Verdict: Raffles are legal in Iowa, and the licensing is cheap and tiered. Selling the tickets through Zeffy does not work. Iowa Code 99B.5(2) lists debit card but not credit card for a raffle, and Zeffy accepts both credit and debit with no setting that turns credit off. Taking a card for a raffle ticket in person runs into the same rule, so Iowa raffle sales stay on cash, check, electronic check or debit.
What works: DIAL's tiered license fees ($15 to $150) match your raffle size. Prizes under $1,000 in a calendar year skip licensing entirely.
What doesn't: Fully online, credit-card checkout raffles are not legal in Iowa. Only Two-Year license holders can conduct electronic raffles, and only through a DIAL-approved system.
Best for: Iowa nonprofits running raffles at events, taking ticket payment as cash, check, electronic check or debit, and running everything around the raffle on Zeffy.
Worth considering if: Your prize structure fits the tiers and you can take raffle payment as cash, check, electronic check or debit outside a card checkout. For the online side, run a straight donation appeal on Zeffy instead. Zeffy is free (no platform fee, no transaction fee, no credit card fee, ever) for donations, event tickets, peer-to-peer, and your donor CRM.
Table of contents
Iowa nonprofits can run legal raffles, and the licensing side is workable: fees run $15 to $150, and the Iowa Department of Inspections, Appeals & Licensing (DIAL) walks you through the tiers. But there is a payment-method rule most guides miss, and it is the one that quietly trips up otherwise well-run raffles. This guide covers the license tiers, the rules that actually matter for a small nonprofit, the tax obligations, and where Zeffy fits (and where it does not).
How to run a legal raffle in Iowa
Fundraising raffles are legal in Iowa for qualified nonprofits with a valid license from DIAL. The state uses a tiered system: the license you need depends on how much you plan to award in prizes across the calendar year, not per event.
Per DIAL, the prize-value tiers are:
- Very small raffle: total prizes under $1,000 in a calendar year (no license required).
- Small raffle: prizes over $1,000 but not more than $10,000.
- Large raffle: prizes over $10,000 but not more than $100,000.
- Very large raffle: prizes over $100,000 (requires a Very Large Raffle add-on to a One-Year or Two-Year license).
For a small nonprofit: almost every event-scale raffle you run will land in the small-raffle tier or below. That is a $15 to $75 license and no financial audit surcharge. The tiers only get expensive if your prize pool crosses $100,000, which is not where most volunteer-run raffles live.
Types of raffles allowed in Iowa
- Traditional raffles: supporters buy tickets, you draw a winner for a prize.
- 50/50 raffles: the winner takes half the ticket sales; the other half funds your cause.
- Prize (merchandise) raffles: donated goods or experiences instead of cash. See raffle prize ideas.
- Electronic raffles: only with a Two-Year license, using a DIAL-approved system from a licensed manufacturer or distributor. See how to do an online raffle.
Iowa raffle laws for nonprofits
Iowa Code Chapter 99B governs charitable gambling, including raffles. The rules DIAL enforces most often:
- A license must be in effect before you promote the raffle or sell a single ticket.
- Raffles are only valid during the license period.
- A raffle begins when the first ticket is sold and ends when a winner is chosen.
- Calendar raffles (recurring daily or weekly drawings tied to specific dates) are not allowed.
- Winners do not need to be present at the drawing.
- Prizes can be a single item or multiple items.
- There is no cap on ticket price.
Do you need a gambling license for a raffle in Iowa?
Yes, unless you qualify for the very small raffle exemption (total cash prizes under $1,000 in a calendar year, or up to $5,000 if all prizes are donated merchandise). Above that, you need a license from DIAL. The permit options:
|
| 14-Day License | $15 | One large raffle per year | 14 days | |
| 90-Day License | $40 | One large raffle per year | 90 days | |
| 180-Day License | $75 | One large raffle per year | 180 days | |
| One-Year License | $150 | Eight large raffles per year | 1 year | Each raffle must be in a different county |
| Two-Year License | $150 | Eight large raffles per year | 2 years | Same as One-Year, longer term; required for electronic raffles |
| Very Large Raffle License | $100 | Required if raffle prize value exceeds $100,000 | Matches One- or Two-Year | Add-on to a One-Year or Two-Year License |
License fees ($15 to $150) confirmed from DIAL's Social & Charitable Gambling page. These are duration tiers, not prize tiers: the license type sets how long the license is valid and how many raffles you may run under it. The prize-value tiers (very small, small, large, very large) determine which license you need in the first place.
For a small nonprofit: if you run one raffle a year at an annual event, the 14-Day or 90-Day license is almost always the right pick. The One-Year and Two-Year licenses only pay off if you run multiple raffles across the year in different counties.
What to know about online raffles in Iowa
Two rules combine to make fully online raffles hard in Iowa:
- Iowa Code Chapter 99B restricts the payment forms allowed for a raffle. Per Chapter 99B and its administrative rules, the allowable payment forms for a raffle are cash, personal check, bank check, cashier's check, electronic check, money order, and debit card. Credit cards are not on that list for a raffle. Confirm the current text with DIAL before you set up your checkout.
Other electronic-raffle rules to know:
- Online-only raffles are not allowed. The winning number must be drawn manually.
- Frequency is limited: one small electronic raffle per day, one large electronic raffle per year.
- Each entry must be uniquely numbered and issued to the buyer at the time of purchase.
- Very large raffles cannot be conducted electronically.
For a small nonprofit: the practical read is that a fully online, credit-card-checkout raffle is not a fit for Iowa. Sell tickets in person at your event (cash, check, or debit), or if you truly need an online path, use a debit or electronic-check checkout, and confirm any electronic raffle system is DIAL-approved before advertising.
Who qualifies as a qualified organization
Not every group can run a raffle in Iowa. The state uses a specific legal standard: a "qualified organization" under Iowa Code 99B.1. Per DIAL's Social & Charitable Gambling guidance, the core requirements are:
- Bona fide religious, charitable, labor, fraternal, educational, or veterans organization, or an equivalent qualifying entity (including government units and school-affiliated groups like PTOs).
- At least 12 active members.
- No self-perpetuating governing body.
- 501(c) tax-exempt status (or the equivalent for a government entity or school PTO).
There is no general "two years in existence" or "five years in existence" requirement to run a raffle in Iowa. The five-year existence rule that appears in a lot of secondhand guides applies only to the Two-Year Qualified Organization License: to hold that specific longer-duration license, the organization must have existed for at least five years. Every shorter-duration license (14-day, 90-day, 180-day, One-Year) has no minimum age requirement.
For a small nonprofit: if you have your 501(c) determination, at least 12 active members, and a real board, you almost certainly qualify. A brand-new nonprofit is not locked out of Iowa raffles; you just start with a shorter license and renew.
If you are unsure whether your organization meets the qualified-organization standard, contact DIAL before advertising your event. Getting confirmation in writing protects you if questions arise later.
What Iowa law actually says, in plain English
Most guides summarize Iowa's raffle laws in broad strokes. When your organization's license is on the line, the actual statute matters. Here is what Iowa Code Chapter 99B provides, in plain English, with the correct section attributions. (For the primary source, read Iowa Code Chapter 99B directly or contact DIAL.)
The "very small raffle" exemption lives in section 99B.24, not 99B.5
Iowa Code Chapter 99B was restructured after 2015. Section 99B.5 in the current code is titled "Allowable forms of payment" and covers what payment instruments are permitted for chapter-99B activities. The very small raffle licensing exemption is in section 99B.24. A lot of older guides (and the earlier draft of this page) cite 99B.5 for the licensing exemption. That is a section-number holdover from the pre-restructuring code, and it is worth flagging because auditors read the current code.
In plain English: a qualified organization may conduct a raffle without a license if total prize value stays under $1,000 in a calendar year (or up to $5,000 in donated merchandise). Cross that threshold, even by a dollar, and you are in licensed territory.
For a small nonprofit: track cumulative prize value across the whole year, not per event. Five separate $800 raffles total $4,000 and require a small raffle license, even though no single event exceeds $1,000.
When a license is required, and which one
Per DIAL's Social & Charitable Gambling page:
- Small Raffle License: total annual prizes over $1,000 and up to $10,000.
- Large Raffle License: total annual prizes over $10,000 and up to $100,000.
- Very Large Raffle License: total annual prizes over $100,000. This is an add-on to a One-Year or Two-Year license.
The tier is set by cumulative prize value across the calendar year, not by the size of any single event.
Key compliance terms to know
- "Raffle": a game in which a participant buys a ticket for a chance to win a prize, with the winner chosen by random drawing. Games of skill are excluded.
- "Qualified organization": a bona fide religious, charitable, labor, fraternal, educational, or veterans organization with 501(c) tax-exempt status (or an equivalent qualifying entity), at least 12 active members, and no self-perpetuating governing body. The five-year existence requirement applies only to the Two-Year license tier.
- "Net proceeds": gross receipts minus allowable expenses (prizes, license fees, directly related operating costs). Net proceeds must be used for the organization's stated purposes.
Raffles conducted at a fair
Running a raffle at a county fair, state fair, or similar public event in Iowa comes with its own set of rules. The raffle must take place at a recognized fair or exposition, and the activity must be confined to the duration of that event.
Fair contexts modify some of the prize thresholds available to you. Merchandise-prize handling and cash-prize caps for fair-venue raffles differ from standard raffles; DIAL sets and periodically updates the specifics. Because the exact cap numbers move, confirm the current limits with DIAL guidance for your license tier before you set your prize pool.
Other rules still apply at a fair:
- Tickets must be uniquely numbered and issued at the time of purchase.
- The drawing must be conducted at the fair itself, not at a later date or a separate location.
- Your organization must still meet the qualified-organization standard.
For a small nonprofit: if you are planning a raffle at an Iowa fair, contact DIAL before the event to confirm your license type covers the activity and to get the current prize caps in writing. Fair rules do not exempt you from licensing; they modify the numbers.
Ticket sales and residency
Iowa raffles are governed by Iowa Code Chapter 99B, which applies to activity conducted in Iowa. In practice, that means your ticket sale, your drawing, and your promotion all need to fit inside Iowa's regulatory scope. DIAL guidance treats out-of-state ticket sales as a compliance risk, and many Iowa charitable-gaming attorneys recommend limiting ticket sales to Iowa residents (or to buyers physically present in Iowa) to stay clearly inside the state's authority.
What this means for your setup:
- For in-person events, this is easy. You are selling to people physically present in Iowa.
- For any digital promotion, add a clear statement in your raffle terms and at the checkout that participation is limited to Iowa residents (or to buyers in Iowa), and either geo-restrict or require the buyer to confirm before completing a purchase.
- Keep records. If DIAL audits your raffle, buyer confirmations and ticket logs are your defense.
If you have a specific scenario (say, an alumni network with out-of-state members), get written confirmation from DIAL before selling.
Tax obligations for raffle winners and organizers
Winning a raffle prize in Iowa is not purely a windfall. It carries tax consequences for the winner and reporting responsibilities for your organization. This section is a starting point, not tax advice. Confirm your specific obligations with a tax professional and the IRS's Publication 3079 and Form W-2G instructions.
What winners owe
Federally, raffle prizes are treated as gambling winnings. Winners must report the fair market value of any prize on their federal return. For Iowa income tax, the Iowa Department of Revenue reports gambling winnings (including raffle prizes) as "Other Income" on the IA 1040. It is not an "earned income" category, and it is not filed under Chapter 99B. Chapter 99B is Iowa's gambling licensing statute; the tax treatment sits under Iowa's tax code and IRS federal rules. For the current Iowa treatment, see the Iowa Department of Revenue's gambling tax guidance.
Two federal reporting rules to plan around:
- W-2G filing: per IRS Form W-2G instructions, organizations generally must file a W-2G for a raffle prize of $600 or more when the prize is at least 300 times the ticket price. If a prize crosses that threshold, collect the winner's Social Security number and issue the form by January 31 of the following year. Verify the current threshold with the IRS.
- Backup withholding: per IRS Publication 3079, prizes over $5,000 (net of the wager) are generally subject to federal withholding at the regular gambling-winnings rate. Your organization is responsible for withholding and remitting. Handing a winner a $5,000 check with no withholding creates a liability. Confirm the current rate and mechanics with a CPA or the IRS before your drawing.
What your organization owes
Iowa requires organizations holding very large raffles to submit a financial report to DIAL within 60 days of the drawing, covering gross receipts, allowable expenses, net proceeds, and how those proceeds were used. Very large raffle license holders also pay a percentage of gross receipts toward the state's audit; confirm the current percentage with DIAL when you apply.
Even for smaller raffles, keep detailed records of ticket sales, prize values, and expenses. If DIAL audits, those records are your defense. You can track offline raffle ticket sales alongside every other gift in Zeffy's free donor CRM, which keeps the recordkeeping in one place across your donations, event tickets, and raffle activity.
If you are uncertain about withholding or W-2G thresholds, consult a tax professional before your drawing date. The IRS does not make exceptions for nonprofit organizers who fail to withhold correctly.
For a small nonprofit: the two moments that catch people are the $600/300x W-2G trigger and the $5,000 withholding trigger. If your top prize is close to either line, price your tickets so you know in advance which rule applies, and get the winner's tax info before you hand over the prize.
Penalties and enforcement
Iowa does not treat raffle violations as minor paperwork issues. Chapter 99B carries real enforcement teeth, and the consequences of noncompliance can affect your organization's ability to fundraise for years.
Fines and civil penalties
Conducting a raffle without a valid license violates Iowa Code Chapter 99B. DIAL has authority to issue civil penalties against organizations that operate outside the law. Fine amounts vary by the nature and severity of the violation, and they can stack when multiple issues appear in one audit (say, unlicensed activity plus misreported prize values).
License revocation and denial
If your organization violates raffle laws while licensed, DIAL can revoke your existing license and deny future applications. Revocation is not reserved for extreme cases. Repeated smaller violations, like selling tickets before the license is issued or failing to submit required reports, can be enough. Losing your license does not just affect raffles; it can impact your ability to conduct any charitable gaming activity in Iowa.
Criminal penalties
Serious violations of Iowa gambling law can carry criminal consequences. Operating an unlicensed raffle can be classified as illegal gambling under Iowa law, which carries misdemeanor or felony charges depending on the scale. Officers and directors of the organization can be held personally liable, not just the organization itself.
What triggers enforcement
DIAL investigates complaints, runs routine audits, and reviews required reports. Common triggers include complaints from participants, discrepancies between reported proceeds and estimated ticket sales, and failure to submit post-event financial reports. The best protection is straightforward: get your license before you promote, track everything, and submit all required documentation on time.
For a small nonprofit: the risk here is not the $150 license fee. It is a preventable audit finding (unlicensed activity, or ticket sales before the license was issued) that costs you future licenses and a fundraising channel.
Step-by-step: apply for an Iowa raffle license
Step 1: Determine your organization's eligibility
Confirm you meet the qualified-organization standard (see above). If you are not sure, email DIAL before applying.
Step 2: Choose the correct license type
Match the license to your annual prize plan, not to any single event. Under $1,000 in annual prizes: no license needed. $1,001 to $10,000: small raffle. Over $10,000: large raffle. Over $100,000: add a Very Large Raffle license. Then pick a duration (14-Day, 90-Day, 180-Day, One-Year, or Two-Year) that fits how long you need to run.
Step 3: Gather required information
- Organization details: name, address, nonprofit status.
- Raffle details: dates, prize values, ticket sales period, drawing date.
- Documentation: proof of nonprofit status, prior gaming activity reports if applicable.
Step 4: Complete the online application
- Use the SCG Online Licensing System to start your application.
- Pay the non-refundable application fee (see the fee table above).
Step 5: Submit and await approval
- DIAL must issue your license before you begin advertising or selling tickets.
- Processing can take up to 30 days. Apply well in advance.
Common mistakes to avoid
1. Selling tickets or promoting before the license is issued
Iowa requires all qualified organizations to hold a valid raffle license before selling any tickets or advertising the event. Beyond the 30-day approval window, add a buffer month so you have time to promote once the license is in hand.
2. Misreporting prize values
Prize-value tiers are cumulative across the calendar year. Track and document the retail value of every cash and merchandise prize as you go, so your reporting matches your license tier.
3. Running a prohibited raffle type
Some raffle formats are not permitted in Iowa:
- Calendar raffles: recurring daily or weekly drawings tied to specific dates.
- Build-up or pyramid raffles: prizes that accumulate over time instead of being awarded in a single drawing.
Stick to approved formats: random drawing, single winner selection, prompt notification.
4. Treating reporting as an afterthought
Iowa requires organizations to track and report raffle revenue, expenses, and prize distribution. Very large raffles must submit a report within 60 days of the drawing and pay a percentage of gross receipts toward a state audit; confirm the current percentage with DIAL. For every raffle tier, keep records as you go rather than reconstructing them later.
Final tips for a successful raffle in Iowa
- Plan your timeline. Set your ticket sales window, then back into your license application date with a 30-day cushion.
- Price tickets in bundles. Offering options (1 for $10, 3 for $25) tends to lift bulk purchases.
- Be transparent. State prize details, raffle rules, and the drawing date in your promotional materials.
Can you use Zeffy to run online raffles in Iowa?
Are raffles legal in Iowa? Yes, with a DIAL license, or with no license at all under $1,000 of annual prize value. Can you sell raffle tickets online? Not through Zeffy's raffle checkout. Can you sell them in person and take a card? Not for a raffle ticket through Zeffy. Iowa's list of permitted payment forms includes debit but not credit, and Zeffy accepts both with no way to exclude credit.
The reason is not an internet rule; it is a payment-instrument rule.
Iowa Code Chapter 99B restricts the payment forms allowed for an activity authorized under the chapter to cash, personal check, bank check, cashier's check, electronic check, money order, and debit card. Credit cards are not on that list for a raffle. (Confirm the exact section language with DIAL and the current Chapter 99B text.)
Zeffy's checkout accepts both credit and debit cards, along with Apple Pay, Google Pay, ACH and check. Debit is on Iowa's list, so the debit half is not the problem. The problem is that there is no setting that turns credit off. A Zeffy raffle checkout will therefore accept a payment form Iowa does not permit the moment a buyer reaches for a credit card, and the organization has accepted it at that point. So Zeffy's raffle product is not a fit for Iowa raffle ticket sales, even with a valid DIAL license. A custom question or a tick-box does not close the gap: it tells you how someone says they will pay, it does not stop the charge completing. If you want to use it anyway, that is a conversation to have with DIAL before you sell a ticket, because whether a prompt refund cures a payment form that has already been accepted is DIAL's call and not ours. Confirm the currently permitted payment forms with DIAL before you build a raffle around any of this.
Zeffy is also not, and does not claim to be, a DIAL-approved electronic raffle system from a licensed manufacturer or distributor. There is no winner-drawing step inside a Zeffy raffle checkout. We do publish a free online raffle generator on our blog, separate from the raffle form, so it sits outside the sales flow. It is a free tool rather than a DIAL-approved drawing system, and Iowa requires the winning number to be drawn manually, so check any drawing method against DIAL's rules before you use it.
Here is what your Iowa nonprofit can do on Zeffy. Zeffy is used by 100K+ nonprofits with $2B+ raised, and it is 100% free (no platform fee, no transaction fee, no credit card fee, ever):
- Record the raffle sales Iowa does allow. Cash, check, electronic check and debit are all on Iowa's permitted list, so those sales can still happen at the table. Log every one of them in Zeffy's free donor CRM, so your raffle ticket buyers sit next to the rest of each donor's history instead of in a separate spreadsheet.
- Send newsletters and campaign updates from the same dashboard with supporter email.
- Collect in-person donations, event ticket payments and merch sales at the same event. Keep raffle ticket payment separate, and on Iowa's permitted list.
Your nonprofit keeps 100% of every donation, no matter what.
Frequently Asked Questions - Iowa Raffle Laws
Do you need a raffle license in Iowa?
Yes, unless your total annual prize value is under $1,000 (or under $5,000 in donated merchandise). Above that, apply with the Iowa Department of Inspections, Appeals & Licensing (dial.iowa.gov).
What documentation is required?
You will need a completed Charitable Gaming application, a State of Iowa Sales Tax Permit Number, and proof of nonprofit status. New to nonprofit status? Read our guide to starting a 501(c) organization at zeffy.com/blog/how-to-start-a-nonprofit.
Can you sell raffle tickets online in Iowa?
Only if you hold a Two-Year license, use a DIAL-approved electronic raffle system from a licensed manufacturer or distributor, and your checkout accepts only the payment forms permitted for a raffle (cash, checks, money order, debit card). Credit cards are not on that list. Confirm your setup with DIAL before advertising.
Can you promote a raffle online?
Yes. Promoting a raffle online through your website, social media, and email is permitted. That is separate from the payment-form rule at checkout.
Who qualifies as a qualified organization?
A bona fide religious, charitable, labor, fraternal, educational, or veterans organization (or equivalent) with 501(c) tax-exempt status, at least 12 active members, and no self-perpetuating governing body. Only the Two-Year license additionally requires the organization to have existed for at least five years. Every shorter license (14-Day through One-Year) has no minimum age requirement.
Do raffle winners pay taxes in Iowa?
Yes. Federally, raffle winnings are gambling winnings and are reportable. For Iowa income tax, the Iowa Department of Revenue reports gambling winnings as "Other Income" on the IA 1040. Your organization may need to file a W-2G for qualifying prizes and withhold federal tax on prizes over $5,000. Confirm current thresholds with the IRS's Publication 3079 and Form W-2G instructions, and consult a tax professional for your specific situation.
Who can buy raffle tickets in Iowa?
Iowa's raffle rules apply to activity conducted in Iowa. In practice, limit ticket sales to Iowa residents or to buyers physically present in Iowa, and build a residency confirmation into your ticket purchase process. Confirm the specifics of your setup with DIAL.
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