Is it Legal to Run a Raffle, Giveaway, or Contest in California?
What are the Laws on Running a Raffle or Giveaway in California?
Promotional giveaways can be a great way to build buzz around your brand. But if you’re a for-profit business in California, there are strict laws you need to know before launching a raffle, sweepstakes, or contest.
Let’s break down exactly what’s allowed, and what could get you into legal hot water.
Are raffles legal for for-profit businesses in California?
Short answer: No.
In California, raffles are strictly limited to registered nonprofit organizations. A raffle typically involves:
- Selling tickets
- Offering a prize
- Selecting a winner by chance
That’s considered a form of gambling, and under California Penal Code section 320.5, only eligible nonprofit organizations may legally conduct raffles. Even then, they must:
- Be registered with the California Attorney General
- Use 90% or more of proceeds for charitable purposes
See more at our Guide to Nonprofit Raffles.
If your business is for-profit, you cannot legally run a raffle.
What if I plan to donate the proceeds?
Again, if you are a for-profit business, you cannot run a raffle, even if you plan to donate the proceeds. The raffle must be run by a non-profit, but you can partner with a non-profit to help promote it, etc.
What For-Profit Companies Can Do: Giveaways/ Sweepstakes and Contests
If you’re a California business looking to engage customers, you can run either a giveaway/sweepstakes, or a contest.
What are the laws for doing a giveaway or sweepstakes?
There are 3 key rules for giveaways/sweepstakes:
1. No Purchase Necessary
This is crucial. You cannot require a purchase, payment, or donation to enter your giveaway. Doing so turns your sweepstakes into an illegal lottery.
Make sure your entry methods include a free option that’s clearly stated in all your marketing.
2. Winners Must Be Chosen at Random
Sweepstakes must be a game of chance, not skill. You can’t give people an advantage based on how much they spend, how often they buy, or any other pay-to-win mechanism. If you want to do a skill-based promotion, see the rules for contests, below.
3. Publish Clear Official Rules
To stay compliant, your giveaway must include:
- Who’s eligible (age, location, etc.)
- Start and end dates
- Free method of entry
- How the winner is chosen
- Prize description and value
- How and when the winner will be notified
- Any disclaimers or limitations
Post your rules on your website, and include a link wherever you promote the contest, including on social media.
Tip: Create a separate “Official Rules” page and link to it in your Instagram bio, giveaway posts, or product emails.
What are the laws for running a contest?
Unlike a giveaway or sweepstakes, a contest is based on skill, not chance. For example: “Best design wins,” or “Submit your story to enter,” or “Take our trivia challenge.”
You’re legally allowed to charge an entry fee for a contest if the outcome is genuinely skill-based. Just make sure:
- Criteria are clearly defined
- Judging is fair and objective
- The contest is not random in nature
What are the Penalties for Violating the Rules on Raffles, Giveaways, and Contests?
If you host an illegal raffle or fail to comply with giveaway or contest laws, you could face:
- Fines and penalties
- Orders to stop the promotion
- Damage to your reputation and brand
It’s not worth the risk. Stay legal, stay clear.
Recap: What’s Allowed in California?
| Type | Legal for a for-profit business? | Key Rules |
| Raffle | No | Only for nonprofits |
| Giveaway / Sweepstakes | Yes | Free entry required, random winner, published rules |
| Contest (Skill-Based) | Yes | Based on skill, not chance |
Final Thoughts
California has some of the strictest promotional laws in the country. If you’re running an e-commerce brand or service-based business, the safest path is to stick to giveaways and skill-based contests. Avoid raffles altogether unless you’re partnering with a registered nonprofit.
Further Resources
Guide to the Law for Business Owners and Entrepreneurs
Guide to the Law on Marketing in California
Non-profits vs For-profits: What are the Differences?
