12.01: Definitions

Prize. Any item or items chosen by a sponsoring organization as the subject of a raffle, which the organization announces it will award to a person selected by chance from among those purchasing tickets to the raffle.

Qualified Member. For the purposes of eligibility to participate in managing or otherwise assisting in the operation of a raffle, a person is a bona fide member of the licensed organization only when he or she:

(a) Has become a member prior to the commencement of the function and such membership was not dependent upon, or in any way related to the payment of consideration to participate in, any gambling activity; and

(b) Has held full and regular membership status in the licensed organization for a period of not less than three consecutive months prior to the subject function; and ( c) Has paid any reasonable initiation or admission fees for membership, and/or any dues, consistent with the nature and purpose of the licensed organization and with the type of membership obtained and is not in arrears in payment of any such fees or dues; and

(d) Has met all other conditions required by the licensed organization for membership and is in all respects a member in good standing at the time of the subject function. A person may also be a bona fide member of a bona fide charitable or bona fide nonprofit organization affiliated with or auxiliary to his or her licensed organization, or to which his or her own licensed organization is auxiliary, when he or she meets all of the standards set out above respecting his or her own licensed organization.

Related Party. Includes:

(a) An officer, director, or trustee (or an individual having powers or responsibilities similar to those of officers, directors, or trustees) of the organization.

(b) A spouse other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance; a child including legally adopted children;

·grandchildren; parents; and grandparents of parties described in 940 CMR 12.0l(l).

(c) A corporation, trust, estate or partnership more than 35% of which is owned or held by any of the preceding.

Sponsoring Organization. Any organization conducting a raffle pursuant to a license under M.G.L. c. 271, § 7A to conduct raffles.

12.02: Disclosure

(l) In any raffle conducted pursuant to M.G.L. c. 271, § 7A, the sponsoring organization must disclose the following information either on the raffle ticket itself or in a written notice given to the purchaser prior to the sale:

(a) a full and fair description of the prize;

(b) the appraised value of the prize;

(c) date or dates when the prize will be available for inspection;

(d) if there is a minimum number of tickets to be sold; what the minimum is and the procedure to be employed to secure a refund in the event the minimum is not reached;

(e) the maximum number of tickets to be sold if any;

(f) the fact that the value of the prize will be treated as ordinary income to the winner for federal and state income tax purposes and that the winner may be required to pre-pay a portion of the tax liability prior to receiving the prize; .

(g) the fact that the Internal Revenue Service takes the position that no portion of the ticket price will qualify as a charitable contribution for federal income tax purposes:

(h) the drawing date for the raffle;

(i) the estimated percentage of the ticket price which will be used for charitable purposes in the event that only the minimum number of tickets are sold; U) the exact nature of the charitable purpose for which the proceeds will be used:

(k) any other facts the disclosure of which may have influenced the purchaser or prospective purchaser not to enter into the transaction.

(2) Each ticket must bear a clear and conspicuous warning to the effect that depositing the ticket or any other material in connection with the raffle in the federal mails is a violation of federal law and may lead to criminal penalties.