Verdict: Are raffles legal in Arizona? Yes, but only for qualifying tax-exempt organizations that meet the statutory requirements in A.R.S. 13-3302. Can you sell tickets online? Yes, on conditions: the Arizona Department of Gaming asks that online sales run through your organization's website, that the website be operated by members of your organization, and that purchases be limited to individuals located in Arizona. Can a member take a card at a table? Yes. A.R.S. 13-3302 says nothing about payment methods at all; what (B)(3) bars is anyone other than your own members participating "directly or indirectly" in the sales. So the gate is a third-party seller, not the card, and ADG's in-person guidance is to make sure all sales are conducted by members of your organization and not by third party sellers.
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 the operational rules, you can legally run a raffle.
What doesn't: Newly formed nonprofits (under one year of continuous AZ existence), for-profit businesses, and individuals have no legal pathway.
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 a member-run ticket drawing.
Worth considering if: Your organization is approaching its one-year Arizona anniversary and wants to plan a compliant raffle before that date lands.
Table of contents
Nonprofit raffle laws in Arizona
Are raffles legal in Arizona?
Raffles are legal in Arizona only for organizations with IRS tax-exempt status that follow a specific set of rules under A.R.S. 13-3302. All other raffles are treated as illegal lotteries under Arizona law.
Qualifying organization types include:
- Religious or apostolic organizations or corporations
- Fraternal beneficiary societies, orders, or organizations
- Labor, agricultural, or horticultural organizations
- Teachers' or public employees' retirement fund organizations
- Business leagues, chambers of commerce, real estate boards, or boards of trade not organized for profit
- Historical societies (five-year continuous existence rule under 13-3302(C))
- Political organizations and clubs
For a small Arizona nonprofit that clears the one-year existence bar, this exemption is workable. If you don't, there is no lawful raffle in Arizona this year. See the 501(c)(3) Raffle Laws by State guide for the map of how other states handle this.
Are 50/50 raffles legal in Arizona?
Yes. 50/50 raffles run by tax-exempt organizations for fundraising purposes fall inside the 13-3302 exemption on the same terms as any other raffle. Participants buy tickets for the chance to win a cash prize; the funds raised are split evenly between the prize pot and the cause.
All the same rules apply: your nonprofit still needs the one year of continuous Arizona existence, and members of the organization still have to conduct the ticket sale themselves.
Arizona raffle rules for nonprofits, in plain English
To stay inside the Arizona charitable gaming rules, your nonprofit needs to meet these conditions:
- Be tax-exempt (typically 501(c)(3)) and have existed continuously in Arizona for at least one year before conducting the raffle.
- No member, director, officer, worker, or agent of your organization may personally benefit from the raffle.
- Only bona fide local members of the sponsoring organization may participate in the management, sales, or operation of the raffle.
- In-person ticket sales must be conducted by members of the organization, not by a third-party seller.
- Any online promotion must funnel the actual sale back to members of the organization. Arizona's rule is about who handles the sale, not how the payment is processed.
- Keep financial records of gross receipts, expenses, and net proceeds. A.R.S. 13-3302 does not require this, but it is how you demonstrate the no-personal-benefit condition above.
A narrow exception exists in 13-3302(B)(4)(a) for licensed general hospitals, licensed special hospitals, and foundations supporting cardiovascular medical research: they may contract with an outside agent, subject to a cap of three raffles per calendar year and a maximum 15% fee on net proceeds. 13-3302(B)(4)(b) adds a further narrow exception for certain 501(c)(3) organizations with a 20-plus-year history of child abuse prevention or victim services. Most Arizona nonprofits do not qualify for either carve-out. Do not treat these as a general workaround.
For a small nonprofit: if you're an established Arizona 501(c)(3) with members who can run a ticket table at events and a bookkeeper who can keep a clean ledger, a raffle is worth it. If you're a solo founder with no member base, or if you're planning to route sales through any outside vendor, the exemption doesn't cover you and the downside is a class 5 felony, not a fine.
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 existence continuously in this state for a one-year period immediately before conducting the raffle" ( 13-3302(B)(2)). 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. Historical societies under 13-3302(C) face a five-year requirement instead.
There is no waiver process and no emergency-fundraising exception. Plan your raffle calendar around this threshold and document your organization's Arizona existence date clearly. If you're still building toward that anniversary, see how to start a nonprofit in Arizona for the establishment timeline.
For a small nonprofit: if you're under 12 months old in Arizona, don't try to run a raffle. Run a straightforward donation campaign or a ticketed event instead. The one-year rule has no back door.
Who can actually run the sale: the member-only operator rule
The single most important sentence in the statute is 13-3302(B)(3):
No person except a bona fide local member of the sponsoring organization may participate directly or indirectly in the management, sales or operation of the raffle.
This is the whole game. Arizona doesn't regulate the internet, credit cards, or payment processors. The statute contains no reference to any of those. It regulates who handles the sale. Members of your nonprofit have to sell the tickets themselves. No outside vendor, no third-party platform, and no hired ticket-seller may be involved in management, sales, or operation.
That's the derivation for the widely-repeated "online sales must go through your own website" advice. It isn't in the statute as an internet rule. It follows from (B)(3): if only members can run the sale, then any online interface has to be one those members operate, not a third-party marketplace.
The narrow (B)(4) exceptions above (qualifying hospitals, certain long-established child-abuse organizations) are the only cases where an outside agent is permitted, and only within the 3-raffle-per-year and 15%-of-net-proceeds caps.
For a small nonprofit: before you plan anything, name the members who will physically handle the sale, take the payment, and record the ticket. If you can't name them, you don't have a compliant raffle.
Federal prize reporting and withholding thresholds
Arizona's statute does not cap total prize value, but federal IRS rules impose reporting and withholding obligations tied to prize value. For 2026, IRS W-2G reporting for raffle-type winnings kicks in at $2,000 (inflation-adjusted; different thresholds apply by game type, for example bingo/keno/slots use $2,000, poker uses $5,000+ net, and horse racing and lotteries use a 300x-wager test).
When winnings minus the wager exceed $5,000 for sweepstakes, wagering pools, and lotteries, the organization must withhold 24% in federal taxes before disbursing the prize. For parimutuel pools and sports wagering, that same 24% withholding at the $5,000 net threshold also requires the winnings to be at least 300 times the wager. Source: IRS W-2G instructions (01/2026), https://www.irs.gov/instructions/iw2g. Verify current details with the IRS before your drawing, since these figures are inflation-adjusted annually.
Note: any "exclusive use of proceeds" expectation for Arizona raffles is best framed as IRS 501(c)(3) private-inurement doctrine, not as an A.R.S. 13-3302 requirement. 13-3302(B) has only four paragraphs (1 through 4); there is no (B)(5).
For a small nonprofit: decide before you announce a prize whether it crosses either federal threshold. If it does, plan for withholding and W-2G reporting on day one, not after the winner is drawn.
Record-keeping obligations
A.R.S. 13-3302 sets no recordkeeping requirement for raffles, and no Arizona agency licenses or inspects them. Records still matter, for three reasons. 13-3302(B)(1) bars any member, director, officer, employee or agent from taking a pecuniary benefit from the raffle, and a ledger is how you show that. Federal prize reporting runs off your own figures. And any inquiry from a state authority or the Arizona Attorney General's office is far easier to answer with documentation you already hold.
Best practice: keep a separate bank account, or at minimum a dedicated ledger, for raffle proceeds. Document how funds were spent relative to your nonprofit's mission. If the Arizona Department of Gaming or another authority requests your raffle records, you must be able to produce them promptly. Reconstructed records after the fact are the weakest possible position.
For a small nonprofit: even a shared spreadsheet with dated entries beats no records at all. Track every ticket sold and every dollar spent on prizes, printing, and venue costs, then reconcile net proceeds to a specific mission line.
What happens if you violate the law
Conducting a raffle outside the statutory exemption is treated as a class 5 felony under 13-3303 (promotion of gambling). 13-3301 is the definitions section and creates no criminal offense on its own; do not cite it as a penal provision.
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, such as running a raffle before your organization's one-year anniversary or letting a non-member handle sales, can remove the exemption entirely.
The bottom line
The exemption in 13-3302 is genuinely accessible for established Arizona nonprofits, but it is conditional. Every requirement (the one-year existence rule, the member-only operator rule, and the no-personal-benefit rule) 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
Walk through these yes/no questions before your next raffle. If you can't answer "yes" to every applicable item, your raffle may not be protected under the 13-3302 exemption.
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 (or five years for a historical society)?
- Is your organization a qualifying type (civic league, religious organization, 501(c)(3), fraternal society, etc.)?
- Are all raffle operations managed by bona fide local members of your organization, not outside contractors (unless you qualify for the narrow hospital or child-abuse-organization exception)?
Is your raffle structured correctly?
- Are ticket sales being conducted by organization members only?
- If you're promoting the raffle online, does the sale itself still flow through your members rather than a third-party marketplace?
- 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 $2,000 or more, do you have a plan for IRS Form W-2G reporting?
- If any prize creates net winnings above $5,000 (winnings minus wager), have you arranged for 24% federal tax withholding before disbursing?
- Are raffle proceeds being used exclusively for your organization's stated mission (an IRS 501(c)(3) private-inurement expectation, not an A.R.S. line)?
- 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?
- 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. 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 under 13-3303 as a class 5 felony. 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, 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, which carries a presumptive sentence of 1 year in prison.
Who faces personal liability
This is where many well-meaning nonprofit leaders get surprised. 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 does not shield you from individual prosecution.
"Knowingly" is the operative term. 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 is not 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 cannot produce clean documentation of gross receipts, expenses, and mission-aligned expenditures face greater scrutiny.
Civil penalties can 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 is 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.
For a small nonprofit: the biggest enforcement risk isn't a sting operation, it's a records request you can't answer. A shared ledger, a members-only sales roster, and a written sign-off from your board on how proceeds will be used will carry you through nearly any inquiry.
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 has been operating in Arizona for at least one year, you're operating an illegal lottery. 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. 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 is not 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. 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.
For a small nonprofit fielding these requests: if a community member wants to raise money for a cause under your umbrella, you can say yes, but the sale still has to be run by your bona fide members. That's a program decision, not a paperwork one.
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.
|
| 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 (5 years for historical societies) | No newly formed nonprofits, even with IRS status. 12 months in Arizona is a hard cutoff. |
| Who handles the sale | 13-3302(B)(3): only bona fide local members may manage, sell, or operate the raffle | Members of your organization run the ticket sale. No third-party platform, vendor, or hired seller. |
| Online promotion vs. online sale | Statute is silent on the internet; (B)(3) governs who handles the sale | You can promote online, but the actual sale has to be run by your members, not a third-party marketplace. |
| Use of proceeds | Ties to IRS 501(c)(3) private-inurement doctrine, not an A.R.S. paragraph | No personal benefit to any member, officer, or director. Net proceeds go to the mission. |
| Recordkeeping | Not required by 13-3302. Documenting gross receipts, expenses and net proceeds is how you show no member benefited. | Separate ledger or bank account strongly recommended. |
| Federal IRS reporting | Form W-2G at $2,000+ for 2026; 24% withholding when winnings minus wager exceed $5,000 (per game type) | Federal obligations apply even when Arizona requirements are fully met. Verify current thresholds at irs.gov/instructions/iw2g. |
| Outside agents | Generally prohibited; narrow exceptions for qualifying hospitals (B)(4)(a) and 20-year child-abuse orgs (B)(4)(b) | Max 3 raffles per calendar year; agent fee capped at 15% of net proceeds. |
| Penalty for violations | Class 5 felony under 13-3303 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-organization exception, or if your prizes cross federal reporting thresholds.
Can you use Zeffy to run online raffles in Arizona?
Are raffles legal in Arizona? Yes, for qualifying tax-exempt organizations that meet A.R.S. 13-3302. Who has to run the ticket sale? Your own members. Can a member take a card? Yes. Arizona's gate is who conducts the sale, not how the ticket gets paid for.
Here is why. A.R.S. 13-3302(B)(3) says that no person except a bona fide local member of the sponsoring organization may participate directly or indirectly in the management, sales or operation of the raffle. That is a rule about who may be in the sale, not about how a payment is processed. The statute has no payment-instrument provision at all: no credit, debit, cash, check, money order or electronic payment anywhere in the section. The Arizona Department of Gaming reads it the same way. Its guidance for organizations selling in person is to "make sure that all sales are conducted by members of your organization and not by third party sellers". That is a rule about sellers, not about card terminals. A member running the table and taking a card is still a member conducting the sale.
For online sales the same ADG guidance sets three conditions: sales go "through your organization's website", "purchases are limited to individuals located in Arizona", and "the website is operated by members of your organization". The Arizona-only limit is the one to plan for, because a page on your own website is reachable from any state. Decide how you will enforce it before you open online sales, and put that one question to an Arizona attorney. One caveat on all of this: ADG states that no Arizona state agency regulates charitable raffles, and it recommends independent legal advice. Its guidance is the state's own published reading, not an approval.
What Zeffy can carry is everything around the raffle, at no cost:
- Taking payment for a sale your members run. The ticket sale itself stays with your members, at the table or on your own site. Because Arizona's rule is about who sells rather than how payment clears, the payment method is not what the statute addresses. For online sales, weigh ADG's three conditions above: a Zeffy form embedded on your own website speaks to the organization's-website and member-operated conditions, and the Arizona-only limit is yours to solve. We are describing what the regulator asks for, not certifying that any particular setup satisfies it.
- Logging the sales your members made. Record those offline ticket sales in your dashboard: members sell in person, then log each sale so you have a clean record of the raffle, with the participant list, member segmentation, and the gross receipts and net proceeds figures. 13-3302 does not require those records, but they are what show no member took a pecuniary benefit under (B)(1). On our side that is record-keeping after the fact rather than the sale itself. Worth knowing that (B)(3) reaches "management" and "operation" as well as "sales", so keep the sale, the money and the drawing in your members' hands and treat the ledger as your own record of what they did.
- Free event ticketing: for the dinner, gala, or community night around the drawing. This is a separate transaction from the raffle ticket itself.
- Free donation forms: the online-giving option to run alongside a member-conducted raffle. Supporters who want to give beyond a ticket can do so through your donation page.
Zeffy is trusted by 100K+ nonprofits and has helped raise $2B+ for causes across North America, all on a 100% free model for nonprofits.
Are raffles illegal in Arizona?
Raffles are illegal in Arizona if they're run by any entity other than a qualifying tax-exempt organization that meets the 13-3302 requirements. Legal raffles are permitted in the state and are subject to the specific rules covered above, including the one-year continuous existence requirement and the member-only operator rule.
Can I use an online platform to sell raffle tickets in Arizona?
You can sell online, but the sale has to stay yours. A.R.S. 13-3302(B)(3) restricts management, sales, and operation of the raffle to bona fide local members of the sponsoring organization, so a third-party seller running the sale falls outside the rule. The Arizona Department of Gaming's guidance for online sales asks that sales go through your organization's website, that the website be operated by members of your organization, and that purchases be limited to individuals located in Arizona. Note what the rule is not about: the statute contains no provision on payment methods, so taking a card is not itself the issue. ADG also states that no Arizona state agency regulates charitable raffles and recommends independent legal advice.
Is a raffle considered gambling?
Yes. Arizona classifies raffles as a form of gambling under A.R.S. 13-3301, but permits them under the tax-exempt-organization exemption in 13-3302 when the statutory conditions are met.
What type of gambling is legal in Arizona?
Bingo and raffles run by qualifying tax-exempt organizations are among the limited categories of legal gambling in Arizona. Most other gambling is illegal unless it falls under a specific statutory exemption or a tribal gaming compact. A full list of Arizona gambling laws is available here.
3%201.avif)
.webp)
