That last community fundraiser you went to with a chance auction (often called a Chinese auction) and a 50-50 raffle, it probably violated state law.
These common fundraising tactics used frequently by groups coming together for a sudden and unexpected hardship or tragedy that hits a member of our community are not allowed by state law, according to Rich Kaczynski, from the New York State Gaming Commission, who spoke Tuesday night at the South Byron Fire Hall.
The event, hosted by the South Byron Volunteer Fire Department, was prompted by the recent discovery by several local volunteer departments that their longtime fundraising events may have, at best, skirted the edge of state law.
This year, Stafford fire canceled its Corvette raffle and Town of Batavia fire canceled its annual Harley raffle. In both cases, the departments are looking to better understand the law.
Kaczynski's department regulates four types of games of chance -- bingos, raffles, bell jar tickets and casino night type of games.
The state allows certain types of nonprofit groups to use these games as fundraisers, including volunteer fire departments, service organizations, fraternal groups, veterans groups and religious organizations.
For bingos, the group need only have existed one year before applying for a license, but for all other games of chance allowed by the state, the organization must have existed for at least three years.
It's that last provision that may most frequently put community fundraisers for victims of hardship into legally questionable territory. Often these efforts are created by ad hoc groups of people who are friends of the family and are not legally established groups in existence for at least three years.
Sometimes, these raffles are organized by established nonprofits, but if the fundraising isn't for the legally defined purpose of the group, then it also runs afoul of state regulation, according to Kaczynski. For example, a volunteer fire department can't hold a raffle to raise money for a member stricken by cancer.
To assist that cancer victim, there would need to be a three-year-old organization with the express mission of raising money for cancer victims, or similar hardships.
For the sake of extending the example, then, Genesee Cancer Assistance could host such a raffle, but only members of Genesee Cancer Assistance could conduct the raffle, and to be a member eligible to conduct the raffle, you must be a member for a least a year prior to the raffle.
The good news, perhaps, is that for small organizations, the bureaucracy of fundraising through games of chance isn't quite as cumbersome as it is for groups raising larger sums of money.
Groups that will hold raffles that generate a profit of more than $5,000 on a single raffle, or whose total profit for the year on raffles exceeds $20,000 in profit fall into Category 2 of New York gaming law and have more paperwork to deal with. Groups that reach Category 1 have more paperwork and pay a 2-percent tax on profits over $30,000 in a calendar year.
If your raffle efforts fall in Category 3 (below $5,000 in profit on a single auction, less than $20,000 profit in a year), you can self-define your group as meeting state requirements for existing for three years (or a year for bingo), not meeting the profit thresholds, falling within the proper categories for games of chance, and managing your funds within state guidelines.
Groups in categories 2 and 3 must register with the state and once they receive a state ID number, apply for a license from the town, village or city clerk where the group is organized.
In all three categories, if they want to sell raffle tickets outside of their home jurisdictions, they can sell only within jurisdictions within their same county and in the municipalities in counties contiguous with their home county. They cannot venture outside of that group of contiguous boundaries to sell tickets. For example, no selling tickets to your cousin in California. If your cousin from California wants a raffle ticket for your gun raffle in South Byron, he must fly to Buffalo, drive to South Bryon, enter your fire hall and buy a ticket with cash, and only cash.
In order for a group in any of the three categories to sell in a contiguous jurisdiction, they must request a letter of authorization the municipality's clerk. For example, if you're a volunteer with the South Byron Fire Department and you work at Graham Manufacturing, your department needs authorization from the City Clerk of Batavia in order for you to sell raffle tickets to your coworkers.
That applies to every single possible contiguous jurisdiction. If there are 20 contiguous municipalities, the organization needs 20 different letters of authorization.
If you're a business owner and a volunteer with South Byron and your business is located in the Town of Byron, you can sell raffle tickets at your business, but your employees can't sell raffle tickets unless they're related to you by blood or marriage.
A volunteer fire department can get a license to fund raise through a game of chance, but in order for the Ladie's Auxillary to help with that fundraiser, it must get its own state ID, and the same applies for the "Sons of" organizations. With all three groups properly licensed, and duly noted on the proper paperwork, they can assist each other in games-of-chance fundraisers, but otherwise, only members with at least a year of membership can participate.
If you want to hold a casino night, the gaming implements must be owned by the organization or rented from a licensed company, or, if approved, borrowed from an organization that owns the tables and wheels and cards and dice. Only members of the organization can deal cards or spin roulette wheels.
Even if your casino night doesn't have a buy in, if it's based on chance and has prizes, it's regulated by the state.
If you're running a game that isn't authorized by the gaming commission regulation -- such as a Texas hold 'em tournament -- you're likely violating state antigambling laws.
Your blackjack tournament? It's allowed, but it must be run precisely according to state regulations.
Repeatedly during the presentation, Kaczynski had to remind audience members he was just repeating state law. He doesn't make state law or control state law. That's up to the Legislature, or up to the gaming commission's attorneys to interpret.
There is legislation pending, supported by Assemblyman Steve Hawley, to help take away some of the difficulties being faced by local groups that have long relied on raffles as primary fund-raising tools.