Arizona Raffle Laws: Complete Legal Guide for Nonprofits
Arizona offers one of the most nonprofit-friendly raffle regulatory environments in the United States. With no state licensing requirements, simplified compliance rules, and recent legislative improvements, the Grand Canyon State makes it easier for charitable organizations to fundraise through raffles while maintaining appropriate oversight.
⚠️ Legal Disclaimer: This guide provides general information about Arizona raffle laws as of 2025. Laws change frequently. Always consult with legal counsel or the Arizona Department of Gaming for current requirements specific to your situation.
✅ Great News for Nonprofits: Arizona significantly improved its raffle laws in 2022, reducing the minimum operational requirement from 5 years to just 1 year, making it much easier for newer nonprofits to conduct fundraising raffles.
Arizona Raffle Laws: Quick Facts
Regulatory Authority:
Arizona Department of Gaming (advisory only)
Licensing Required:
No - no permits, licenses, or registrations
Who Can Hold Raffles:
501(c)(3) nonprofits (1+ year operation)
Minimum Existence:
1 year (reduced from 5 years in 2022)
Maximum Raffles Per Year:
3 raffles per calendar year
Online Sales:
Allowed (Arizona residents only)
Website Requirement:
Must be owned/operated by charity
Third-Party Fee Limit:
Under 15% of net proceeds
Member Participation:
Equal basis with all participants
Arizona's Business-Friendly Approach
Arizona takes a unique approach to raffle regulation that emphasizes nonprofit autonomy while ensuring basic protections:
No State Agency Regulates Charitable Raffles: Unlike most states, Arizona has no dedicated raffle licensing or registration system. Organizations simply must follow established rules to ensure their raffles are legal.
Key Advantages of Arizona's System
No Licensing Fees: Save money typically spent on permits and applications
No Bureaucratic Delays: Start your raffle planning immediately
Simplified Compliance: Follow straightforward rules without complex regulations
Online Sales Permitted: Reach broader audiences through digital platforms
Quick Implementation: No waiting periods for government approvals
Who Can Conduct Raffles in Arizona?
Arizona's eligibility requirements are straightforward and inclusive:
Eligible Organizations Must:
Be tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Have existed and operated in Arizona for at least 1 year (as of September 2022)
Be properly registered with the IRS and Arizona as a nonprofit
Conduct raffles for legitimate charitable purposes
Maintain proper organizational structure and governance
Recent Legislative Improvement (2022)
Major Update: On September 24th, 2022, Arizona legislation reduced the minimum operational requirement from 5 years to just 1 year. This change makes raffle fundraising accessible to newer nonprofits much sooner.
Ineligible Organizations
For-profit businesses or corporations
Individuals (even if donating proceeds to charity)
Political organizations or campaigns
Government entities or agencies
Newly formed nonprofits (less than 1 year of operation)
Organizations without proper 501(c)(3) status
Operational Rules and Restrictions
Annual Raffle Limits
Three Raffle Maximum
Arizona nonprofits may conduct a maximum of 3 raffles per calendar year. This limit helps maintain the charitable nature of raffles while preventing over-commercialization.
Member and Officer Restrictions
Arizona law includes important conflict-of-interest protections:
No Direct Benefits: Organization members, directors, officers, employees, or agents cannot receive direct or indirect pecuniary benefits
Equal Participation: If members participate in raffles, it must be on an equal basis with all other participants
No Special Advantages: Organization insiders cannot receive preferential treatment or early access
Transparent Operations: All raffle activities must be conducted openly and fairly
Sales and Management Requirements
Bona Fide Member Requirement
Only bona fide members of the organization can participate in raffle sales
Only bona fide members can participate in raffle management
Only bona fide members can participate in raffle operations
All in-person ticket sales must be conducted by organization members directly
No third-party sellers or commercial sales agents allowed
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Online Raffle Operations
Arizona is among the most permissive states for online raffle ticket sales:
Online Sales Requirements
Organization Website Only: Sales must be conducted through a website owned and operated by the charity
Arizona Residents Only: Online sales limited to individuals located in Arizona
Proper Verification: Systems must verify purchaser location and eligibility
Secure Transactions: Use secure payment processing and data protection
Member Oversight: Online sales must still involve organization member oversight
Third-Party Service Limitations
15% Fee Limit: Any fees paid to outside agents must remain under 15% of net proceeds
Service Provider Scope: Third parties can provide technical services but not direct sales
Organization Control: The nonprofit must maintain control over all raffle operations
Documentation Required: Maintain records of all third-party service agreements
Charitable Registration Requirements
While raffles don't require specific permits, Arizona nonprofits must meet general charitable organization requirements:
Secretary of State Registration
Initial Registration: File registration statements before soliciting first contribution
Annual Returns: Submit annual information returns for preceding fiscal year
Current Status: Maintain good standing with Arizona Secretary of State
Compliance History: No outstanding violations or compliance issues
IRS Requirements
Current 501(c)(3) determination letter
Annual Form 990 filing compliance
Proper tax-exempt status maintenance
Required financial disclosures and reporting
Conducting Your Arizona Raffle
Arizona Raffle Compliance Checklist
Verify current 501(c)(3) status with IRS
Confirm 1+ year of operation in Arizona
Ensure good standing with Arizona Secretary of State
Check annual raffle count (maximum 3 per calendar year)
Design tickets with clear terms and organization information
Establish member-only sales and management procedures
Set up online sales system (if applicable) for Arizona residents only
Ensure no organization insiders receive improper benefits
Plan fair and transparent drawing procedures
Prepare record-keeping system for financial tracking
Review third-party service agreements (under 15% fee limit)
Required Ticket Information
While Arizona doesn't specify exact ticket requirements, best practices include:
Name of the conducting organization
Organization's contact information
Ticket price clearly displayed
Date, time, and location of drawing
Description of prizes and their approximate values
Terms and conditions of participation
Statement about tax implications for winners
Contact information for questions or complaints
Drawing and Winner Selection
Fair Process: Use impartial, random selection methods
Transparent Operation: Conduct drawings openly with witnesses
Proper Documentation: Record all procedures and results
Winner Notification: Contact winners promptly and professionally
Prize Distribution: Award prizes as advertised in a timely manner
Financial Management and Reporting
Record Keeping Best Practices
While Arizona doesn't mandate specific raffle records, maintain comprehensive documentation:
Complete participant lists with contact information
Financial records of all income and expenses
Prize documentation including sources and values
Winner information and prize distribution records
Third-party service agreements and fee documentation
Drawing procedures and result documentation
Tax Implications
IRS Reporting: Include raffle income on annual Form 990
Winner Tax Forms: Issue 1099 forms for prizes over $600
State Compliance: Follow Arizona tax reporting requirements
Prize Tax Withholding: Consider requirements for large prizes
Common Compliance Issues and Solutions
Note: While Arizona has no specific raffle enforcement agency, violations of charitable fundraising laws can still result in legal consequences through other channels.
Frequent Compliance Issues
Conducting more than 3 raffles per calendar year
Operating without proper 501(c)(3) status
Organizations less than 1 year old conducting raffles
Allowing non-members to manage sales or operations
Organization insiders receiving improper benefits
Selling tickets to non-Arizona residents online
Exceeding 15% fee limit for third-party services
Inadequate financial record keeping
Prevention Strategies
Maintain accurate calendar tracking of annual raffles
Regular verification of tax-exempt status
Clear member identification and training procedures
Written policies for conflict of interest prevention
Geographic verification systems for online sales
Regular review of service provider fee structures
Comprehensive documentation and record keeping systems
Best Practices for Arizona Raffles
Leverage Arizona's Advantages: Take advantage of no licensing requirements for faster implementation
Plan Your Annual Calendar: Strategically schedule your 3 annual raffles for maximum impact
Embrace Online Opportunities: Use Arizona's permissive online sales rules to reach more supporters
Maintain Strong Governance: Implement clear policies even without regulatory requirements
Use Professional Tools: Consider software like rafflr for management and documentation
Document Everything: Maintain detailed records despite minimal regulatory oversight
Train Your Team: Ensure all members understand their roles and limitations
Seek Independent Legal Advice: The Arizona Department of Gaming recommends legal consultation for complex situations
Capitalize on Arizona's Raffle-Friendly Environment
Arizona's streamlined approach to raffle regulation creates exceptional opportunities for nonprofit fundraising. The absence of licensing requirements, combined with recent legislative improvements and support for online sales, makes the Grand Canyon State one of the best places to conduct charitable raffles.
The key to success in Arizona is leveraging these regulatory advantages while maintaining high standards of governance and transparency. With proper planning and documentation, your organization can maximize fundraising potential while building donor trust and community support.
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rafflr helps you capitalize on Arizona's raffle-friendly laws while maintaining professional standards and comprehensive documentation.