The term unrelated trade or business does not include conducting bingo games. To qualify for this statutory bingo exclusion, a game must:
- Meet the definition of bingo under the Internal Revenue Code and Treasury Regulations (see below);
- Not violate state or local law where it is played; and
Be played in a jurisdiction where bingo games are not regularly carried on by for-profit organizations.
The Code and Regulations define bingo as a game of chance played with cards that are typically printed with five rows of five squares each. Participants place markers over randomly called numbers on the cards in an attempt to form a pre-selected pattern such as a horizontal, vertical, or diagonal line or all four corners. The first participant to form the pre-selected pattern wins the game. In addition, for a game to meet the legal definition of bingo, wagers must be placed, winners must be determined and prizes or other property must be distributed in the presence of all persons placing wagers in that game.
Publication 3079, Gaming Publication for Tax-Exempt Organizations