Charitable Gaming: Nebraska

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SEE ALSO: SALES & USE TAX: NEBRASKA

Lottery vs. Raffle

LOTTERY RAFFLE
Participants pay something of value for an opportunity to win Participants pay something of value for an opportunity to win
Sequentially numbered tickets are sold Sequentially numbered tickets are sold
Winners are determined by a random drawing of tickets or by a race of inanimate buoyant objects Winners are determined by a random drawing of tickets or by a race of inanimate buoyant objects
At least 80% of the value of the prizes are merchandise which is not directly or indirectly redeemable for cash
License required if gross proceeds greater than $1,000 License required if gross proceeds greater than $5,000
Lottery = Cash Prizes Raffle = Merchandise Prizes

Lottery & Raffle Eligibility, Requirements, Limitations

LICENSED LOTTERY OR RAFFLE UNLICENSED LOTTERY OR RAFFLE
Nebraska nonprofit organization or nonprofit corporation exempt under section 501 of the Internal Revenue Code or a volunteer fire company, or volunteer first- aid, rescue, ambulance, or emergency squad Nebraska nonprofit organization or nonprofit corporation exempt under section 501 of the Internal Revenue Code

OR Whose major activities, exclusive of conducting any lottery or raffle, are conducted for charitable or community betterment purposes

Must be organized or incorporated in Nebraska, and conduct activities other than lotteries and raffles Must have its principal office located in Nebraska, and conduct a majority of its activities in Nebraska
Have at least 10 members in good standing
Prize payout of at least 65%* No minimum prize payout requirement
10% expenses limitation* No expense limitations
Must be 18 to participate* No age restrictions
Separate bank account used only for lottery/raffle proceeds No separate bank account necessary
2% tax on gross proceeds No Taxes
Quarterly and Annual Reports required No reporting requirements
Sell sequentially-numbered tickets which also contain the organization’s name, state ID, cost per ticket, and date of drawing Sell sequentially-numbered tickets
Determine winners by random drawing or race of inanimate buoyant objects Determine winners by random drawing or race of inanimate buoyant objects
*Can be waived with a special permit Other Limitations
  • Only one lottery per calendar month
  • Unlimited number of raffles – but combined gross proceeds cannot exceed $5,000 per calendar month

Lottery/Raffle Licenses & Fees

Organization Lottery/Raffle License $30 Biennial
Utilization of Funds Member
  • Must be an active and bona fide member of the organization for at least one year (hardship waiver upon written request)
  • Citizenship attestation form required of new license applicants
$40 Biennial
Optional Special Permit
  • Waives the 65% payout requirement, 10% expense limitation, and age restriction
$10 One per year, valid for up to 90 days
Local Licensing Requirements Authorization by ordinance or resolution can be required in City of Lincoln/Lancaster County and City of Omaha/Douglas County only

Silent Auctions

Gross Proceeds

  • Total receipts from the conduct of the lottery or raffle, without any reduction for prizes, discounts, taxes, or expenses
  • Includes receipts from required purchase or admission costs to the extent that the purchase or admission includes a chance in the lottery or raffle
  • Includes the value of any free tickets

Use of Gross Proceeds

  • Prizes
  • Expenses
  • Taxes (if applicable)
  • License fees (if applicable)
  • Lawful purpose
  • Charitable or community betterment purposes
    • Includes charitable, benevolent, humane, religious, philanthropic, recreational, social, educational, civic or fraternal activities conducted by the organization for the benefit of its members
    • Not Permitted: Lobbying and political campaigns expenses or contributions

State & Federal Lottery/Raffle Tax Requirements

State Tax (2% of Gross) Form 51 Due quarterly
State Annual Report Due August 15 annually
Federal Form W-2G, Certain Gambling Winnings Refer to IRS Publication 3079 If the amount paid reduced by the amount of the wager is $600 or more and at least 300 times the amount of the wager
Federal/State Withholding Tax
  • 28% federal withholding is required if the value of the prize is more than $5,000
  • 5% Nebraska withholding is required
  • Use fair market value for noncash payments

Resources & Further Reading

IRS Publication 3079: Tax Exempt Organizations & Gaming

NE Department of Revenue: Obtain a Gaming License

NE Department of Revenue: Revenue Rulings

Lottery/Raffle

NE Department of Revenue: Guide to Charitable Gaming: Lottery & Raffle

NE Department of Revenue: Nebraska Lottery & Raffle Act

NE Department of Revenue: Overview of Nebraska Raffle Lottery & Raffle Laws

Bingo

NE Department of Revenue: Bingo Home Page

NE Department of Revenue: Bingo Information Guide

NE Department of Revenue: Bingo Regulations

NE Department of Revenue: Nebraska Bingo Act

Keno

NE Department of Revenue: Keno Home Page

NE Department of Revenue: County/City Lottery (Keno) Guides

Pickle Cards

NE Department of Revenue: Pickle Cards Home Page

Auctions

NE Department of Revenue: Nebraska Sales & Use Tax for Auction Sales

Planned Giving Design Center: Tax Considerations for Charitable Auctions

Nebraska Department of Revenue Contact

Nebraska Department of Revenue

Charitable Gaming Division

1800 “O” Street, Suite 101

402-471-5937

Toll Free 877-564-1315

Fax 402-471-5600

http://www.revenue.ne.gov/gaming