Iowa Raffle Laws: Licensing, Rules & How to Run a Legal Raffle [2026]

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What's ahead:

• How to run a legal raffle in Iowa

• Iowa raffle laws for nonprofits

• Who qualifies as a qualified organization

• What Iowa law actually says: Iowa Code 99B.24 in plain English

• Raffles conducted at a fair

• Ticket sales and residency requirements

• Tax obligations for raffle winners and organizers

• Penalties and enforcement

• Successful online raffle example: Iowa Savages 7v7

• Step-by-step guide to apply for an Iowa raffle license

• How to legally run a raffle: Common mistakes to avoid

• Final tips for a successful raffle in Iowa

• FAQs

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How to run a legal raffle in Iowa

Fundraising raffles are legal in Iowa with a valid license. Raffles aren't a one-size-fits-all in the state however and raffle laws differ by the size of the event or fundraiser for a charitable organization.

Raffle categories are based on the value of cash or merchandise prizes:

• Very small raffle: Under $1,000

• Small raffle: $1,001 – $10,000

• Large raffle: $10,001 – $100,000

• Very large raffle: $100,001 – $200,000

A raffle license is awarded by the Iowa Department of Inspections, Appeals, & Licensing for qualified organizations interested in:

• Charitable gambling

• Social gambling

• Amusement concession gambling

• Selling bingo or electronic raffle equipment or supplies

Most charitable gaming activities and nonprofit organizations hosting events for charitable purposes will be approved by Iowa raffle laws.

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What are the different types of raffles allowed in Iowa?

• Traditional raffles: The classic go-to where supporters buy tickets, and you draw a winner for a fun prize (like a gift basket or a weekend getaway).

• 50/50 raffles: The winner can take home half the total ticket sales while the other half goes to your cause (imagine raising $2,000 and giving a lucky winner $1,000 while supporting your mission).

• Prize raffles (like merchandise raffles): Instead of cash, you're raffling off cool prizes (concert tickets, signed memorabilia, or unique experiences) for events with sponsors or donated items.

• Online raffles: Going digital opens up new opportunities, but be aware of the extra rules that come with it. Some states have strict regulations around online raffles, so double-check your local laws before launching.

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Iowa raffle laws for nonprofits

Iowa Code 2025, Section 99B governs raffles, outlining the following key rules and other regulations we'll talk to in this article:

• A license must be in effect before promotions begin.

• Raffles are only valid during the license period.

• Raffles begin when the first ticket sells and ends when a winner is chosen.

• Calendar raffles are not allowed.

• Cash prizes and merchandise can't exceed $10,000.

• Winners do not need to be present.

• Prizes can be one item or multiple.

• There are no limitations on ticket cost.

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Do you need a gambling license for a raffle in Iowa?

Yes, you do need a gambling license to conduct a raffle in Iowa unless your organization qualifies for a very small raffle exemption. ( $1,000 total value or $5,000 in donated merchandise)

Here are the raffle permit options for qualified organizations:

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Learn more from the Iowa Department of Inspections, Appeals, & Licensing (DIAL) here.

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What to know about online raffles in Iowa

Iowa raffle laws allow nonprofit organizations to use online raffle software under the following regulations:

• A raffle license is required; only two-year qualified organizations can conduct electronic raffles and charitable gaming.

• You must use a state-approved electronic raffle system from a licensed manufacturer or distributor.

• Online-only raffles are not allowed — the winning number must be drawn manually.

• Limited raffle frequency: Only one small electronic raffle per day and one large electronic raffle per year are permitted.

• Ticketing rules apply: Each entry must be uniquely numbered and issued to the buyer at the time of purchase.

• Very large raffles cannot be conducted electronically.

• State regulations apply, and organizers need to confirm that the software is DIAL-approved before selling tickets online.

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Who qualifies as a qualified organization

Not every group can run a raffle in Iowa. The state uses a specific legal standard — "qualified organization" — and your status under that definition determines whether you can hold a raffle at all.

Under Iowa Code 99B.1(19), a qualified organization must be a bona fide religious, charitable, labor, fraternal, educational, or veterans organization. That covers most 501(c)(3)s, PTOs, booster clubs, veterans posts, and civic leagues — but not every informal community group or newly formed entity.

Iowa uses a tiered licensing system for charitable gambling (including raffles): 14-day ($15), 90-day ($40), 180-day ($75), One-Year ($150), and Two-Year ($150). The 14-day through One-Year licenses have no minimum existence requirement — any qualifying nonprofit can apply. Only the Two-Year Qualified Organization License requires at least 5 years of existence (per the Iowa Department of Inspections, Appeals, & Licensing). So a newer nonprofit isn’t locked out of Iowa raffles — you just pick a shorter-duration license and renew it when needed.

A few additional criteria matter too. Your organization must operate primarily for purposes consistent with your exempt status. The raffle's net proceeds must go toward those stated purposes. And no member, officer, or employee can personally profit from the raffle beyond a reasonable wage for actual work performed.

If you're unsure whether your organization meets the qualified organization standard, contact DIAL directly before advertising your event. Getting confirmation in writing protects you if questions arise later.

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What Iowa law actually says: Iowa Code 99B.24 in plain English

Most guides summarize Iowa's raffle laws in broad strokes. But when your organization's license — or your event's legality — is on the line, the actual statutory language matters. Below are the key provisions from Iowa Code 99B.24 and related subsections, quoted directly and annotated so you know exactly what applies to your situation.

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Who can legally hold a raffle: The "qualified organization" requirement

Iowa Code 99B.24(1) states:

"A qualified organization may conduct a raffle without a license if the value of all prizes awarded at the raffle does not exceed one thousand dollars in any one calendar year."

What this means in practice: Not every group can run a raffle in Iowa. A "qualified organization" is a bona fide religious, charitable, labor, fraternal, educational, or veterans organization operating for charitable, educational, religious, or civic purposes — think 501(c)(3)s, PTOs, veterans organizations, and sports booster clubs. The 5-year existence threshold only applies to the Two-Year Qualified Organization License; all shorter-duration licenses (14-day through One-Year) have no minimum age requirement, so a newly formed qualifying nonprofit can still run a licensed raffle — just pick a shorter license tier.

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The "very small raffle" exemption: 99B.5

Iowa Code 99B.5 carves out a specific exemption for low-stakes events:

"A qualified organization may conduct a raffle without obtaining a license under this chapter if the total value of all prizes awarded does not exceed one thousand dollars in a calendar year."

What this means in practice: If your total prize payout stays under $1,000 across all raffles in a calendar year, you skip the licensing process entirely. There's a parallel exemption for donated merchandise: if all prizes consist entirely of donated goods, the threshold rises to $5,000. The exemption applies to one raffle per calendar year — not one raffle per event. The moment your cumulative prize value crosses the applicable threshold — even by $1 — you enter licensed territory. Many small nonprofits unknowingly run multiple small raffles throughout the year and collectively exceed this limit without realizing it.

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When a license is required: 99B.24(2)

"A qualified organization that awards prizes in excess of one thousand dollars but not more than five thousand dollars in a calendar year shall obtain a small raffle license. A qualified organization that awards prizes in excess of five thousand dollars shall obtain a large raffle license."

What this means in practice: Iowa creates a tiered licensing system based on annual prize value — not per-event value. The distinction matters: five separate $800-prize raffles in one year total $4,000 and require a small raffle license, even though no single event exceeds $1,000. Track your cumulative prize totals across the calendar year, not just per event.

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Key compliance terms to know

These statutory definitions appear repeatedly in audits and enforcement actions — make sure your team understands them:

• "Raffle" ( 99B.1(20)): A game in which a participant buys a ticket for a chance to win a prize, with the winner chosen by random drawing. Games of skill are excluded.

• "Qualified organization" ( 99B.1(19)): A bona fide religious, charitable, labor, fraternal, educational, or veterans organization operating for charitable, educational, religious, or civic purposes. The 5-year existence requirement applies only to the Two-Year license tier; shorter licenses have no minimum age.

• "Net proceeds" ( 99B.1(14)): Gross receipts minus allowable expenses including prizes, license fees, and directly related operating costs. Net proceeds must be used for the organization's stated purposes.

A note on reading the statute yourself: The full text of Iowa Code Chapter 99B is publicly available at legis.iowa.gov. When in doubt about a specific scenario, consult the statute directly or contact Iowa's Division of Alcohol and Licensing (DIAL) before proceeding.

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Raffles conducted at a fair

Running a raffle at a county fair, state fair, or similar public event in Iowa comes with its own set of rules. Iowa Code 99B.5 addresses fair raffles specifically, and the prize limits are significantly higher than standard raffle categories — but so are the compliance requirements.

A qualified organization can conduct a raffle at a fair without a standard license, provided it meets the conditions set out in the statute. The key distinction is the venue: the raffle must take place at a recognized fair or exposition, and your activity must be confined to the duration of that event.

For fair raffles, the cash prize cap is $200,000. That's substantially higher than the $100,000 ceiling for standard large raffles. However, merchandise prizes are treated differently. The fair raffle rules permit merchandise prizes beyond typical raffle limits, but your total declared prize value must remain within the boundaries DIAL recognizes for your license tier — unless you hold a very large raffle license as an add-on.

There are practical rules to follow too. Tickets must still be uniquely numbered and issued at the time of purchase. The drawing must be conducted at the fair itself, not at a later date or separate location. And your organization must still meet the qualified-organization standard before taking advantage of fair raffle rules — the 5-year existence minimum only kicks in if you’re applying for a Two-Year license.

If you're planning to hold a raffle at an Iowa fair, contact DIAL before the event to confirm your license type covers the activity. Fair contexts don't exempt you from licensing — they modify the prize thresholds available to you. Getting that confirmation in writing is worth the extra step.

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Ticket sales and residency requirements

Iowa raffle tickets can only be sold to Iowa residents. This is a compliance detail that many organizations overlook, especially when running online promotions that reach supporters across state lines.

The residency requirement applies to buyers, not just the organization. Even if your nonprofit is Iowa-based and fully licensed, selling tickets to someone in Illinois or Nebraska violates Iowa raffle law. This matters most for digital promotions where your social media posts or email campaigns might reach out-of-state audiences who want to participate.

In practice, this means your raffle terms and ticket purchase flow should include a clear statement that participation is limited to Iowa residents. If you're using an online platform to sell tickets, you should either geo-restrict purchases or include an acknowledgment that buyers must confirm Iowa residency before completing a transaction.

For in-person events, the rule is easier to manage — you're typically selling to people physically present in Iowa. But for mailed ticket campaigns or digital raffles, you'll need a documented process to verify or at least require buyer confirmation of Iowa residency.

Organizations that fail to enforce this rule aren't protected by ignorance. If DIAL audits your raffle and finds evidence of out-of-state ticket sales, you can face fines or license consequences. Build the residency requirement into your raffle materials from the start — it's a simple safeguard that protects your license and your mission.

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Tax obligations for raffle winners and organizers

Winning a raffle prize in Iowa isn't purely a windfall — it comes with tax consequences for the winner and reporting responsibilities for your organization.

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What winners owe

All raffle prizes are considered Iowa earned income under Chapter 99B. That means winners must report the fair market value of any prize they receive as taxable income on both their federal and Iowa state returns.

For federal purposes, the IRS requires organizations to file a W-2G (Certain Gambling Winnings) for any single raffle prize worth $600 or more, provided the prize is at least 300 times the ticket price. If the prize value meets that threshold, you're required to collect the winner's Social Security number and issue the form by January 31 of the following year.

For prizes worth $5,000 or more after subtracting the ticket price, federal law requires 24% backup withholding. Your organization is responsible for withholding that amount from the prize before it's distributed and remitting it to the IRS. If you give a winner a $5,000 check without withholding, you've created a liability for your organization.

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What your organization owes

Your nonprofit's reporting obligations don't stop at W-2Gs. Iowa requires organizations holding very large raffles to submit a financial report to DIAL within 60 days of the drawing. That report must account for gross receipts, allowable expenses, net proceeds, and how those proceeds were used.

Even if your raffle doesn't hit very large raffle territory, keep detailed records of all ticket sales, prize values, and expenses. If DIAL audits your activity, those records are your primary defense. Using raffle software that automatically logs transactions — like Zeffy's zero-fee raffle platform — makes this significantly easier than maintaining manual spreadsheets.

If you're uncertain about your withholding obligations or W-2G thresholds, consult a tax professional before your drawing date. The IRS does not make exceptions for nonprofit organizers who fail to withhold correctly.

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Penalties and enforcement

Iowa doesn't treat raffle violations as minor paperwork issues. The state has real enforcement teeth under Chapter 99B, and the consequences for noncompliance can affect your organization's ability to fundraise for years.

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Fines and civil penalties

Conducting a raffle without a valid license is a violation of Iowa Code Chapter 99B. DIAL has authority to issue civil penalties against organizations that operate outside the law. Fines vary based on the nature and severity of the violation, but they can accumulate quickly if multiple infractions are found during an audit — for example, unlicensed activity combined with prize value misreporting.

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License revocation and denial

If your organization violates raffle laws while licensed, DIAL can revoke your existing license and deny future applications. Revocation isn't reserved for egregious cases. Repeated minor violations — like failing to submit required reports or selling tickets before the license is issued — can be enough grounds for revocation. Losing your license doesn't just affect raffles; it can impact your ability to conduct any charitable gaming activity in Iowa.

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Criminal penalties

Beyond civil enforcement, serious violations of Iowa gambling law can carry criminal consequences. Operating an unlicensed raffle can be classified as illegal gambling under Iowa law, which carries misdemeanor or felony charges depending on the scale of the activity. Officers and directors of the organization can be held personally liable — not just the organization itself.

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What triggers enforcement

DIAL investigates complaints, conducts routine audits, and reviews required reports. Common triggers include complaints from participants, discrepancies between reported proceeds and estimated ticket sales, and failure to submit post-event financial reports. The best protection is simple: get your license before you promote, track everything, and submit all required documentation on time.

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Successful online raffle example: Iowa Savages 7v7

Now that you understand the legal foundation, here's what a compliant, well-run raffle looks like in practice.

The Iowa Savages 7v7 is a nonprofit example of a well-run online raffle that allows participants to have fun while supporting team fees, travel expenses, and player development. Using Zeffy's 100% free raffle platform, every cent went right to the cause and was easily tracked for reporting.

Here's what we loved:

• Clear timeline and promotion: This raffle was well-advertised, with a clear start and end date to pull in more support for the team.

• High-value and compliant prizes: A mix of cash, signed jerseys, and premium gifts boosted ticket sales while staying within the regulations set by the state.

• Live engagement: A Facebook Live drawing increased excitement and transparency to blend the raffle as a hybrid experience that still met Iowa rules.

• Flexible ticket options: Supporters knew their contributions directly benefited young athletes, and saw many options to participate.

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Step-by-step guide to apply for an Iowa raffle license

Step 1: Determine your organization's eligibility

Before applying, ensure your organization qualifies as a charitable, community or nonprofit organization permitted to conduct raffles under Iowa law.

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Step 2: Choose the correct license type

Depending on your raffle's scale and duration, Iowa offers different license durations and types. Consider where you fall, consulting with the state to ensure you fill out the correct application and don't hit any snags.

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Step 3: Gather required information

Here's what you'll need to have ready to go for your application:

• Organization details (name, address, nonprofit status)

• Raffle details (dates, prize values, ticket sales period, raffle drawing date)

• Required documentation (proof of nonprofit status, prior gaming activity reports if applicable)

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Step 4: Complete the online application

• Visit the Iowa Department of Inspections, Appeals, and Licensing (DIAL) website.

• Use the SCG Online Licensing System to start your application.

• Follow the SCG Online User Guide for detailed instructions.

• Pay the non-refundable application fee (outlined above by license type).

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Step 5: Submit and await approval

• DIAL must issue your license before you begin advertising or selling tickets.

• Processing time can be up to 30 days, so it's smart to apply well in advance.

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How to legally run a raffle: Common mistakes to avoid

Organizations can make costly mistakes when hosting a raffle, even with the best intentions. Here are some of the most common errors and how to avoid them:

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1. Failing to obtain a license before you sell tickets

Iowa law requires all qualified organizations to obtain a raffle license before selling any tickets or advertising the event. Beyond the 30-day approval window, consider adding a buffer month so you can get started selling and raising as much as possible with your promotional window.

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2. Misreporting prize values

Raffles must follow strict prize value limits based on the type of license obtained. That said, as long as you accurately document the retail value of all cash and merchandise prizes, you are in the best position to stay compliant.

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3. Hosting prohibited raffle types

Certain types of raffles are illegal in Iowa, including:

• Calendar raffles: Recurring daily or weekly drawings with raffle tickets tied to specific dates.

• Build-up or pyramid raffles: Prizes accumulate over time instead of being awarded in a single raffle drawing.

Stick to approved raffle formats, ensuring the winner is chosen randomly and notified promptly after your drawing. If you have any questions, you can always contact DIAL and ask ahead of time instead of placing yourself at risk for fines after the raffle concludes.

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4. Worrying about reporting after the raffle

Iowa requires organizations to track and report raffle revenue, expenses, and prize distribution. For very large raffles, organizations must submit a report within 60 days of the drawing and pay 1% of gross receipts for a state audit.

This process can feel stressful and daunting if you don't think ahead. We suggest using raffle software or a database that records all ticket sales, prizes awarded, and financial transactions in one place with someone dedicated to updating it throughout.

Final tips for a successful raffle in Iowa

• Plan your timeline carefully. Set your ideal ticket sales period to determine how much time you'll need for promotion. Then, plan to apply for your license beforehand so you can get started without roadblocks.

• Price tickets strategically: People love options, so offer multiple ticket pricing choices (e.g., 1 for $10, 3 for $25) to encourage bulk purchases.

• Be transparent with participants: State prize details, raffle rules, and drawing date in your promotional materials so you can remain compliant and accountable while building transparency.

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FAQs: Iowa Raffles

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