Raffle classes explained: Class 1, 2 and 3 in plain English

New Zealand law sorts raffles into classes by size. The bigger the prizes and the more the tickets are worth, the higher the class and the more rules apply. The class decides who can run your raffle and whether you need a licence.

The short version

• Class 1 is a small raffle. Prizes worth $500 or less, and all the tickets together worth $500 or less. Anyone can run one. No licence.
• Class 2 is the usual club or school raffle. Prizes worth up to $5,000, and all the tickets together worth up to $25,000. Only a club, school, charity or other not-for-profit group can run one. No licence.
• Class 3 is a big raffle, like a car or house lottery. Prizes worth more than $5,000. Only a not-for-profit group can run one, and it needs a licence from the Department of Internal Affairs (DIA) before any tickets are printed.
• Class 4 isn't a raffle. It's pokie machines in pubs and clubs. Your group can't run them, but it can apply to the trusts that do for grants.

Limits and rules are from DIA's classes of gambling page and its guidance for running a raffle.

Work out your class in three steps

1. Add up the prizes at what they'd cost in a shop (retail value), even if they were donated. A donated $1,200 barbecue counts as $1,200.
2. Work out what all the tickets are worth: the number of tickets you print times the ticket price. DIA calls this "potential turnover". It counts every ticket printed, not just the ones you expect to sell. 2,000 tickets at $5 is $10,000.
3. Check who's running it. A person or a business can only run Class 1. A club, school, PTA, church, charity or other not-for-profit group can run any class.

If either number goes over $500, it's Class 2: prizes of $400 with 300 tickets at $2 ($600) is Class 2, not Class 1. Prizes over $5,000 make it Class 3. Because prizes must be worth at least 20% of the tickets, $5,000 of prizes allows at most $25,000 of tickets.

Three words that come up

• Society: gambling law's word for a group set up for any purpose other than making a commercial profit. Incorporated or not, a club, school, PTA, kindy association, church or charity usually counts. A business doesn't. (Gambling Act, section 4)
• Authorised purpose: what a society's raffle money must go to after costs. Usually a charitable or community purpose, such as new team uniforms. Not a business, and usually not one person's trip. (DIA's examples)
• Potential turnover: tickets printed times ticket price, as above.

Rules for every raffle, whatever the class

These come from DIA's lottery game rules, which apply to Class 1, 2 and 3.

• Prizes worth at least 20% of all the tickets. 1,000 tickets at $10 is $10,000, so at least $2,000 of prizes.
• Tell people the rules, including the prizes and when and where the draw is.
• Every ticket has an equal chance. Every sold ticket goes in the draw, and no unsold ones do.
• Get each buyer's name and contact details so you can find the winner.
• Don't change the prizes once sales start. A society can't change where the money goes either.
• If you sell to the public, say when and where the draw is, and let the public watch it.
• Give the prizes out within 3 months of the draw. Winners mustn't have to pay anything to collect.
• No banned prizes: no alcohol, tobacco, firearms or ammunition, explosives, restricted weapons or airguns, or vouchers for them. (DIA's full list)
• No commission for the people running or selling it. (A licensed Class 3 raffle can pay a licensed promoter.) Pay is limited too: in some cases a society can pay an authorised representative, so check with DIA before you pay anyone.
• Sell tickets in person unless you have a Class 3 licence. DIA says to use social media only to tell people where they can buy a ticket. On top of that, for Class 1 and 2, our safe practice, and a condition of using our raffle tool: a numbered paper ticket for every entry, handed over face to face.

Class 1: the small raffle

In one line: prizes and all the tickets each worth $500 or less. Anyone can run one, no licence.

Who it suits: a class or team raffle, a hamper at the school gala, a workplace sweepstake.

Sell in person. The law: a Class 1 raffle can't be sold remotely, so no numbers taken in Facebook comments or messages. Use Facebook only to say where people can buy a ticket. Our safe practice, and a condition of using our raffle tool: give every buyer a numbered paper ticket, face to face.

The catch for a person. If a person (not a society) runs it, all the money, less real costs, has to go back out as prizes. So a person can't use a raffle to raise money for themselves. DIA's example of what's not allowed: raising money to send your child to summer camp.

When a society runs one, the money after costs goes to its authorised purpose, like any other society raffle.

Example. A netball team sells 100 tickets at $5 ($500 worth) for a $150 hamper. That's Class 1, and the prize is well over the 20% minimum of $100. If the hamper was donated, the team keeps the $500, less any costs. If it bought the hamper, it keeps $350.

See small class or team raffle.

Class 2: the usual club or school raffle

In one line: prizes up to $5,000, all tickets up to $25,000. Only a society can run one, no licence.

Who it suits: most club, school and PTA raffles, from a meat pack to a weekend away.

Who can run it: a society, incorporated or not. A business, a for-profit daycare or a person can't.

Sell in person. The law: a Class 2 raffle can't be sold remotely, so no numbers taken in Facebook comments or messages, and every ticket must be numbered. Use Facebook only to say where people can buy a ticket. Our safe practice, and a condition of using our raffle tool: give every buyer a numbered paper ticket, face to face. That holds even for a big Class 2 raffle: 100 tickets at $50 for a $2,000 prize still means 100 paper tickets, each sold to someone in person.

On top of the rules for every raffle:

• Number every ticket.
• The group and the organiser can't hold a ticket.
• A ticket that has won can't be drawn again in the same draw.
• No jackpots. Unwon prizes can't roll over into another raffle.
• Check the winning ticket belongs to the person claiming it.
• Put the key details where tickets are sold: the group's name, the organiser and their address, what the money is for, the prizes and their value, the ticket price, how many tickets there are, when sales close, how the winner is picked, and where the results will be published. The ticket itself is the easiest place.
• Name the group, the organiser and the purpose in your ads, including Facebook posts.
• Draw within 3 months of the first sale and within 14 days of sales closing, then publish the results within a week. A post on your club's page or newsletter is the usual way.
• Keep records of ticket sales, costs and who sold the tickets. DIA can ask to see them and give you 14 days to produce them.

The money: costs come out first, and the rest goes to your authorised purpose.

These extra conditions are in section 25 of the Gambling Act.

Example. DIA's own: prizes under $5,000 and 1,500 tickets at $10. That's $15,000 of tickets, so no licence. With the 20% rule, the prizes must be worth at least $3,000.

See printed ticket raffle and multi-prize raffle from local business donations.

Class 3: the big licensed raffle

In one line: prizes worth over $5,000. Only a society can run one, and it needs a DIA licence first.

Who it suits: car, boat, house and big-trip raffles. Licensed Class 3 raffles are also the only ones allowed to sell tickets online.

The licence. Apply to DIA before you print a single ticket. Each raffle needs its own licence, and DIA checks the group can afford to run it. Allow at least 20 working days. See DIA's classes of gambling page for the forms and fees.

On top of the Class 2 rules:

• The ticket has a lot on it. That includes the group, the organiser, what the money is for, the draw date and place, the prizes and their value, the price, how many tickets there are, how winners are picked and told, the licence number and DIA's contact details. Each ticket has a butt where the buyer writes their details. DIA gets a sample ticket before sales start.
• The draw. It's held on the date on the licence, within the same 3-month and 14-day limits as Class 2. An independent "person of standing" (for example, a JP) supervises it.
• The results. Publish them in a newspaper where tickets were sold, within a week of the draw.
• The audit. A chartered accountant who isn't involved checks the raffle, and you send DIA an Audit and Prize Statement within 3 months of the draw.
• The paperwork. Keep the butts, unsold tickets, invoices and statements for 6 months after the draw.
• Unclaimed prizes. If no one claims a prize within 3 months, tell DIA within a month and follow its directions.
• Online sales. DIA says licensed Class 3 lotteries can take ticket purchases online.

See online raffle (Class 3 licensed) and our page on the biggest NZ fundraisers, which includes the big home and car lotteries.

Class 4: pokies (not a raffle)

Class 4 is gaming machines, or pokies, outside casinos. Only a corporate society can run them, with DIA licences for the operator and each venue. Some clubs run pokies in their own clubrooms, but most groups meet Class 4 another way: they apply to the trusts that run pokies for a share of the money. See Class 4 gaming trust grants.

Not raffles, or with their own rules

• Housie (bingo) uses the same classes, with its own game rules. Prizes are cash, at least 70% of card sales go back as prizes, and cards are sold at the venue on the day. (DIA's housie rules)
• A free-entry draw (nothing to pay, nothing to buy) usually isn't gambling, because no one pays to enter.
• A shop's "buy and go in the draw" is a sales promotion with its own rules. See the business section of Am I allowed to fundraise?
• A competition of pure skill has no chance in it, so it isn't gambling, though fair-trading rules still apply.

Mistakes that catch groups out

• Counting only the tickets you expect to sell. Potential turnover counts every ticket printed.
• Valuing donated prizes at nothing. Use the shop price.
• Selling on Facebook. Posting "pick a number" and writing names against numbers in the comments, or taking an order by Messenger and getting paid by transfer, is selling remotely. Paying by bank transfer isn't banned in itself; taking the sale remotely is. For a Class 1 or 2 raffle that isn't allowed: online sales need a Class 3 licence. DIA has warned groups about Facebook raffles, and it cites fines of up to $20,000 or up to a year in prison for running an unlicensed lottery online. Post about the raffle, then sell each ticket in person. Our rule: a numbered paper ticket, face to face.
• Taking orders and payment online. If people choose and pay for tickets through a website, Facebook or online banking without meeting a seller, treat it as selling online and check with DIA first.
• Raffling a bottle of wine or a bar voucher. Alcohol and vouchers for it are banned prizes.
• A raffle for one person. Money for one player's trip usually doesn't fit an authorised purpose; helping a family in hardship can be different, so check DIA's guidelines first. Asking for donations is simpler.
• Swapping a prize partway through, even for a better one.

Make the tickets

You can print numbered raffle tickets for free with our raffle tool. It works out your class, and for Class 1 and 2 raffles it checks the 20% prize rule. For anything not covered here, DIA's gambling pages have the final word, or you can ask DIA directly.