Raffle bill unfairly aids nonprofits linked to pro sports

A piece of legislation that would blur the line between gambling and giving is sitting on Governor Jerry Brown’s desk. Senate Bill 549 would grant an advantageous exemption from existing raffle laws to an exclusive set of nonprofit organizations affiliated with major league sports teams. The bill would allow only these nonprofits to conduct raffles where half of raffle proceeds are awarded to a winner.

The California Association of Nonprofits –CalNonprofits, a statewide policy alliance of nearly 10,000 organizations – opposes SB 549 because it unfairly gives privileges to a small set of elite nonprofits affiliated with professional sports teams. That’s neither fair nor in the nonprofit community’s broader interest.

It poses a serious threat to eroding the public’s very strong trust in nonprofit organizations.

Before 2001, nonprofits in California could not legally conduct raffles at all. We participated in a multi-stakeholder process that changed state law through a voter-approved initiative, which allowed nonprofits to use raffles as fundraisers as long as 90 percent of the gross receipts from a raffle are directed to “beneficial and charitable purposes.” This 90/10 raffle provision has allowed all charities to hold raffles and raise funds to support their community activities.

CalNonprofits’ member organizations include many that reside in and deliver services to people living in under-served communities. If SB 549 is enacted, homeless shelters, veterans groups, humane societies, human services agencies, Rotary clubs and food banks, and every other charity you love would be limited to the current 90/10 rules, whether they prefer it or not. Those groups would be violating state law if they conducted a 50/50 raffle. They would have to rely on being in the vicinity and good graces of a professional sports team’s foundation to benefit from SB 549’s proposed changes to the law – regardless of their own ability or interest in conducting such a raffle themselves.

If this law were to pass, an individual buying at raffle ticket at a sports stadium would be giving 50% of that money to the major league sports team’s subsidiary charity

But SB 549 runs an even greater risk than introducing fundamental unfairness to our community. It poses a serious threat to eroding the public’s very strong trust in nonprofit organizations. Our recent Causes Count report details the economic impact of the nonprofit sector identifying more than 72,000 nonprofit organizations, the fourth largest industry in the state and responsible for 15 percent of the state’s GDP. Nearly one million Californians are employed by the nonprofit community and 80 percent of Californians surveyed for the study indicated confidence that nonprofits act on the public’s behalf and deliver quality services.

Interestingly, Senate Bill 549 contains no “maintenance of effort” provision requiring team owners to continue supporting their foundations with their own funds. This begs the question as to whether the raffle proceeds the teams’ foundations would pocket – the other 50 percent of each raffle pot – is really going to increase charitable support.

In fact, what’s in it for the teams may be more of a revenue opportunity than a charitable one. If this law were to pass, an individual buying at raffle ticket at a sports stadium would be giving 50% of that money to the major league sports team’s subsidiary charity.  PointStreak, the owner of the proprietary electronic raffle software hoping to contract with the teams markets their software to the pro sports teams as a “valuable marketing, ticketing, and business asset.” And PointStreak has paid nearly $100,000 to lobbying firms in Sacramento trying to pass this legislation.

CalNonprofits’ members want fair raffle laws that don’t grant a special, elite class of charities special treatment under the law. In the last week, 60 California nonprofits have signed on to our letter of opposition and more are joining us every day. The legislature and the Governor should heed the concerns of California’s leading nonprofit policy alliance and pause before enacting this inequitable, large-scale, largely unregulated gambling expansion. Sports teams should know better than anyone that everyone should play by the same rules.

Governor Brown should veto SB 549.
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Ed’s Note: Jan Masaoka is the CEO of the California Association of Nonprofits.