How to Successfully Fundraise Through Gaming in New York State

As inflation rises and nonprofits seek to ramp up fundraising efforts to adjust to a volatile economy, many are turning to unique approaches to encourage charitable giving. To promote giving in New York state, some nonprofits turn to gaming and gambling, including events like casino nights or methods like raffles and roulette. 

While these are great ways to make the act of giving as fun as it is philanthropic, it’s important to thoroughly understand the New York State Gaming Commission’s specific licensure requirements to ensure your organization is remaining within the bounds of permissibility.

Here are the answers to the questions nonprofits most frequently ask when interested in partaking in gamified fundraising.

What Games Are Permitted? 

Not all games are created equal in the eyes of the commission, and regulators have specified a list of 20 permissible games that can be utilized for means of fundraising. These games have one aspect in common: They are all games of chance, such as roulette, blackjack, bingo, color wheel and bell jar. Organizations must also follow general state gambling laws, which restrict gaming participation to those 18 years or older.

This distinction eliminates common games, like sports brackets and “squares,” which become especially popular during professional tournaments and important sports games. Organizations are encouraged to review the full list of acceptable games prior to planning their fundraising events.

Do I Have to Notify the New York State Gaming Commission of My Gaming Event?

In short, the answer is yes — even if you know your event or activity is compliant with regulations. Organizations must strictly mind the established procedures on registration, conduct during the gaming and reporting after the fact to avoid penalties.

To start, once you have an idea of what kind of event you would like to host, you must file a notarized Form 1A Application for Registration and Identification Number with the commission. Along with the form, nonprofits must also share any relevant information about the event and materials that certify all proceeds will be devoted to the defined, lawful purposes indicated on the application. Forms vary by the kind of game you have selected. Use the commission’s helpful “Games of Chance License Application Checklist” to help with this process. Then await commission approval before the event can occur. 

Once approved, there is another separate set of guidelines related to how the games are run. These regulations impose guidelines for most of the event operations, including the approved rules of the game, required security measures for the event, the specific post-gaming event reporting forms that must be returned in a timely manner and the use of only commission-licensed games of chance suppliers for items like gaming machines and tickets.

Will Hosting Gaming Fundraisers Impact My Tax-Exempt Status?

If an organization is compliant with all the New York State Gaming Commission’s regulations, then the tax-exempt status of the organization should not be impacted through its participation in gamified fundraising. 

At the federal level, the IRS Publication 3079 protects nonprofits from facing any surprises related to their exempt status by outlining exactly how to ensure that their charitable gaming activities remain within the protections of exempt status. Additionally, the IRS maintains a very helpful webpage that includes all pertinent regulations, guidance, court cases and additional analysis. Therefore, it’s important to review these details prior to the fundraising initiative to avoid any unexpected liabilities, but you can rest assured that impacts to exempt status are unlikely for organizations that put on these events infrequently. 

Separately, just be sure you remain on top of your business income tax and reporting and recordkeeping responsibilities. 

How Much Do I Have to Worry About Oversight from the New York State Gaming Commission? 

Whenever a nonprofit hosts a gaming event, the commission reserves the right to investigate, audit and monitor the event as they see fit. While, admittedly, the state attorneys general has not historically prioritized investigations into nonprofits that put on these kinds of gaming fundraisers, the benefits of these events do not outweigh the risks of failing to adhere to state regulations. 

So before you put on your next gaming event, ensure you have a clear understanding of the regulations imposed by your state and at the federal level to avoid penalties. The worst-case scenario for any nonprofit is that the fun, competitive event you put on to raise money for your cause actually ends up costing you money in the long run due to noncompliance.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.