How can I run an online raffle legally?

You can avoid this mess, and just not do a raffle in the first place lol

 

No No No! I have no idea where you read that, but throw away the book! Being a charity gives you no immunity whatsoever.

Again: No No No! It does not matter where you host it, it does not even matter which country you live in. You don't even need to have US nationality yourself! If you sell to US citizens you are breaking the law. If the server is abroad it may slow prosecution down a bit because the police or FBI will need an international warrant, but they will charge you eventually. And if you live outside the US, then they will simply ask the government of the country you live in to extradite you. Don't think it won't work. There are British citizens living in US jails because they ran (legal in Britain) gambolling sites in Britain but sold tickets to US citizens, The US simply asked the British government to arrest them and send them over to the US for trial and they complied.

Maybe if you live in somewhere like Russia (where the government hates the US) you may be safe, but otherwise......

 

Seriously advise you to check with a qualified lawyer before trying this. I know that if you tried this system offline it would still be called gambolling, so I suspect it will be called gambolling online too!

 

Great idea!
Hi, I want to start a new venture, will there be any legal issues?
Of course there will be, but you can avoid the mess by not starting your business at all.
:/

 

Hello everyone, just wanted to check in on this idea: I want to sell something, let's say worth $25 and would like to have 25 people submit an entry for $1. In a few days or same day (minor details) I'd have a random winner for that product, who will eventually get it for $1 submitted, but I will get my full price of $25. Would that be completely illegal or could that work? Thanks.

 

i think the loophole is to give tickets for every sale, but also have mail in address to get a free ticket, and call it a free sweepstakes

 

Even though you only get the face value of the item, that is still a lottery, and is still covered by the same laws.

I'd check this with a lawyer first, as I believe (but am not certain) that this only applies to lotteries that come as a free gift (eg. if you buy a packet of cornflakes and you get a chance to win something - legally the cost of the cornflakes has to be treated as a "lottery ticket", but you can get round this by offering the deal you state). I don't think (NB "think" not "know") this applies if your payment is directly for entry in the lottery.

Also, please note that pmf123 is posting about British law, many other countries do not class "free gift draws" as lotteries, so do not have this exception.

 

Thank you, ecchi. I will definitely look into consultation with a lawyer and see if this could be done or I can continue "dreaming" about it.

 

Accttually I was quoting USA law.

 

Fair enough, but the point I was making was that it is not going to be the same in all countries (this board is not just read in US and UK). However you do bring up an interesting point: Lottery law is mostly state not federal, so when you say "US law", you really need to say which states, because it is unlikely in the extreme that all 50 of the buggers agree on the same law!

 

Look at some sample sweepstakes, they say which states cant participate.

Where are you located and what is your target audience country?

 

Safer to get a lawyer and check for yourself. If you follow someone who has made a mistake, that is no defence if you get arrested!

The same target audience that everyone in business should have: The World!

 

The world would be awesome, but I'm thinking of starting with 50 continental US states. I am in US and think it would be a good start

 

like i mentioned, sweepstakes aren't legal in 4 or 5 states, and they always exclude them from entering - like the other guy said check with a lawyer, but you can get an idea by looking at big sweepstakes they have for major companies.

 

You will find that expensive when promoting your scheme/site. Good US only traffic/advertising is very expensive (compared with "world" or even "all English speaking countries"). And practically every Internet service costs loads more for "US" than "world". You are looking at paying about twice as much for every sale if you go US only. Plus, of course, you don't get any money from the billions of surfers who are not Americans!

 

I'm actually, believe it or not, trying to set up a legit site. Never thought that it'd be "that expensive" to run for US only, but I'm not really interested in Nigerian princes showing up and screwing everything up.

 

how do you propose to get enough traffic to make it viable without advertising spend?

 

It is going to be very expensive. And you are going to have to think long term. For example you cannot do this as a "one off" because whatever you do, you will end up having to pay more in advertising than you will get in sales (eg charge $10 per ticket, average spend 2 tickets per customer, you are still paying more than $20 per sale in advertising), so you need to get clients who will bookmark and buy tickets for all your lotteries, and have future lotteries ready to start for them to buy tickets after the first is finished. Also, it will probably take time to build up enough customers so for your first few you may have to give a prize worth more than you actually get in ticket sales.

Basically, your idea could work, but only if you take the long view. IE, go into this realising that you will loose lots of money over the first six months but make so much over the following years that you will "pay yourself back" with a bloody good profit on top.

Also, you have to be very sure you have enough money at the start. Because if you run out, stop and start again, you will be starting again from scratch, little of the "goodwill" on your first try will carry over, and you can write off 90% of what you spent on the first try as lost!

Online businesses in general are not "instant money makers", they take time to go into profit. Gambolling businesses are the same. Put the two together, run an online lottery, and you are doubling up on this.

Bottom line is that this can work, this could make you rich - But be very certain you have what it takes both financially and in "staying power" before you start, or you will just loose money.

Yes I'd avoid Africa (and Russia), but there is a lot of world out there. Europe (as a whole), for example, is a bigger market than the US, and most (not all) European countries have laws that make it easier to run a lottery than the US. On your own doorstep there is Canada, and quite a few of the Central and Southern American countries could be good markets. Then there is Australia (although no idea of their legal situation) and parts of Asia that will be good markets (the Japanese, for example, love gamboling). Considering how risky this venture is, I really think you need to go for the widest possible market to give you the best chance of succeeding. Plus, of course, you will approximately halve your advertising cost per client obtained if you go "international" which, with an expensive business like this is probably a "must do".

 

I realize that there will be expenses associated with advertising, I knew it wasn't going to be free, although it would be nice. Just thought that it'd be cheaper to start with US and then go around the world. I'll have to think and research it a bit more.

 

Thanks ecchi, there are definitely some good points that I have not thought about. Money are somewhat a problem, I don't have millions at my immediate disposal, but I think I can manage for a first six months of loosing streak and I do intend to keep my day job, just in case.