People often assume there's a single "X% must go to charity" rule for NZ raffles, the way pokies have a hard 40% minimum. There isn't, for Class 3 lotteries. What actually exists is more specific than a headline number, and worth understanding properly if you're either running one or just want to sense-check a raffle before buying in.
The one number that is fixed: 20%, and it's for prizes, not charity.
Straight from DIA: "Prizes must be at least 20% the value of the tickets sold." This is the rule we use as our own sniff test throughout this site — sell $500,000 in tickets, and the prize pool has to be worth at least $100,000. It's a floor, not a target; plenty of well-run lotteries sit well above it.
Costs: no fixed percentage, but a real, enforceable standard.
This is the part people usually don't know exists. To get a Class 3 licence in the first place, DIA has to be satisfied of something specific: "The costs of running the raffle must be minimised and returns to the community maximised." That's not a suggestion, it's a licensing criterion. DIA's own regulatory documentation goes further, stating the Department "must be satisfied that the proposed gambling operation is financially viable, that costs will be minimised, and that returns to the community maximised" before it will issue a licence at all.
There's no published number like "costs can't exceed 15%." Instead, DIA reviews the actual proposed costs of each specific raffle at the licensing stage and has to be satisfied they're reasonable, not that they clear an arbitrary bar. One specific rule that is fixed: if you use a third party to help run ticket sales, you cannot pay them a commission. Nobody profits from simply moving tickets.
What's actually returned to charity: "net proceeds," not a percentage.
Here's the mechanism in plain terms. Ticket sales minus prizes minus reasonable costs equals net proceeds, and DIA's own game rules require that "the authorised purpose(s) to which the net proceeds of the lottery are applied or distributed must not change once ticket sales have commenced." Whatever's left has to go to the stated cause, and the cause can't be swapped partway through. But there's no minimum percentage attached to that final number, the way pokies have their 40% rule.
Why this design makes sense, even without a fixed number.
A fixed minimum works for something like pokies, where the "cost" side is largely just machine operation and venue overhead, fairly predictable across operators. A one-off charity raffle is different every time: a $2,000 school raffle and a $500,000 national lottery have wildly different reasonable cost structures. DIA's answer is to review each one individually rather than force every raffle through the same percentage, which is arguably more honest than a number that would be too strict for small operators and too loose for big ones.
Prize pool below 20% of ticket revenue: a real red flag, and the easiest number to check yourself. No published cost or "net proceeds" figure at all: not automatically wrong, since DIA reviews this at the licensing stage rather than requiring public disclosure, but it does mean you're trusting the process rather than verifying it yourself. A raffle that seems to spend heavily on the prize and comparatively little on getting the word out can still be entirely legitimate — that's a business decision, not usually a compliance one. It can, however, be a bad decision, which is really a separate question.