Ask a Business Lawyer. Get Business Law Questions Answered ASAP.
Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.
The answer to both your questions is yes. You can conduct a raffle which is a lottery because you are a charitable organization. You can use the proceeds to buy the lottery prize because only the net proceeds have to go to the charitable purpose. The costs of operating the lottery, including paying for the prize and paying people to sell the tickets are proper deductions. Here is a link to the relevant SD statutes. http://www.gambling-law-us.com/Charitable-Gaming/South-Dakota/
If I have answered all your questions, please positively rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.