Fundraising with sports betting – is it a gamble

Many organizations, including non-profits, find that betting on sports is a great way to bring employees together and boost their morale. Such activities become especially relevant during significant events such as the Super Bowl. Sometimes they are even used to raise funds for some organizations. Indeed, it looks harmless enough, but what is it really like? Before you choose this kind of fundraising method, you should know about all the risks that accompany it.

First of all, it is worth knowing that when a non-profit organization acts as a beneficiary of sports betting, that is, as an organizer receives part of the funds, it can have inevitable legal consequences for it, and negative ones at that. And here’s what it has to do with – their tax status.

Non-profit organizations receive tax-exempt status from the IRS on the basis that they pursue charitable, educational and other similar purposes. And that’s why engaging in gambling activities can cause legal problems. The fact is that the IRS has strict rules regarding what types of activities tax-exempt organizations can engage in.

There is a provision for tax on income from unrelated business – and if gambling activities are conducted on a regular basis, they fall under this provision. Accordingly, the nonprofit organization’s status as a tax-exempt organization may be at risk.

The underlying problem is that such a fundraising strategy overlaps with gambling laws, which vary from state to state. Accordingly, before engaging in such activities, it is necessary to research the legal environment and ensure that the law will not be violated.

Ethical and financial risks are also a significant factor. Not everyone may take positively to the fact that a non-profit organization benefits from gambling and sports betting. Because they have a limited budget and are accountable to donors, it is essential to be particularly careful in such matters.

In order to avoid such misunderstandings, a clear policy should be developed and implemented that defines what is acceptable to the organization and what is not. Of course, financial activities should be sincere and transparent. Ethical implications can be detrimental to the organization, so it is necessary to relate the issue of betting to its values.

Thus, even if sports betting is used as a way to raise funds, it is necessary to act carefully and prudently in this case.

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