Are small-scale community raffles legal?

Source: Radio New Zealand

Raffles have long been a popular way to fundraise, but some of them may not be legal.

A Christchurch company director was due to be sentenced this month for running the largest ever illegal lottery in New Zealand, highlighting what some say was a lack of knowledge around the legality of running raffles.

The lottery, which generated over $11 million in revenue, was highlighted by the Department of Internal Affairs as a “stark warning” to anyone involved in running an illegal lottery of any scale.

However, community leaders say small scale raffles run by families to cover essential expenses should be seen in a different context.

Lara Dolan, the CEO of Māngere Budgeting Services Trust, said while she hadn’t seen many clients who run or participate in raffles, she had noticed families running it in her South Auckland community to cover essential travel.

“Because they don’t have enough savings, and it’s also cultural for people that in their cultures, they must attend family events such as weddings and funerals.”

A quick online search for raffles has taken RNZ to posts including fundraisers to send a child on their overseas exchange trip, a sports club raffle where alcohol was the prize, and businesses selling their products as a lucky draw.

Rules around raffles were set out in the Gambling Act 2003.

Lawyer Marty Robinson was a former advisor to the Department of Internal Affairs’ gambling team and runs his own practice, he broke the rules down.

“They’re basically classified by the amount that is spent in the type of gambling, and the risk of problem gambling that’s associated with that activity.”

Under Class 1, individuals and groups could run lottery with a prize or turnover up to $500, all proceeds from the raffle must be returned as prizes.

Societies such as sports clubs can run Class 2 and Class 3 gambling, and all proceeds must benefit the community – not an individual or business.

Class 4 gambling usually referred to gaming machines such as pokies.

Robinson said most community raffles were run under Class 1 or Class 2, which prohibited selling tickets through online or phone calls.

There were also rules around how you could use the funds, he said.

“If you are looking to take money out you can’t use it for say, sending you child overseas, it got to be for an authorised purpose, and the under the act basically that means a charitable purpose, a non-commercial or community based type of purpose.”

And for all classifications, certain types of prizes were prohibited.

According to DIA, the list included firearms, alcohol, tobacco, taonga tuturu, vouchers or entitlements to commercial sexual services, or other items that were in breach of any New Zealand laws such as recreational catches and illegal drugs.

Robinson said the Gambling Act was set to protect society from harmful gambling.

“I’m a criminal litigator in court and very often we find addiction is the underlying cause of people offending, it’s often drugs and increasingly methamphetamine but gambling has always been a major issue in a lot of embezzlement and fraud.”

But low value community raffles were often not as harmful, when compared to other activities such as online gambling, he said.

Grant Hewiston, secretary for Communities Against Alcohol Harm, agreed most community raffles were less of an issue.

While he was deeply concerned about problematic gambling and addictions, he thought the law should be applied with context when it comes to raffle fundraisers.

“If it was a private commercial profit, then that might be closer to being an issue. But where it’s a community of people to raise funds to support each other from time to time, my kind of sense is that we’re getting into some grey area about whether this is such a mechanism for community and social kind of funding and support, and maybe it shouldn’t be seen as private people profiting from these raffles.”

He said those participating in these community raffles often don’t expect to win, but know they were helping someone out, and anticipated being offered similar help when they needed it in the future.

Dolan was concerned if communities cannot run raffles to raise funds, it could have big impacts on those who were already struggling with cost of living.

“The only other option for them will be just to borrow money at higher interest rates, which is not ideal. This will be quite devastating for them.”

However, she thought if law enforcement was concerned over the activity, raising awareness was needed.

“To be honest, they’re (the community) probably not aware of the rules. I think if it is an illegal activity, the first thing that needs to happen is education campaign needs to be put in place so people actually do know about it.”

The Department of Internal Affairs was planning an education campaign later this month.

In a written statement, Vicki Scott, the Department’s director for Gambling, said Internal Affairs prioritises responses to the most serious cases.

“With consideration to resourcing the Department looks at illegal gambling activity as a whole (across the various forms it may take) and prioritises responses to the most serious issues identified. Given illegal gambling operates outside the law, where no application has been made or advice sought from the Department, we are largely reliant on illegal raffles being reported to us and encourage people to do so if they have concerns.”

She said over the last two years, targeted enforcement had led to multiple prosecutions which included illegal raffles operated by gangs and commercial illegal poker venues.

She encouraged people to report anything of concern.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand