Michigan State University
Controller's Office

Administration Bldg
426 Auditorium Rd, Rm 305
East Lansing, MI 48824
517 355-5020

Section 49: Raffle Policy

Last updated: July 2018

Michigan State University colleges/departments/units/organizations are permitted to conduct raffles in accordance with the procedures and requirements in this policy. However, other charitable gaming events requiring a State-issued license, such as bingo and millionaire parties, are not permitted.

Raffle definition: A game of chance where raffle tickets are sold or consideration is given, a winner(s) is determined by randomly drawing a ticket stub from a container, and a prize is awarded. Almost all raffles need to be licensed. If your organization is holding a 50-50, an event with an admittance/registration fee that includes being entered in a drawing for a door prize, or a drawing for completing something, such as a survey, these are raffles and should be licensed.

General information about raffles, rules and forms can be found at State of Michigan, Michigan Lottery, Charitable Gaming Division at http://www.michigan.gov/cg/ . Please note that the typical processing time for all raffle applications is 8 weeks. This includes MSU approval/signature and State of Michigan approvals. Failure to obtain proper licensing prior to a raffle event jeopardizes MSU status as a qualified organization with the Charitable Gaming Division. Any MSU college/department/unit/organization that fails to follow this Raffle Policy may be permanently dis-allowed for all future raffle applications.

Those wishing to hold a raffle, as a fundraiser or as a drawing for random prize selection, must meet the following requirements and rules:

I. Requirements and Rules

  1. Carefully review and follow the State of Michigan’s raffle information and rules. Please note the following when reviewing rules and considering holding a raffle:
    1. Tickets may only be sold to purchasers who are 18 years of age or older.
    2. Game records must be retained for three years, plus the current calendar year. See Charitable Gaming Division’s Raffle Guide for detailed list of records for retention. The Charitable Gaming Division reserves the right to inspect any game records before, during or after the event.
  2. You may NOT use MSU accounts or University funds to purchase raffle tickets.
  3. You MAY NOT:
    1. Use the internet to sell raffle tickets.
    2. Sell raffle tickets over the phone to persons outside of Michigan.
    3. Sell raffle tickets at events outside of Michigan
    4. Mail raffle tickets to purchasers.
  4. If you have any questions after reviewing raffle rules and forms, please contact the MSU Office of the Controller – Tax Services at 517-355-5029 or taxreporting@ctlr.msu.edu.

II. Raffle Application Process

  1. The only raffles that do not require a license are those where 1) All raffle tickets sold or consideration is given at a single gathering and 2) The drawing is conducted at the same gathering and 3) The total retail value of all the prizes awarded does not exceed $100 in a consecutive 24-hour period. All other raffles need to be licensed. General information about raffles, rules and forms can be found at the State of Michigan Charitable Gaming site. Please also refer to the MSU Raffle Checklist for completing the raffle application/financial statement.
  2. You will need to complete the Charitable Gaming Division Raffle License Application using this link for the pre-filled form to begin the application process. The information is the same for all departments for page one. Complete pages 2 and 3 specific to department and raffle information.
  3. Complete and route the MSU Raffle Cover Letter and raffle license application as instructed. ALL raffle related documents must be routed through the MSU Office of the Controller – Tax Services for review, approval, and signature. Improper signatures will be rejected by the Charitable Gaming Division and may significantly delay the application process.
  4. The MSU Office of the Controller - Tax Services will review and route for the Office of General Counsel (OGC) and Vice President (VP) signatures. The VP’s office will then email and mail the signed application back to the department’s raffle contact person. The department holding the raffle is responsible for paying the license fee.
  5. The department holding the raffle is responsible for submitting the completed application, supporting documents, and license fee, payable to the State of Michigan, to the address found at the bottom of page 2 of the raffle application.
  6. Once approved, the Charitable Gaming Division will send a packet with the raffle license, directions, and pre-filled “Raffle Financial Statement”.

III. Financial Statement Proces

  1. After the raffle event is held, the department who held the raffle must complete the pre-filled Raffle Financial Statement that was sent in the Charitable Gaming Division raffle packet, route for signature and return to the State of Michigan by the due date. If the pre-filled financial statement has been misplaced, blank forms can be found at the State of Michigan Charitable Gaming site. The financial statement is due the 10th day of the month following the month that the raffle event took place. Failure to submit a financial statement will delay all other MSU raffle applications, which could be detrimental to other departments. Similar to the raffle application, the Raffle Financial Statement requires MSU executive signature. Improper signatures will be rejected by the Charitable Gaming Division. Please also refer to the MSU Raffle Checklist for completing the raffle application/financial statement.
  2. To route the financial statement for the required signature, complete the MSU Raffle Cover Letterand route as instructed.
  3. The MSU Office of the Controller - Tax Services will review and route for VP signatures. The VP’s office will then email and mail the signed financial statement back to the raffle contact person in the department.
  4. The department is then responsible for submitting the completed financial statement, by email or mail, to the State of Michigan contact information found at the bottom of the financial statement form.

IV. Tax Reporting Requirements

  1. If a prize is valued at $600 or more, and the prize value is more than 300 times the wager (ticket price), certain Internal Revenue Service (IRS) requirements must be followed. Please contact the Accounting Manager, 355-5000, if you will be awarding a prize worth $600 or more to arrange logistics of Federal tax reporting, including:
    1. When the prize is awarded, you must obtain a Form W-9 from the prize winner along with the winner’s driver’s license number and the state that issued the license. This information is used to report game winnings to the IRS.
    2. If the prize is $5,000 or more, MSU may be required to collect withholding tax from the prize winner. Generally, the Federal withholding rates are 24% with a completed W-9 (31.58% for certain non-cash payments). The State of Michigan withholding rate is 4.25%.
  2. If any of the raffle prizes were donated, they will need to be reported to University Advancement, Carolyn Fountain founta52@msu.edu or 884-1028. University Advancement will require a Raffle Prize Donation Form be completed for each prize donated. University Advancement uses this information to formally acknowledge donor gifts if they meet certain requirements. The prize information also needs to be sent to the University Tax Manager (884-4279) if the prize is valued at or over $600. See (B) above.
  3. Unrelated Business Income Tax Requirements – If a unit holds multiple raffles per year, the IRS may seek federal unrelated business income tax (UBIT) on the net revenue from the activity. In order to meet the federal exclusion for UBIT on charitable gaming, the unit is required to keep accurate records reflecting the number of hours worked on the raffle by compensated and volunteer workers. The net revenue can be excluded if volunteers perform substantially all the work. The department’s records are subject to review by the MSU Office of the Controller - Tax Services.

Please contact the MSU Office of the Controller - Tax Services at 517-355-5029 or taxreporting@ctlr.msu.edu with any raffle questions.