Illinois Raffles and Poker Runs Act: Queen of Hearts Raffle – Local Government Legal Risk or Royal Reward?
Most people are familiar with the line from the popular Juice Newton song, “Playing with the Queen of Hearts, knowing it ain’t really smart…” which alludes to the risky nature of being smitten with the allure of new found love. The adage is also applicable to the newest frenzy in charitable fundraising, the Queen of Hearts Raffle. While many have heard of these popular raffles offering a chance at hundreds of thousands or in some instances millions of dollars in prizes, many also fail to appreciate the inherent legal risks and limitations that coincide with the prevalence of these raffles. Although it is important to understand the risks associated with these raffles, it is also necessary to understand how these raffles operate.
The Queen of Hearts Raffle is played on a game board containing numerically encased sealed envelopes or boxes placed in ascending order depending upon the number of cards used, with the limit on the number of boxes being 54 which corresponds with a deck of cards. These game boards are typically constructed either by a non-profit organization hosting the raffle or a private company to ensure the integrity of the board. Each week tickets are sold in droves to those hopeful individuals seeking an opportunity to pick the Queen of Hearts. Many ticket buyers come eagerly prepared with their customized rubber stamps etched with their names and numbers to quickly fill out their tickets. So long as there are raffle tickets and time available, there is usually an unlimited number of chances to enter the raffle.
When the drawing commences, the raffle operator will pull a ticket and read aloud the name and number. The operator will then open the corresponding numbered envelope and reveal whether that lucky person has picked the Queen and won the raffle. In the unfortunate event the box does not contain the Queen, the prize money collected up until that drawing is rolled over to the next week, and the frenzy begins anew. The number selected will be ineligible to be picked for the remainder of the raffle and as such, the numbers available will decrease each week. Therefore, as the prize value rolls over and grows each week so too does the hype and love for these raffles. The allure of the increasing prize value each week persuades more hopefuls to purchase tickets and take a chance at picking the Queen.
While the Queen of Hearts is appealing to the hopeful winners, there are major legal risks or obstacles that stand in the way of the Queen of Hearts Raffle which are derived from a misunderstanding of the applicable state law regulating raffles. Although considered gambling, these raffles are legally permissible under the regulations established in the Illinois Raffles and Poker Runs Act 230 ILCS 15/0.01 et al., (the “Raffle Act”). The Raffle Act provides that a local government must enact an ordinance regulating and licensing raffles within its boundaries before a raffle license may be issued to an eligible organization. If no raffle licensing ordinance has been enacted, no organization may legally operate a raffle. The organizations eligible to receive a raffle license, include non-profit, religious, charitable, labor, business, fraternal, educational or veterans’ organizations. In addition, the eligible organizations must also have been in operation for five years preceding their application for a raffle license.
Once an ordinance is enacted, the licensing body must provide a licensing structure for the raffles, including a maximum award limit on prizes, maximum money to be paid out, and maximum price allowable to ticket sales. This requirement does not limit the maximum amount to be set, but rather requires that there is a predetermined maximum amount for each category. The ordinance should also, (1) define which types of non-profit organizations can receive a raffle license, (2) who within the organization is in control of operating the raffle, (3) specifically describe the location where the raffle tickets may be sold and where the prizes may be awarded, and (4) at the local government’s discretion, require a fidelity bond at a certain amount to guarantee payment of the prize. In addition, the Raffle Act also requires that certain individuals are prohibited from operating a raffle based upon their criminal history. As such, although the Raffle Act provides a baseline of restrictions required to be within each applicable ordinance, the Act specifically allows local governments to enact further restrictions at their own discretion.
Among the requirements found within the Raffle Act, there are two major legal risks that should be addressed regarding the Queen of Hearts Raffles. The first being establishing and enacting an ordinance regulating the licensing of raffles and the second is setting and limiting the maximum award value of the raffle prizes. Each risk is regulated by the Raffle Act and should be considered if local officials desire to enact an ordinance providing for the issuance of raffle licenses. Without enacting a raffle licensing ordinance and setting a maximum prize value, any raffle conducted by a non-profit organization may be considered illegal.
The need for a raffle licensing ordinance was recently played out in Morris, Illinois, when their own Queen of Hearts Raffle was hindered because no such ordinance existed. Their local VFW Queen of Hearts Raffle operated and became so immensely popular that it drew the eye of the Illinois Gaming Board. The raffle accumulated over a $1 million prize, but it was ultimately determined by the Gaming Board to be in violation of the Raffle Act because Morris did not have an ordinance regulating and licensing raffles. Following this decision, Morris quickly amended its local code to enact a comprehensive ordinance regulating the operation of raffles, which allowed the Queen of Hearts Raffle to continue. As such, although smitten to the idea and financial benefits these raffles may provide for non-profit organizations, it is imperative to acknowledge the requirements of the Raffle Act before issuing, seeking, or conducting a raffle.
Along with enacting a raffle licensing ordinance, local governments should be aware that setting a maximum prize amount awarded in each raffle is required by the Raffle Act. The rollover element of these raffles may often cause the prize to increase exponentially from week to week. Thus, when drafting the raffle ordinance, the local officials should set a maximum amount that corresponds with the possible prize value of these raffles. Many raffle prizes across the state have reached well over $100,000.00 and sometimes have swelled over $1 million. Thus, it is essential that the local officials discuss the possible award limits that will be added to any ordinance. As such, establishing this prize limit not only allows a local government to comply with the Raffle Act, but also ensures that the non-profit’s raffle license will not risk suspension or revocation or the integrity of the raffle, so long as that non-profit adheres to the prize value limitations. Without such a limit, the raffle licensing ordinance would be in violation of the Raffle Act.
While illuminating the legal risks associated with the Queen of Hearts raffles, it begs the question, what may happen if a raffle is found to be in violation of local or state law? First and foremost, if a raffle licensing ordinance is enacted, the ordinance should grant the local government the authority to suspend or revoke the raffle license and also require that a fidelity bond is secured to insure against such circumstances. If such a bond or similar insurance policy exists, ticket purchasers could seek a refund through that policy or perhaps the non-profit directly. However, if no such ordinance exists, the Raffle Act provides that the State may charge any person in violation of the Act with a Class C misdemeanor. In addition, the State may also attempt to seize the funds during the pendency of any legal action. However, any of these situations can be avoided if a non-profit seeking to start a Queen of Hearts Raffle understands the requirements expressly stated within the Raffle Act and works alongside their local officials to navigate the applicable local raffle ordinance.
Although the allure of the Queen of Hearts Raffles has sent many into a love-crazed frenzy across the state, these raffles are based upon the presumption that the money collected provides altruistic financial benefits to the non-profit organizations hosting the raffles. However, when deciding to play with these Queen of Hearts Raffles, it is important to consider the legal risks and limitations associated with these games. The adage famously alludes to the inherent risk of falling in love with a new sensation, but local governments and non-profit organizations can protect their hearts and their raffles from this new sensation by following the requirements found within the Raffle Act.