Online Gambling/Raffle Laws...Overseas Laws etc.

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armour248

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I'm hoping I can explain and have the majority of my questions answered with concrete evidence/examples. I have drafted a business plan regarding an online "raffle" website. I have the capital and time to do so, I am simply stuck with some legal problems.

The website would allow users to post items at a designated price, sell "raffle" tickets, and have a drawing for the winner once the price point is hit.

Due to the Raffle Act, conducting such a business in the USA is illegal unless it is affiliated with a non-profit. While I would love to create my own non-profit and give to various charities, I believe your non-profit has to have been established for 4 years before it can run raffles/drawings.

Obviously online gambling has stayed strong by keeping operations overseas while still allowing citizens of the USA to participate.

Here are my basic questions at this time:

1) If the business is located overseas, will there be anything prohibiting US citizens from posting or buying items?

2) If the business is located in the European Union, will there be anything prohibiting european citizens from posting or buying items? I believe their laws regarding online gambling/games of chance are different.

3) If the two scenarios above cause problems, would it be possible to do the following to avoid legal issues...

John Doe wants to sell his 2001 Ford Mustang for $5,000
A contract to purchase the vehicle for $1 is listed on the website
Raffle tickets for the contract are sold until $5,000 worth of tickets have been sold
The drawing is held and a winner is chosen
The winner, who actually purchased a contract, then purchases the vehicle for $1

Would this solve any of the potential legal issues? Any help would be appreciated...Thanks.
 
There is no way you should be conducting this business without a complete consultation with an experienced attorney. You are far from the first person who wanted to take in money from those with an urge to gamble. Let me introduce you to the Safe Port Act:

The Security and Accountability For Every Port Act of 2006 (or SAFE Port Act, Pub.L. 109-347) is an Act of Congress in the United States that covers port security and online gambling.

Here's an excerpt from Wikipedia on the Safe Port Act which can start you with the process of getting acquainted with the difficulty of trying to circumvent US law, which was long ago discovered by Congress:

Internet gambling provisions

Title VIII of the Act is also known as the Unlawful Internet Gambling Enforcement Act of 2006 (or UIGEA). This title (found at 31 U.S.C. § 5361–5367[dead link]) prohibits the transfer of funds from a financial institution to an Internet gambling site, with the notable exceptions of fantasy sports, online lotteries, and horse/harness racing.

Legislative history

The Act was passed at midnight on the day Congress adjourned for the 2006 elections. Though a bill with the gambling wording was previously debated and passed by the House of Representatives, the SAFE Port Act (H.R. 4954) as passed by the House on May 4th (by a vote of 421-2) and the United States Senate on September 14th (98-0),[6] bore no traces of the Unlawful Internet Gambling and Enforcement Act that was included in the SAFE Port Act signed into law by George W. Bush on October 13th, 2006.[7] The UIGEA was added in Conference Report 109-711 (submitted at 9:29pm on September 29, 2006), which was passed by the House of Representatives by a vote of 409-2 and by the Senate by unanimous consent on September 30, 2006. Due to H. Res. 1064, the reading of this conference report was waived.

Among the more prominent Congressional supporters of the Act were Jim Leach, a former chairman of the House Banking Committee and Rep. Robert Goodlatte [R-VA], who co-authored H.R. 4411 (the Internet Gambling Prohibition and Enforcement Act). Bill Frist, former majority leader of the Senate, and Jon Kyl are both credited with expediting the UIGEA's passage through the Senate. Though the SAFE Port Act's provisions related to Internet gambling were drawn exclusively from H.R. 4411, significant portions were removed, including text relating to the Federal Wire Act.

A prior version of the gambling part of the bill passed the House in 1999 but failed in the Senate in part due to the influence of lobbyist Jack Abramoff.

Responses from online gambling sites

All online gambling sites listed on the London Stock Exchange or similar markets have stopped taking United States players due to the passage of the Act, while most non-public companies have announced an intention to continue taking US customers.

PartyGaming Plc, which runs PartyPoker.com, had its publicly-traded stock drop almost 60% in 24 hours as a result of this bill being passed. The company was moved from the FTSE 100 to the FTSE 250 Index on October 11.

WTO dispute

Antigua and the United States have been involved in a long-running World Trade Organization dispute over U.S. restrictions on online gambling. The WTO ruled on January 25, 2007 that the U.S. is in violation of its treaty obligations by not granting full market access to online gambling companies based in the island nation. On March 30, 2007 the WTO confirmed the U.S. loss in the case.

On June 19, Antigua filed a claim for USD $3.4 billion in trade sanctions against the United States, along with a request for authorization to ignore U.S. patent and copyright laws. This claim was filed a day after similar demands for compensation were made by the European Union.

The United States settled the dispute by granting concessions in other sectors. The administration of President George W. Bush refused to disclose the details of those concessions, however. In April 2008 Congressmen Barney Frank and Ron Paul called for the agreements to be made public. They stated that the concessions "could cost the United States many billions of dollars in compensation" and that the administration's invocation of "national security" as a reason to block disclosure under the Freedom of Information Act (FOIA) was "a misuse of the FOIA process." When the administration continued to keep the information secret, Public Citizen brought suit on behalf of Ed Brayton, a journalist whose FOIA request had been denied.
 
In online gambling raffle is an arrangement for increasing money and raffle licenses can renew on-line but only you have to file your report online and your current license number.
 
The government is tenacious about tax money and takes every opportunity to take it. If you sell tickets to a raffle and the ticket says the winner can buy the car or whatever or take a lower cash prize then you have valued the prize at that amount but just like those who win prizes on game shows. They must pay tax on the retail value. The only way around it is to not tell the government you gave the prize. That of course is a crime. Also you cannot run a raffle without a permit or if you are a church. If you want to make money with raffles go to winbyraffle.com. on that site he will list the prize you want to raffle and the price and amount of tickets you wish to sell. He takes 25 % of the money raised after the cost of the prize. If you want to run a short raffle time and the goal isnt reached then he will give a calculated cash award as a 5 of the total raised. You avoid all the hassle of us laws that way. I think each listing is 150 dollars. He runs the raffle for you. good luck
 
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