Gambling for a Cause: The Rise of the Charitable Raffle in Pro Sports and Implications (and Opportunities) for In-house Counsel

Transcription

1 GOOD POINT GOOD POINT GOOD POINT ACC Sports & Entertainment Committee Gambling for a Cause: The Rise of the Charitable Raffle in Pro Sports and Implications (and Opportunities) for In-house Counsel April 21, 2015" Ellen M. Zavian, Esq." Sports and Negotiation Attorney George Washington University Professor Dawn Crowell Murphy, Esq." Nonprofit Organizations Practice Pillsbury Winthrop Shaw Pittman LLP

2 What is a 50/50 Raffle?" Tickets Participants/ticket purchasers Presence for winning (typically) Winner obtains half the total pot Benefiting org gets other half

3 The Attraction" Heightened awareness for the cause Publicity for the sponsoring org Cost effective no upfront costs, inventory, product to stockpile or deliver Versatile works with any size group; not dependent upon advertising

4 The Big Draw " Winner goes home with full pockets Charity gets financial benefit in addition to increased awareness Large pots garner attention, increased participation and attendance for sponsoring org, and increased concession sales CASH IS KING

5 Origins in Canada" Sports culture Amateur to Professional Canadian NP reliance Viewed as cause focused

6 Translation to U.S. Cultural Context" Perception: of gambling associated with sports Behaviors: tailgating, etc. Economics: usage of scoreboards, sponsorship arrangements Transition: hockey games in Canada à hockey in U.S.

7 Legal Landscape - Canada" favorable legal framework gaming regulated at provincial level & sometimes local allowed in all provinces so long as a recognized charity is beneficiary no tax on winnings

8 historically unfavorable regulation Legal Landscape U.S." gaming regulated at state level & sometimes local licenses limited to 501(c)(3) or (c)(4) orgs additional reqs vary by jurisdiction e.g., min period of existence, max # raffles/yr, prize limits, possible to win without buying a ticket some make it difficult or ban outright

9 Major U.S. Jurisdictions CA" Raffles legal under certain conditions Tax-exempt org using for fundraising Eligible org in CA at least 1 year; register and report for raffle separate from charitable reg 50/50 raffles illegal 90/10 rule applies at least 90% of the gross receipts must be used to support charitable purposes in California No apparatus or device may be used

10 Major U.S. Jurisdictions NY" Charities and other similar tax-exempt entities are eligible to hold raffles tickets sold in a municipality that has passed local games of chance law 3 categories based upon anticipated proceeds; some must apply for games of chance ID, some submit a verified statement of $$, some self-determine

11 Lobbying to Change the Rules" League/Sports Organizations Federal State Local Technology Companies

12 Lobbying to Change the Rules" CA Example Assemblyman introduced raffle legislation A carve out for sports leagues only Native American Tribal issue Types of sports not all Delivery of tickets

13 Case Studies Implementing 50/50s" [ELLEN]

14 Tickets printed for raffles shall include the following: (a) Name of the licensed organization listed on the license; (b) Date, time, place, and exact address of the drawing; (c) Prizes to be awarded; (d) Aggregate value of the prizes; (e) Cost of the raffle ticket; (f) Purpose for which net proceeds will be used; Case Studies DC Ticket Rules" (g) Statement that the winner need not be present at the drawing to win; (h) Appropriate odds of winning, assuming all raffle tickets printed are sold; and (i) The phrase "Licensed by the D.C. Lottery and Charitable Games Control Board."

15 Considerations for In-house Counsel" 1. Do you have an upcoming event and a cause for which you d like to raise funds? 2. Are charitable raffles legal in the state or province where you intend to hold the event? 3. If so, are there any local or municipal laws that also apply to raffles?

16 Considerations for In-house Counsel" 4. Is the organization that will receive money from the raffle a charity or other nonprofit that is eligible to benefit from a raffle? 5. Do you need to obtain a license from a regulating body in order to conduct the raffle? 6. How will you issue tickets (e.g., by paper or electronically)? 7. How will you account for and safeguard funds?

17 Considerations for In-house Counsel" 8. What are the applicable laws or rules in your jurisdiction relating to ticket fees or limits, prize limits, ticket disclosure language, restrictions on ticket sellers, and other specifics of operating a raffle with which you must comply? 9. Are you subject to any league (i.e. NCAA, NFL, NHL, MLB, MLS) or company-wide guidelines on raffles or fundraising? 10. Are you subject to any specific taxes or reporting requirements?

18 " " " "THANKS" Ellen M. Zavian, Esq." " Dawn Crowell Murphy, Esq." "