An Administrator's Guide to California Private School Law

Chapter 19 – Fundraising

on the Internet. 2480 Information regarding raffles that may be shared by schools on the Internet includes:  Lists, descriptions, photographs, or videos of the raffle prizes;  Lists of the prize winners;  The rules of the raffle;  Frequently asked questions and their answers;

 Raffle entry forms, which may be downloaded from the Internet website for manual completion by raffle ticket purchasers, but cannot be submitted to the school through the Internet; and  Raffle contact information, including the school’s name, address, telephone number, facsimile number, or e-mail address. 2481

Federal law generally prohibits organizations from mailing lottery information and lottery tickets via the United States mail. 2482 This prohibition, however, does not apply to any advertisements, list of prizes, or other information concerning a lottery conducted by a nonprofit organization that is not otherwise prohibited by state law. 2483 Schools should note that every person who operates or assists with an unauthorized raffle is guilty of a misdemeanor. 2484 Also, if a raffle is held in violation of applicable requirements, the individuals who won the prizes must forfeit them to the state. 2485 The Department of Justice is authorized to investigate, assess penalties, and take legal action against organizations that have violated the provisions of Penal Code section 320.5. 2486 B. E XCEPTION TO P ENAL C ODE 320.5 - T ICKETS M AY B E D ISTRIBUTED I N E XCHANGE F OR D ONATIONS R ATHER T HAN C ASH I F C ERTAIN R EQUIREMENTS A RE M ET . If the school requires that participants purchase a ticket in order to have a chance to win a prize, the drawing is subject to the provisions of Penal Code section 320.5 as set forth above. In special circumstances, however, schools may be able to conduct raffles without complying with this statute by accepting donations for raffle tickets instead of charging cash for tickets. Before the enactment of Penal Code section 320.5, the California Attorney General applied California’s lottery law to determine the legality of exempt organizations’ raffles and casino nights. The Attorney General looked at three elements in determining whether a scheme constitutes an unlawful lottery: (1) a prize, (2) distribution by chance, and (3) payment of consideration. 2487 If all three of these elements are present, the activity is unlawful. Payment of consideration means payment of money or the exchange of something of value. In examining the element of payment of consideration, the Attorney General ruled there was no consideration, meaning it was not an unlawful lottery, if there was a “general and indiscriminate” distribution of free chances to win. There was consideration, however, if a donation had to be

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 601