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Verdict: Raffles are legal in Arizona — but only for qualifying tax-exempt organizations that meet strict statutory requirements.
What works: The 13-3302 exemption is genuinely accessible for established Arizona nonprofits. If your organization has operated continuously in Arizona for at least one year, holds qualifying tax-exempt status, and follows all operational rules, you can legally run a raffle.
What doesn't: Newly formed nonprofits, for-profit businesses, and individuals have no legal pathway to conduct a raffle under Arizona law. Missing even one requirement — like the 10-day written notice — can void the exemption entirely and expose organizers to felony charges.
Best for: Established 501(c)(3)s and equivalent tax-exempt organizations with at least 12 months of continuous Arizona operation looking to fundraise through ticket-based drawings.
Worth considering if: Your organization is approaching its one-year Arizona anniversary, is planning a high-value prize raffle that crosses IRS reporting thresholds, or wants to use an outside agent to manage raffle operations (special rules apply).
Raffles are considered legal in Arizona only for organizations with an IRS tax-exempt status following a specific set of rules. All other raffles are considered illegal under Arizona law.
Qualified organizations include:
Civic leagues
Religious or apostolic organizations or corporations
Fraternal beneficiary societies, order, or organizations
Labor, agricultural, or horticultural organizations
Corporations
Teachers' or public employees' retirement fund organizations
Business leagues, chambers of commerce, real estate boards, or boards of trade that are not organized for profit
Historical societies
Political organizations/clubs
Are 50/50 raffles legal in Arizona?
Legal events in Arizona include 50/50 raffles run by tax-exempt organizations for fundraising purposes. This type of raffle requires participants to purchase tickets for the opportunity to win a cash prize.
The funds raised by the raffle are split evenly between the prize pot and the cause. Nonprofits can use 50/50 raffles to raise more in a shorter amount of time to fund their mission, projects, and initiatives.
Nonprofits can follow the following rules to remain compliant withArizona raffle laws:
Your nonprofit must be tax-exempt under 501(c)(3) of the Internal Revenue Code and exist in Arizona for at least one year before conducting the raffle.
No member, director, officer, worker, or agent of your organization can receive a benefit from the raffle.
Only bona fide members of your organization can participate in raffle sales, management, or operations.
All in-person ticket sales must be conducted by organization members directly and not through a third-party seller.
All online ticket sales have to happen to those in Arizona through your organization's website.
Violations are subject to civil and sometimes criminal penalties.
There are also a few special circumstance rules that may apply to specific nonprofits:
Hospitals or foundations focused on cardiovascular medical research may hire an outside agent to manage raffles, sales, and operations if the proceeds fund medical research, education, or care.
Child abuse organizations with a 20-year history can contract with an outside agent for raffle management, sales, and operations if the proceeds go to services to prevent child abuse and advocacy for victims.
In both instances, a maximum of 3 raffles may happen in a calendar year. Any fee paid to an outside agent must remain under 15 percent of the raffle's net proceeds.
What A.R.S. 13-3302 actually says: the full statutory breakdown
Most guides summarize Arizona's nonprofit raffle law in broad strokes. But when you're deciding whether your organization qualifies — or how to stay compliant — the actual statutory language matters. Here's what A.R.S. 13-3302 says, subsection by subsection, with plain-language explanations of what each requirement means in practice.
Who is legally permitted to conduct a raffle
The statute limits raffle authority to "bona fide" qualifying organizations. Under 13-3302(B), a qualifying organization must be a nonprofit that has been "in continuous existence in this state for a period of not less than one year immediately before conducting a raffle." This is a hard cutoff. Newly formed nonprofits cannot conduct raffles, regardless of their 501(c)(3) status. Your organization must have been operating in Arizona continuously for at least 12 months before the first ticket is sold.
This requirement exists to prevent pop-up entities from using the nonprofit exemption as a loophole. It doesn't matter how legitimate your cause is or how recently you received federal tax-exempt status. If your Arizona operations are less than one year old, you don't qualify.
There's no waiver process and no exception for emergency fundraising needs. Plan your raffle calendar with this threshold in mind, and document your organization's existence date clearly in your records.
The 10-day advance notice requirement
One of the most commonly overlooked requirements appears in 13-3302(B)(3): the organization must provide written notice to its membership at least 10 days before the raffle is conducted. This notice must include the date, time, and location of the drawing. Emailing your list or posting on social media may satisfy this if your documented membership receives it — but informal announcements do not substitute for written notice. Keep a copy of the notice and proof of distribution in your records.
Written notice to its membership" means the people formally on record as members of your organization. If your nonprofit has a formal membership structure, you need a documented list and verifiable delivery. If your organization uses an email list, retain screenshots or delivery reports showing who received the notice and when.
A board meeting announcement, a Facebook post, or a flyer at an event won't meet this requirement on its own. The 10-day window starts from the date the notice is actually delivered, not the date you drafted it. Build this step into your raffle planning timeline well in advance.
Prize value limits and reporting thresholds
The statute does not cap the total value of prizes, but it does impose reporting obligations tied to prize value. Under 13-3302(B)(5), net proceeds from the raffle must be used "exclusively for the purposes of the qualifying organization." More importantly, any prize valued at $600 or more triggers IRS Form W-2G reporting requirements, and prizes over $5,000 require the organization to withhold 24% in federal taxes before disbursing the prize. These are federal thresholds that interact with the state statute — ignoring them creates liability even when you're fully compliant with Arizona law.
This means your raffle compliance isn't just about Arizona. If you're offering a high-value prize — a vacation package, a vehicle, jewelry — you need to account for federal tax withholding before the drawing takes place. Winners who receive taxable prizes and later learn about the withholding obligation can create disputes that damage your organization's reputation.
The cleanest approach: decide before you announce a prize whether it crosses either threshold, and communicate the tax implications clearly in your raffle terms. Your organization is responsible for the withholding, not the winner.
Record-keeping obligations
Under 13-3302(B)(4), the organization is required to maintain financial records of raffle activity, including gross receipts, expenses, and the net proceeds distributed to the nonprofit's stated purposes. These records must be available for inspection. Best practice: keep a separate bank account or at minimum a dedicated ledger for raffle proceeds, and document how funds were spent relative to your nonprofit's mission.
Available for inspection" means exactly that. If the Arizona Department of Gaming or another authority requests your raffle records, you must be able to produce them promptly. Vague or reconstructed records won't protect you if questions arise about how proceeds were used.
Document every expense associated with the raffle — printing costs, venue fees, marketing materials — and separately track all ticket revenue. Then record precisely how net proceeds were allocated to your mission. This paper trail is your primary defense if the raffle is ever scrutinized.
What happens if you violate the law
Conducting a raffle outside the statutory exemption is treated as a class 5 felony under 13-3301 and 13-3303 — the same classification that applies to operating an illegal lottery. This is not a minor administrative infraction. Individuals who organize or promote a non-compliant raffle can face personal criminal liability, not just organizational penalties. Even well-meaning mistakes — like running a raffle before your organization's one-year anniversary — can remove the exemption entirely.
The bottom line
The exemption in 13-3302 is genuinely accessible for established Arizona nonprofits, but it's conditional. Every requirement — the one-year existence rule, the 10-day written notice, the exclusive use of net proceeds, and proper recordkeeping — must be met simultaneously for the exemption to apply. If any element is missing, the raffle is legally equivalent to an illegal lottery under Arizona law.
When in doubt, consult a licensed Arizona attorney before your first ticket goes on sale.
Arizona raffle compliance checklist
Now that you understand the statute, it's worth putting the requirements into a format you can actually use before your next raffle. Walk through these yes/no questions to assess your compliance position. If you can't answer "yes" to every qualifying question, your raffle may not be protected under the 13-3302 exemption.
⚠️ Note: The interactive version of this compliance quiz — which dynamically evaluates your answers and returns a compliance determination — is pending development. In the meantime, use the static checklist below to manually walk through each requirement. If you answer "no" to any item, address it before your raffle begins.
Is your organization eligible?
[ ] Is your organization tax-exempt under the IRS?
[ ] Has your organization been in continuous operation in Arizona for at least 12 months?
[ ] Is your organization a qualifying type (civic league, religious organization, 501(c)(3), etc.)?
[ ] Are all raffle operations managed by bona fide members — not outside contractors (unless you qualify for the hospital or child abuse org exception)?
Is your raffle structured correctly?
[ ] Have you provided written notice to your membership at least 10 days before the drawing?
[ ] Does the notice include the date, time, and location of the drawing?
[ ] Are ticket sales being conducted by organization members only?
[ ] If selling online, are you restricting sales to Arizona-based buyers through your own website?
[ ] Have you confirmed that no member, director, officer, or agent personally benefits from raffle proceeds?
Are your prize and financial obligations covered?
[ ] If any prize is valued at $600 or more, do you have a plan for IRS Form W-2G reporting?
[ ] If any prize is valued over $5,000, have you arranged for 24% federal tax withholding before disbursing?
[ ] Are raffle proceeds being used exclusively for your organization's stated mission?
[ ] Do you have a separate account or dedicated ledger for raffle income and expenses?
Is your recordkeeping ready?
[ ] Can you produce records of gross receipts, expenses, and net proceeds on request?
[ ] Do you have documented proof of the 10-day written notice delivery?
[ ] Have you recorded how net proceeds were allocated to your mission?
If you answered "no" to any item above, address it before your raffle begins. A single missing element can void the statutory exemption entirely.
Raffle penalties and enforcement in Arizona
Knowing the law matters. But knowing the consequences of breaking it matters just as much. Arizona's raffle penalties are serious, and they apply to individuals — not just organizations.
Criminal classifications under Arizona law
Arizona treats unauthorized gambling, including illegal raffles, as a criminal matter under A.R.S. 13-3301 through 13-3309. Here's how the classifications break down:
Conducting or promoting an illegal raffle (operating outside the 13-3302 exemption) is charged as a class 5 felony under 13-3303. A class 5 felony in Arizona carries a presumptive sentence of 1.5 years in prison, with a range from 6 months to 2.5 years for first-time offenders. Repeat offenders face enhanced sentencing.
Participating in illegal gambling as a player (rather than an organizer) is typically charged as a class 1 misdemeanor. That's the most serious misdemeanor classification in Arizona, carrying up to 6 months in jail and fines up to $2,500.
Possessing gambling devices or equipment used to conduct an illegal raffle can trigger a class 6 felony charge under 13-3304. A class 6 felony carries a presumptive sentence of 1 year in prison.
Who faces personal liability
This is where many well-meaning nonprofit leaders get surprised. The criminal liability under Arizona's gambling statutes doesn't just apply to the organization. Individual officers, directors, and event organizers who knowingly conduct or assist in an illegal raffle can face personal criminal charges. Your 501(c)(3) status doesn't shield you from individual prosecution.
Knowingly" is a key term here. If you ran a raffle believing your organization qualified but failed to meet the one-year existence requirement, Arizona prosecutors have discretion over whether to pursue charges. Ignorance of the law isn't a formal defense — but documented, good-faith compliance efforts do matter in practice.
What enforcement looks like
The Arizona Department of Gaming oversees charitable gaming activities in the state. Complaints can come from participants, competing organizations, or law enforcement referrals. Enforcement typically begins with an investigation, which may include a request for your financial records. Organizations that can't produce clean documentation of gross receipts, expenses, and mission-aligned expenditures face greater scrutiny.
Civil penalties can also apply independently of criminal charges. If the Arizona Attorney General's office investigates and finds violations of charitable solicitation laws alongside raffle law violations, your organization could face fines, forced restitution, and registration suspensions — all without a criminal conviction.
The safest path forward
Don't wait for a complaint to audit your own compliance. Review your organization's eligibility and raffle documentation at least 30 days before any drawing. If there's any uncertainty about whether you meet the statutory requirements, consult a licensed Arizona attorney. The cost of legal advice is far lower than the cost of a class 5 felony investigation.
Raffle laws for non-nonprofits and individuals
Not every person searching Arizona raffle laws is running a nonprofit. If you're an individual, a business, or a for-profit entity wondering whether you can host a raffle — the answer is almost always no, and the consequences of getting it wrong are significant.
Why personal raffles are illegal in Arizona
Arizona law does not have a "small scale" or "personal use" exemption for raffles. If you're hosting a raffle and you're not a qualifying tax-exempt organization that's been operating in Arizona for at least one year, you're operating an illegal lottery under A.R.S. 13-3301. This applies even if your raffle is small, informal, or genuinely charitable in intent.
Common scenarios that cross the line: a neighborhood association running a raffle to fund a community project, a local restaurant offering raffle tickets to customers, or an individual hosting an online raffle to raise money for a sick friend. All of these fall outside the statutory exemption — regardless of how good the cause is.
For-profit businesses and raffles
A for-profit business cannot legally conduct a raffle in Arizona, full stop. This includes LLCs, S-corps, sole proprietors, and any other business structure. A business that sells raffle tickets — even if it donates all proceeds to charity — is operating an illegal lottery. The fact that the proceeds go to a good cause does not transfer the exemption to the business.
Some businesses try to structure raffles as "free to enter" contests with a purchase option, or as sweepstakes with no consideration required. Whether these structures comply with Arizona law depends on the specific mechanics and isn't covered under 13-3302. If you're a business exploring promotional contests, consult an attorney about sweepstakes law — which is a different legal framework from raffle law.
Real estate and raffle promotions
Real estate professionals occasionally attempt to use raffle-style promotions to market properties. Arizona's real estate regulations and gambling statutes both apply here. Offering a cash prize or property through a ticket-based drawing — even as a marketing promotion — can trigger gambling statutes if consideration is required. The Arizona Department of Real Estate takes these violations seriously, and participants in such promotions can face both gaming and licensing consequences.
What individuals can do instead
If you want to raise money for a cause but you're not affiliated with a qualifying nonprofit, your best option is to partner with one. Many established Arizona nonprofits will work with community members on fundraising events under their organizational umbrella — which puts the raffle legally within the nonprofit's exemption. You can also make personal donations to an existing 501(c)(3) and encourage others to do the same, without the legal complexity of running your own raffle.
Key requirements at a glance
The requirements under A.R.S. 13-3302 span eligibility, operations, finances, and enforcement. Here's a consolidated view so you can check your position quickly.
Requirement
What the law says
What it means in practice
Who can run a raffle
Qualifying tax-exempt organizations only
Must be a 501(c)(3) or equivalent — civic leagues, religious orgs, fraternal societies, etc.
Minimum existence period
At least 1 year of continuous operation in Arizona
No new nonprofits, even with IRS status. 12 months in Arizona is a hard cutoff.
Advance notice
Written notice to membership at least 10 days before drawing
Must include date, time, and location. Keep delivery proof.
Ticket sales rules
In-person sales by bona fide members only (no third-party sellers)
Special exceptions apply for qualifying hospitals and child abuse orgs.
Online ticket sales
Must be sold through your organization's website to Arizona-based buyers only
Sales platforms that sell to out-of-state buyers may void the exemption.
Use of proceeds
Net proceeds used exclusively for the organization's purposes
No personal benefit to any member, officer, or director.
Recordkeeping
Gross receipts, expenses, and net proceeds documented and available for inspection
Separate ledger or bank account strongly recommended.
IRS reporting
Prizes valued at $600+ require Form W-2G; prizes over $5,000 require 24% withholding
Federal obligations apply even when Arizona requirements are fully met.
Outside agents
Generally prohibited; exceptions for qualifying hospitals and 20-year child abuse orgs
Max 3 raffles/year; agent fee capped at 15% of net proceeds.
Penalty for violations
Class 5 felony for organizers; class 1 misdemeanor for participants
Individual criminal liability applies — not just organizational penalties.
Regulator
Arizona Department of Gaming
Complaints, investigations, and enforcement handled through gaming.az.gov.
This table covers the core compliance framework. Individual circumstances may add additional obligations — especially if your organization qualifies for the hospital or child abuse exception, or if your prizes cross federal reporting thresholds.
How one Arizona nonprofit's raffle raised $7.9K
Iben Beachin LLC combined its vacation rental services with charitable giving to host a raffle to benefit a family in need. The raffle raised an impressive $7,900, and all ticket sales went to the Bicklers as their 15-year-old son completed cancer treatment.
The organization brought the raffle to life with Zeffy's raffles and lottery forms to invite people to participate and make a big impact through each ticket sold.
Beach Vacation Raffle for Jackson Bickler's Fight Against Cancer
Raffle best practices we love
Bring in a personal touch: The raffle features an image of the Bickler family and Jackson with a personal appeal to remind people why their actions matter.
Offer an exciting prize: Every raffle ticket increased the chances that someone could win a 3-night stay in a beautiful beach rental, enticing bulk ticket purchases and more money raised for the cause.
Create urgency: The beach vacation raffle capped tickets at 250 total with a clear entry close date to drive people to take action in a timely manner.
Add a donation option: Passionate supporters could easily add a donation to their raffle ticket purchase to make an even bigger impact on the Bickler family.
Make it easy to share: Visitors can quickly share the raffle with even more people to bring in overwhelming support for the cause through email, social media, and a direct link to the raffle page.
In addition to the impressive fundraising totals, they saved $395 in fees through Zeffy — a fundraising platform trusted by 100,000+ nonprofits that has helped raise over $2 billion for causes across North America. Zeffy's 100% free model for nonprofits ensures that every cent of donations and purchases goes directly to the cause.
Raffles are illegal in Arizona if they are run by any entity other than a qualified 501(c)(3) tax-exempt organization. They are also considered illegal if they violate Arizona raffle laws set forth by the Arizona Department of Gaming.
Legal raffles are allowed in the state and are subject to specific rules and regulations.
Arizona fundraising laws help designate processes for raising money on behalf of a charitable organization. These laws cover registration, violations, and classification.
Here are a few to stay aware of:
* Charitable organizations must file registration statements with the secretary of state before soliciting their first contribution or donation.
* An individual may be tax-exempt if the IRS determines they are a charitable organization eligible to fundraise.
* An annual information return should be filed with the secretary of state for the preceding fiscal year.
A raffle is considered a legal form of gambling in Arizona. Arizona Revised Statutes 13-3301 categorize raffles as tax-exempt organization gambling subject to regulations.
The state recognizes gambling as the act of risking or giving something of value in exchange for the opportunity to benefit from a game or contest of chance or skill or a future contingent event.
Arizona allows gambling, such as raffles, under statutorily recognized exemptions.
Bingo and raffles are a few gambling types that are legal in Arizona. Generally, all gambling is illegal unless it falls under these particular tax-exempt organization gambling activities.
Signs of illegal gambling in Arizona include:
* Online gambling
* The host requires fees to participate (buy-ins or re-buys)
* The host requires a cover charge or voluntary donation for participation
* The host takes a percentage of the money players win or wager
* The host requires a minimum purchase to participate
* The host provides equipment and charges rental fees to participate
Look for people who attend related events, follow relevant Facebook groups, or subscribe to aligned newsletters.These aren’t just potential donors—they’re your future advocates.
Look for people who attend related events, follow relevant Facebook groups, or subscribe to aligned newsletters.These aren’t just potential donors—they’re your future advocates.
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