One of the more common fundraising questions from PTAs concerns various games of chance—raffles, “squares,” and other similar activities. The appeal of such fundraisers is apparent, as they are often very easy to run and have the potential to raise a significant amount of money. However, such activities are heavily regulated in Illinois and may jeopardize your PTA’s non-profit status.

Games of Chance

When talking about these sorts of fundraisers, it is important to understand what a “game of chance” is. The easiest way to understand this concept is that if you can spend more money to improve your chances of winning, then the activity is a game of chance. In other words, if you can buy more tickets in a raffle or bingo cards at a bingo night, your chances of winning go up, and the activity is a game of chance. 

Note that neither National PTA nor Illinois PTA recommends games of chance as a means to raise funds for your PTA. In addition, incentives (e.g., gift cards) that have been purchased or donated that are used to encourage the purchase of a PTA membership are also considered a raffle in Illinois and must follow the requirements described below.

IRS Implications

The IRS requires 501(c)(3) organizations’ fundraising activities to be “substantially related to the performance by the organization of its exempt purpose or function.” In other words, PTAs should raise funds in a manner consistent with our mission. Note that the IRS explicitly states that just because an organization raises funds through an activity that allows it to spend the funds for its mission is not sufficient to meet that requirement. Failure to follow the IRS requirements on these activities can cause your PTA to lose its non-profit status.

Should the IRS determine that your PTA’s fundraiser isn’t substantially related to its mission, and games of chance are likely to fall in that category, then several additional requirements for such funds would apply to the “unrelated business income.” Those include:

  • Your PTA may be required to pay taxes on the funds raised from a game of chance.
  • Depending on the value of the prizes, your PTA may be required to withhold taxes or issue a 1099-MISC form or a W-2G form to the winner or winners.

Additional information can be found in IRS publication 598, Tax on Unrelated Business Income of Exempt Organizations.


In Illinois, raffles are regulated under the Raffles and Poker Runs Act, which states that any raffle not licensed and operated in accordance with the Act is illegal gambling and subject to criminal fines and penalties. The Act spells out several key considerations:

  • The organization must obtain a license from the local governing body (i.e., the municipality or county where the raffle will be held). These local governing bodies are not required to allow raffles, so a raffle license may not be available to your PTA depending on where you are located.
  • Raffle licenses can only be issued to select non-profit organizations that have been in existence for at least five years. This means that your PTA cannot obtain a raffle license if it has lost its 501(c)(3) status in the last five years.
  • Local governing bodies are required to set the maximum price of a raffle ticket and the maximum amount of all prizes to be awarded in a raffle.
  • Only bona fide members of the PTA may participate in the management or operation of the raffle. That means that only PTA members can sell tickets. No one under 18 may participate in a raffle in Illinois in any way.
  • Tickets may only be sold within the area specified by the raffle license. That means that grandma in Ohio (or the next county over) cannot purchase a raffle ticket to support her grandchild’s PTA.
  • Following the raffle, the PTA will still have obligations, including maintaining records of and reporting to the local governing body the gross receipts, expenses, and net proceeds from the raffle, as well as how the proceeds were distributed. Those records must also be maintained for three years.


In Illinois, bingo games are regulated under the Bingo License and Tax Act. Many of the requirements are similar to those for raffles, but there are some key differences.

  • The bingo license must be obtained from the Illinois Department of Revenue.
  • The bingo license limits the number of games that can be held in a day and during the year as a whole.
  • The price of a bingo card is limited to $1 and is valid for all games that day.
  • The maximum amount of prizes (money or merchandise) that can be awarded is limited to $2,250. The prize for any one game cannot exceed $500 in cash or its equivalent.
  • The location where you hold your bingo game may be required to obtain a provider’s license.
  • The provider of your bingo supplies may be required to obtain a supplier’s license.

Squares, Brackets, and Other Sports-Related Games

A Super Bowl squares game (where participants purchase one or more squares in a grid based on the score of the game), bracket game (where participants purchase one or more bracket entries in the NCAA basketball tournament), or other sports-related gaming activity are illegal in Illinois for PTAs. While the office March Madness pool is also illegal, a non-profit using sports betting as a fundraiser is much higher profile activity and much more likely to be discovered.


Because games of chance are heavily regulated at the federal, state, and local level, PTAs should be aware that failure to follow those requirements carry significant risks.

  • PTAs could lose their 501(c)(3) status with the IRS.
  • Failure to follow IRS requirements could result in significant fines and penalties for the PTA.
  • Failure to follow Illinois laws regarding games of chance may result in criminal charges for PTA officers or those running the fundraiser. In some cases, those charges may be felonies.

For these reasons, and because gambling in general does not align with the PTA mission and purposes, both National PTA and Illinois PTA strongly recommend that PTAs avoid using games of chance for fundraising.

Photo © 2019 by Dmoore5556 under Creative Commons license.