Non-profits have long used charity “casino nights” as a way to generate non-dues revenue – and for good reason – they can bring in thousands, sometimes millions, of dollars. But, high dollar prizes and jackpots can put your nonprofit at risk for hefty state fines if you don’t know the rules, like the Indianapolis Knights of Columbus recently discovered after hosting annual casino nights for almost 3 decades. There are a few regulations you’ll need to know if your nonprofit hosts one in Massachusetts –  from requesting a permit to the special rules that are enforced during game day.  Massachusetts allows nonprofits to host casino nights up to three times a year.

Step 1: Federal Approval

Receive approval of your charitable organization by the IRS so you can accept donations.

Step 2: State Approval

You’ll need to submit a form to the Commonwealth that will show that your organization has been in operation for at least two years.  The individual or entity running the event must be a member of the nonprofit organization, so the charity cannot hire a third party to run the event. Government organizations, such as schools,  cannot sponsor these events at all.

Step 3: Registration

Find out if you need to register your gaming event (which may include poker, bingo or raffles) with the Commonwealth. Not all charities are created equally, in the eyes of the Commonwealth.  If the charity is either a Veterans’ organization chartered by Congress, church or religious organization, Fraternal or Fraternal Benefit Society, educational or charitable organization, civic or service club, or other club or organization operated exclusively for nonprofit purposes, then they may not  need to register with the Commonwealth.  However, for public charities and all other organizations, the charity must register and obtain a permit before conducting a gaming event.

Step 4: Keep Good Records

The government regulates how the funds are used after the event to ensure that funds are directed properly to the charity so it’s important to create a concise paper trail.  Working with an accountant and attorney who has nonprofit experience is important and would certainly be penny wise.

Step 5: Don’t Miss Your Deadlines

Says Mass.gov: within ten days after conducting your event, your nonprofit organization, “must pay a five percent tax on the gross proceeds to the Lottery Commission.” The Lottery Commission will send the required forms to the nonprofit after the permit is issued…within 30 days after the permit expires, the nonprofit must provide to the city or town clerk two copies of a report certified by the same individuals who applied for the permit containing:

  • Number of gaming events held;
  • Amount of money received;
  • Amount of expenses;
  • Names of winners of prizes of more than $25 in value;
  • Total net proceeds; and
  • Use of the funds.

For more information, you can call the Attorney General’s Office Non-Profit organization/Public Charities Division.  Additionally, the business attorneys at PK Boston Law work with a variety of groups to form new non-profits or any other entity structures, as well as to assist these organizations with governance and local, state and federal compliance.