating [description of the prize — e.g., a two-night stay at the Harbor Inn (certificate no. 4471) / a $250 Visa gift card / a handmade quilt, approx. 90" × 90"] to the [raffle name] held on [date]. Your prize helped the raffle raise $[amount] for [program], and the winner, [first name], was delighted. No goods or services were provided to you in exchange for this gift. [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, EIN [00-0000000]. Federal rules do not permit us to state a value for donated property; you determine the value for your own records (a business that donates inventory generally deducts its cost). [Optional: The winner's prize is being reported to the IRS as required; that is our responsibility, not yours.] [Optional, if the donor's name was printed on the tickets or announced: We listed you as the donor of the [prize] on the ticket and announced it at the drawing, as promised.] With sincere thanks, [Signer name] [Title] [Organization name]
Reply to a ticket buyer who asks for a receipt
The kind, correct answer: raffle tickets are not deductible (Rev. Rul. 67-246; Pub 526) so they are not on the giving statement — plus a second part that acknowledges any voluntary amount paid above the ticket price or given with the tickets declined. Delete the part that does not apply.
[Organization letterhead — name, address, EIN] [Date] Dear [First name], Thank you for buying [n] tickets in our [raffle name] on [date] and for asking about a receipt. We want to be straight with you so that your tax return is right. Under IRS rules, the price of a raffle, 50/50 or bingo ticket is not a charitable contribution — it is a payment for a chance to win a prize, and no part of it is deductible, even if the ticket did not win (Revenue Ruling 67-246; IRS Publication 526). For that reason the $[amount] you paid for tickets does not appear on your annual giving statement, and we have not issued a donation acknowledgment for it. (If you itemize and had gambling winnings this year, losing tickets may count as gambling losses on Schedule A; your tax preparer can tell you whether that applies to you.) [If the person also gave more than the ticket price, or declined the tickets:] Separately, you [paid $[total] and told us to keep the $[excess] above the ticket price / gave $[amount] and declined to take any tickets]. That $[amount], received on [date], was a voluntary gift. No goods or services were provided in exchange for it, and [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, EIN [00-0000000]. Please keep this letter as your acknowledgment of that gift. Thank you for supporting [program]. The raffle raised $[amount], and every ticket helped. Warm regards, [Signer name] [Title] [Organization name]
Raffle rows in the generator
Keep raffle sales in your event system and paste only gifts — but if a ticket row slips in, the generator catches it. A cash row whose Notes read like raffle, 50/50, bingo, pull-tab, calendar raffle, duck race or casino-night tickets gets a WARNING citing Revenue Ruling 67-246: leave it off the donor's statement, and if the buyer also gave a voluntary amount above the ticket price, split the row and acknowledge only the extra. The letter is still produced so the decision stays with you. An in-kind row that says the person donated a prize, basket or gift card for the raffle is treated as an ordinary in-kind gift, described without a value.
Raffle questions
Is any part of a raffle ticket tax-deductible?
No. The IRS has held since Revenue Ruling 67-246 that the price of a raffle ticket is a payment for a chance to win a prize, and Publication 526 lists raffle, bingo and lottery tickets among payments that are not deductible. It does not matter that the ticket did not win, that the buyer meant it as a gift, or that the ticket says "donation". The quid pro quo rules do not help either: with a gala ticket the donor can deduct the excess over the dinner's value, but a raffle has no excess — the whole payment buys the chance. Put "not tax-deductible" on the ticket, keep raffle sales out of your donor database and off giving statements, and if a buyer asks for a receipt send the letter in template 4.
What if someone pays more than the ticket price, or buys no ticket at all?
Then the extra is a gift. A person who hands you $100 for $40 of tickets and says keep the change has made a $60 contribution; a person who gives $50 and declines any ticket has made a $50 contribution. Record those amounts as donations with the date, and acknowledge them with the ordinary letter (the second part of template 4 does it). The stub in template 1 has a "decline the ticket" box so the choice is documented at the point of sale. Do not round the other way — a donor cannot turn ticket purchases into a deductible gift by asking for a receipt afterward.
When do we have to issue a Form W-2G to a raffle winner?
When the prize, reduced by the price of the winning ticket, is $2,000 or more and at least 300 times the ticket price. The dollar figure was $600 for decades; P.L. 119-21 raised it to $2,000 for prizes paid after 2025 and indexes it for inflation after 2026. A $2,500 cash prize on a $5 ticket: $2,495 and 499× — reportable. A $2,500 prize on a $10 ticket: 249× — not reportable. For a non-cash prize use its fair market value. Give the winner Copy B by January 31 and file Copy A with the IRS (with Form 1096 if on paper) by February 28, or March 31 if filing electronically. Get the winner's name, address and taxpayer identification number on a Form W-9 before you hand over the prize.
When do we have to withhold tax from a prize?
Regular withholding of 24% applies when the prize less the wager exceeds $5,000. For a cash prize you simply pay the net and send the 24% to the IRS with Form 945. For a non-cash prize (a car, a trip) the winner must pay you 24% of the value less the wager before taking the prize, or you can pay the tax for the winner — in which case the tax you pay is itself income to the winner and the rate on the prize becomes 31.58%. Separately, if a reportable prize is paid to a winner who will not give you a TIN, you must apply 24% backup withholding. Either kind of withholding is shown on the W-2G. Publication 3079 walks through the arithmetic.
Are raffle proceeds taxable to our organization?
Gaming is generally an unrelated trade or business, so raffle, pull-tab and casino-night income can be subject to unrelated business income tax unless an exception applies: bingo under IRC §513(f) (traditional bingo, legal where played, not competing with for-profit bingo), activities where substantially all the work is done by unpaid volunteers under §513(a)(1), and activities that are not "regularly carried on" (an annual raffle qualifies; weekly pull-tabs do not). If the exceptions do not cover you and gross unrelated income is $1,000 or more, file Form 990-T. Organizations with more than $15,000 of gaming gross receipts also complete Form 990 Schedule G, Part III. Keep a record of ticket sales, prizes paid, W-2Gs and withholding — Publication 3079 lists what to retain.
Do we need a license to run a raffle?
Almost always, from your state or locality, and the rules differ widely: who may hold a raffle (often only organizations in existence for a set number of years), prize caps, how often, whether tickets can be sold online or across state lines (many states forbid internet sales), what must be printed on the ticket, and what report to file afterward. A few states prohibit charitable raffles altogether. Print the license or permit number on the ticket where your state requires it (template 1 has the line). Also check the Federal Trade Commission and postal rules before mailing tickets — unsolicited raffle tickets through the U.S. mail raise lottery-law issues.
How do we thank the business that donated the prize?
With an ordinary in-kind acknowledgment: describe the prize, give the date, say no goods or services were provided, and never state a value (template 3). The prize donor's deduction is its business — a company that donates inventory deducts its cost basis under IRC §170(e)(1)(A); an individual who donates property deducts fair market value for most items and files Form 8283 if non-cash gifts exceed $500 for the year. If you printed the donor's name on the tickets or announced it, that is acknowledgment, not a return benefit. The person who wins the prize is a separate story: they have gambling income equal to its fair market value, and the W-2G duty is yours.
Can a donor-advised fund grant buy raffle tickets, or can a sponsor's payment include tickets?
A DAF grant can never pay for raffle tickets, event tickets or anything else that gives the fund's advisor a more-than-incidental benefit — that is a prohibited benefit taxed under IRC §4967, and most sponsors state it in their grant letters. If a DAF cheque arrives "for the raffle", return it or ask the sponsor to re-designate it as an unrestricted gift with no tickets attached. A corporate sponsor is different: the sponsorship payment is acknowledged under the qualified-sponsorship rules, and if the package includes raffle tickets the tickets are a return benefit valued at their price — see the Sponsorship page.
How does the generator treat raffle rows?
If a cash row's Notes read like raffle, 50/50, bingo, pull-tab, calendar raffle, duck race or other game-of-chance tickets, the generator adds a WARNING citing Revenue Ruling 67-246 and tells you to leave the row off the donor's statement and split out any voluntary excess; the letter is still produced so the decision stays with you. An in-kind row whose Description says the person donated a prize, basket or gift card for the raffle gets the ordinary in-kind treatment with a note that the winner, not the donor, has the W-2G exposure. Cleanest practice: keep raffle sales in your event system, not your donor database, and paste only gifts into the generator.
General information based on Internal Revenue Code §§165(d), 170(e)(1)(A), 170(f)(8), 513(a)(1), 513(f), 3402(q), 3406, 4967, 6041 and 6115; Revenue Ruling 67-246; Form W-2G and Form 5754 instructions; and IRS Publications 526, 1771 and 3079, as amended by P.L. 119-21 for 2026. State charitable-gaming law varies and is not covered. Not legal, tax or accounting advice.