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March 21, 2006 - Blacktie Presents Raffles/Poker - Don't Gamble with Success Seminar

What: Raffle and Poker Do’s and Don’ts

Where: The Timbers Hotel

When: March 21, 2006

Ticket Prices: Free

Beneficiary: All nonprofit organizations

Catering: The Timbers Hotel

Attendance: 90

Attire: Business

Information: Mike Shea, Director of Licensing & Enforcement Division @ 303.860.6911 or Ken Peterson, Chief of Criminal Investigations - Colorado Liquor Enforcement Division @ 303.205.2927, in conjunction with the Colorado Secretary of State’s office, and the Colorado Department of Revenue/Liquor Enforcement presented a seminar, on March 21st, for nonprofit executives, board members and community leaders on the legalities of raffles and Texas Hold’em tournaments.

The Timbers Hotel, Denver's New Luxury Hotel and our host, generously donated the room and refreshments. They have a wonderful, new venue for events of all sizes, warm and rustic decor, and a state-of-the art spa and health center.

Did you know that it is against Colorado Law to send a gambling device through the mail? That means if your organization sends a “whole” raffle ticket in the mail to people, that you are breaking the law.

These and other useful pieces of information were shared by Mike Shea, Director of Licensing and Enforcement Division; Chris Cash, Charities Program Manager Licensing and Enforcement Division; Rudy Johnson, Senior Investigator Licensing and Enforcement Division; and Ken Peterson, Chief of Criminal Investigations - Colorado Liquor Enforcement Division.

People also can’t purchase raffle tickets using a credit card (cash or check only). All raffle tickets must be accurately accounted for and kept for a six-month period of time past the raffle drawing. If a supporter sends in money via the mail, the organization can mail the receipt back through the mail and be in compliance.

Who will complain? How about someone who lost, or has a personal grudge with one of the board or staff members? Only a “member” of the organization can sell raffle tickets. What is a “member?” The group itself, in the organizational documents, defines a “member.” For example, a school can make all parents and teachers members. Even groups that aren’t considered traditionally membership models can have members, as long as they are properly defined to be staff or donors. (This is similar to how people that attend one semester at a university are called “alumni.”)

People who sell tickets can’t be compensated for their time. So they can’t be employees of the organization. Giving them comp time off later does not mean that you are in compliance.

Sometimes the local affiliate of a national group will think that the national group is somehow nationally accredited – but that is not the case. Any national organization that sells raffle tickets in the state of Colorado must be legally licensed through the state of Colorado – Secretary of State’s office.

Many businesses want to raffle off prizes for the benefit of a charity. Unfortunately they can’t and be in compliance with the law. If you are going to sell raffle tickets you must be legally licensed. And only charities can be legally licenses, and they must have been operational for a period of five years. Just because you are a 501c3 doesn’t mean that you are legally able to run a raffle. You must apply for a license from the Secretary of State’s office.

What constitutes a raffle? There are 3 elements:

#1. A charge to be in the drawing. In other words if it’s not open to everyone, even those who show up and don’t want to pay – the first element of a raffle has been met.

#2. The second elements of a raffle is if the winner is determined by chance. Pulling a ticket out of a drum constitutes the second element of “chance.”

#3. The prize that the winner receives must have value. If it has value (no specific dollar amount was given) then the third element has been.

So fancy words to try and skirt these rules won’t work. If the three elements listed above are met, then calling it a business “chance” or anything else won’t lessen your legal liability.

Colorado is the only state in the country where gambling is in the state Constitution. So changes to gambling laws can’t be made by the state legislature via statute – it must be a referendum or an initiative. These are difficult and expensive.

Also, once the first ticket is sold. The raffle MUST take place. If ticket sales fall short of the goal, the prizes that were advertised must be given away. Currently House Bill 1086 is working its way through the legislature. This law deals with how to conduct raffles. The constitution is vague about the conduct of raffles. The Secretary of State’s office is actively seeking your input.

Gambling in Colorado is illegal. So to say, “illegal gambling” is somewhat of an oxymoron. However, the legislature did allow “limited stakes gaming.” But only in three specific geographic locations.

Usually when gambling takes place, there may be liquor involved. Ken Petersen from the Department of Revenue – Liquor Licensing Division gave some input on how to conduct legal charitable tournaments. Mr. Petersen said he couldn’t speak for the Attorney General or the District Attorney - both of which can and sometime do make different interpretations of the law.

Poker Tournaments. There are three elements that constitute gambling, and they are very similar to the three elements of a raffle.

If the person risks something of value (money, entrance fee), a risk or chance (playing cards) and a reward. If these 3 elements are met, it is gambling and hence illegal. If you risk something of value to gain something of value that is gambling.

Restaurants all over the country are promoting “Texas Hold ‘em” tournaments, but they remove one critical element – there is no charge for the people to play. Or you could charge $50 but not provide prizes (not a very popular option.)

What about golf tournaments where every participating golfer is automatically given a ticket good for the drawing. In other words, no additional cost is required for the golfer to participate. This still is illegal, since a person can’t come in off the street and be entered in the drawing.

There are exemptions for “skilled” or endurance activities. Golf or pool tournaments, bowling, etc, don’t constitute gambling. People can pay a fee to participate and win prizes of value.

If you are considering a raffle and have questions, please call Mike Shea @ 303.860.6911 or Ken Petersen @ 303.205.2927. They would like to hear the feedback and answer your questions on this hot topic.

Since there are so many regulations, organizations may wish to consider promoting silent auctions, as they aren’t regulated. Or, you can bring in a person to teach poker, and people can pay for a seminar.

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