Charity Raffle Prizes: Where the Money Actually Goes

Charity raffle prizes are almost never funded the way most people assume — the charity does not simply buy a house and give it away out of generosity, and the winner rarely walks off with the full sticker value. The money flows through a chain of ticket sales, state-mandated payout floors, federal withholding, and fine print in the official rules that can turn a $450,000 house into a smaller cash check before anyone signs anything.

Here are the current numbers. St. Jude Children’s Research Hospital, the biggest name in the space, sells Dream Home tickets at $100 each across more than 40 U.S. giveaways; its 2026 homes ranged from a $450,000 house in Louisville to a $950,000 house in Tucson, per St. Jude’s own giveaway pages and local news coverage from WBKO and Atlanta News First. In California, state law requires that at least 90% of gross raffle receipts go to charitable purposes.

And the IRS requires the organization to withhold 24% on qualifying winnings over $5,000 before the prize is handed over.

None of that is hidden — it is published in official rules, state statutes, and IRS instructions. It is just that almost nobody reads it before buying a ticket. This piece walks through where the money in charity raffle prizes actually goes, using only figures you can look up yourself.

The Real Numbers Behind Charity Raffle Prizes

The headline value of a prize and the amount the charity nets are two different numbers, and they are often disclosed separately. Atlanta News First reported that its 2026 St. Jude Dream Home campaign had sold 10,500 tickets by April 27, raising $1.05 million — against a home valued at $650,000 in that market.

Ticket counts are usually capped, which is how organizers control the odds and the margin. KTVB reported that the 2026 Idaho Dream Home giveaway offered 32,777 tickets total for a home valued at roughly $900,000, and that fewer than 2,500 remained by June 8.

Where Your Ticket Money Actually Goes

In a well-run raffle, your $100 splits three ways: the prize, the cost of running the promotion, and the charitable mission. States set the floor for that last slice, and the floors vary enormously.

California is the strictest. Under Penal Code section 320.5, administered by the state Attorney General’s Charitable Trusts registry, at least 90% of gross receipts must go to beneficial or charitable purposes — meaning no more than 10% can go to prizes and overhead combined. That single rule explains why big-ticket house raffles are far more common outside California.

Other states use a 60% floor on gross proceeds, allowing up to 40% for prizes, license fees, and administration. The practical effect is that charity raffle prizes in a 60% state can be dramatically richer than the same fundraiser run in a 90% state.

On the federal side, the IRS requires an exempt organization with gross gaming revenue over $15,000 to complete Schedule G, Part III of Form 990, disclosing receipts, prize values, and expenses. Those filings are public, so you can look up a specific charity’s raffle economics after the fact.

The Tax Rules That Shrink Charity Raffle Prizes

This is the part that surprises winners. Under the IRS instructions for Forms W-2G and 5754, regular gambling withholding of 24% applies when raffle winnings minus the wager exceed $5,000 and the payout is at least 300 times the wager. The charity — not the winner — is responsible for withholding and remitting it.

The rate itself changed. Older IRS guidance, including Notice 1340, described a 25% rate; the current figure in the January 2026 W-2G instructions is 24%, and 24% is also the backup withholding rate when a winner does not provide a correct taxpayer identification number.

Because withholding is based on fair market value, non-cash charity raffle prizes create an obvious problem: a house cannot be shaved down 24%. Organizations typically resolve this before the drawing, and how they do it is spelled out in the official rules. How any of this applies to a specific person depends on their situation — that is a question for the IRS or a tax professional, not an article.

Here is the fact most ticket buyers get wrong: IRS Publication 526 states plainly that you cannot deduct amounts paid to buy raffle or lottery tickets as a charitable contribution. You received something of value — a chance to win — so it is not a gift. The purchase supports the charity; it just is not a write-off.

Why Charity Raffle Prizes Sometimes Turn Into Cash

Most large raffles set a minimum number of tickets that must sell. Miss it, and the advertised prize changes or the whole thing is called off. This is disclosed up front, in the rules, in writing.

The Special Olympics Southern California Dream Big Raffle rules state that if fewer than 67,000 tickets sell by the deadline, the grand prize converts from a choice of the house to a $1,000,000 annuity paid monthly over 25 years or a one-time $700,000 cash payout. The Megan’s House raffle in Massachusetts published a 5,000-ticket maximum with a 4,250-ticket minimum.

Raffles do get canceled. CBS Baltimore reported that a Middletown, Maryland dream home raffle was halted after organizers sold about 4,300 tickets against a 6,000-ticket requirement. Refund terms in those cases come from the published rules.

The most-scrutinized example is San Francisco’s long-running Dream House Raffle. CBS San Francisco reported that no homes were actually awarded — winners took the cash option instead — and SFGate reported in 2023 that the raffle was ending permanently. Nobody was accused of breaking the rules; the cash-instead-of-house outcome was the rules working exactly as written.

The 50/50 Raffles Where the Split Is the Whole Point

Stadium 50/50 raffles are the most transparent version of charity raffle prizes: half the pot goes to the winner, half goes to the team’s foundation, and the running total is on the scoreboard. Nothing is hidden because nothing can be.

The Los Angeles Rams announced a $342,975 single-game pot in 2025, which the team said set an NFL single-game and regular-season record. The New Orleans Saints reported $972,575 across the 2025 season, with $484,000 distributed to 19 nonprofits and an average regular-season jackpot of $105,231.25. In the NHL, the Buffalo Sabres reported a $318,534 jackpot as the largest single-game total for a U.S. NHL club.

The surprising legal wrinkle: 50/50 raffles were flatly illegal in California until 2015, because a 50% prize payout violates the 90% rule. Penal Code section 320.6 carved out an exception specifically for nonprofits affiliated with MLB, NHL, NBA, NFL, WNBA, MLS, PGA, LPGA, and NASCAR, regulated by the state Bureau of Gambling Control.

Where These Raffles Are Legal at All

Raffles are gambling under state law, and a charitable exemption has to exist for one to be legal. Alabama, Hawaii, and Utah do not provide a workable exemption for paid-ticket charity raffles — Alabama’s prohibition sits at the constitutional level, with limited local exceptions, and Hawaii permits participation only when entry is free.

That is why you see so many “no purchase necessary” free-entry sweepstakes from national nonprofits. A properly structured sweepstakes with a free entry method is not a raffle, so it sidesteps the state raffle regime entirely.

The IRS also treats gaming as an unrelated trade or business in many cases, per Publication 3079, which can create unrelated business income tax — unless an exception applies, such as the rule in IRC section 513(a)(1) for activities where substantially all the work is done by volunteers. That volunteer exception is one quiet reason so many charity raffles are staffed by unpaid helpers.

Frequently Asked Questions

Are raffle tickets tax deductible?

No. IRS Publication 526 states you cannot deduct amounts paid to buy raffle or lottery tickets as a charitable contribution, because you received a chance to win in return. Ask a tax professional about your own return.

How much does the charity keep?

It depends on the state. California requires at least 90% of gross receipts to go to charitable purposes; other states set the floor at 60%, leaving up to 40% for prizes and costs. Charities with over $15,000 in gross gaming revenue disclose the details on Form 990, Schedule G.

Does the charity take taxes out before I get the prize?

Often, yes. IRS W-2G instructions require 24% withholding when winnings minus the wager exceed $5,000 and the payout is at least 300 times the wager. The organization handles the withholding and files Form W-2G.

Can a raffle be canceled after I buy a ticket?

Yes, if the published rules allow it and the minimum ticket threshold is not met. CBS Baltimore reported a Maryland home raffle halted at roughly 4,300 of 6,000 required tickets. Refund terms are set by the official rules, so read them before buying.

Know the Rules Where You Live

Sweepstakes and prize rules change from state to state — what a sponsor can offer, how prizes are handled, and what protections you have. Pick your state to see the exact rules that apply where you live.

See Sweepstakes Laws in All 50 States →

Sources & How to Verify

The facts on this page are drawn from official government and primary sources. Rules and figures change, so always confirm the current details with the official agency or the promotion’s own published rules.

• FTC Consumer Advice: consumer.ftc.gov — prize, sweepstakes, and lottery scam guidance
• IRS: irs.gov — how prizes and winnings are treated as income
• Social Security Administration: ssa.gov — what SSI recipients must report
• The promotion’s official rules: every legitimate sweepstakes publishes them — the rules page is always the final word

Content last reviewed August 2026. If you notice outdated information, please contact us.

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Informational only — not legal, tax, or financial advice. Win Big Daily is an independent educational resource. Prize rules, tax treatment, and benefit-program requirements vary by state and program and change over time, so always verify the current details with the official agency, the promotion’s published rules, or a qualified professional before acting. If a topic involves government benefits, contact the program office about your specific situation.