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Can I offer contests that involve cash prizes in South Carolina? What are the requirements?

Offering Contests with Cash Prizes in South Carolina

Based on the information provided in the context documents, there are certain requirements that must be met in order to offer contests involving cash prizes in South Carolina.

Nonprofit Organizations

Contests involving cash prizes are only allowed in South Carolina if they are conducted by a qualified nonprofit organization and comply with the requirements outlined in SCCL 33-57-120 [5.1]. To qualify, the nonprofit organization must be recognized by the South Carolina Department of Revenue and the United States Internal Revenue Service as exempt from federal and state income taxation pursuant to Internal Revenue Code Section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7), 501(c)(8), 501(c)(10), 501(c)(19), or 501(d), or be a class, department, or organization of an educational institution. The organization must also be organized and operated for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.

The nonprofit organization must register with the Secretary pursuant to the requirements of Chapter 56, Title 33, unless it is exempt from or not required to follow the registration requirements of Chapter 56, Title 33, or is a governmental unit or educational institution of this State.

If the nonprofit organization complies with the requirements of Section 33-57-120(A) and intends to operate a raffle, it must submit an annual raffle form with a fee of fifty dollars to the Secretary. Proceeds from the fees shall be retained by the Secretary for enforcement of these provisions. This registration form shall cover all authorized raffles for that nonprofit organization’s fiscal year. Registrations for raffles shall expire on the fifteenth day of the fifth month after the end of a nonprofit organization’s fiscal year.

Nonprofit organizations, other organizations, and persons operating raffles for charitable purposes are subject to investigation and other actions by the Secretary and subject to all penalties contained in Chapters 56 and 57, Title 33. Nonprofit organizations, other organizations, or persons operating raffles or lotteries that violate the provisions of Chapter 19, Title 16, are subject to investigation and other actions by law enforcement.

Savings Promotion Contests

A financial institution authorized to do business in South Carolina under federal or state law, subject to the supervision of the appropriate state or federal regulatory agency of the participating financial institution, may conduct a savings promotion contest in accordance with the provisions of SCCL 34-45-30 and this title for the purposes of encouraging its depositors to maintain savings accounts and to increase personal savings [2.1].

Withholding on Cash Prizes or Winnings

A person distributing prizes or winnings to a resident or nonresident of five hundred dollars or more shall withhold seven percent of each distribution made to an individual, partnership, trust, or estate and five percent of each distribution made to a corporation or other entity [3.1].

Claiming Prizes

A claim shall be entered in the name of a single natural person. A guardian may claim a prize if the ticket was received as a gift. No claim may be paid to an individual who is not eighteen (18) years of age. Groups, family units, organizations, clubs or other organizations shall designate one individual in whose name the claim is to be entered [4.1].

Therefore, if you are not a qualified nonprofit organization or a financial institution authorized to do business in South Carolina, it appears that you cannot offer contests involving cash prizes in South Carolina.

Source(s):
Jurisdiction

South Carolina