Charity Gaming Requirements

Posted by: Carrie Minnich
Charitable gaming is a popular method for nonprofits to create revenue to support their purpose. Organizations need to be careful as to the type of charitable gaming that is being conducted. Some popular types of gaming can lead to unrelated business income tax (UBIT) and additional reporting requirements.

Unrelated Business Income Tax (UBIT)All income resulting from gaming activities conducted by a nonprofit organization is subject to UBIT except for bingo. Bingo games are defined as games of chance in which players place markers over randomly called numbers on prenumbered cards. Wagers are placed, winners are determined, and prizes are distributed in the presence of all persons making wagers.

Examples of gaming that is subject to UBIT includes pull tabs, raffles, 50/50 raffles, and lotteries, among others.

Other Tax Reporting ConsiderationsDepending on the gaming activity conducted and amount of winnings involved, organizations may be subject to additional taxes and reporting. The organization may be required to pay wagering excise tax and occupational tax, as well as to issue Form W2-G or Form 1096 to the winner.

Indiana Gaming RequirementsThe State of Indiana has its own requirements on organizations conducting gaming activities. According to the Indiana Gaming Commission, any activity where people pay for a ticket and a prize is awarded requires an organization to apply for a charitable gaming license if the total value of all prizes awarded is more than $1,000 for a single event or $3,000 during a calendar year. The financial results of the activity are also required to be reported to the Indiana Gaming Commission within a specified amount of time after the completion of the event. Forms are provided by the Indiana Gaming Commission for such reporting.