NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT 

PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

AMERICAN LEGION POST 62; AMERICAN LEGION POST 105; 

VETERANS OF FOREIGN WARS POST 1433; AMERICAN LEGION 

POST 1; VETERANS OF FOREIGN WARS POST 1796, Plaintiffs/Appellants,

v.

ARIZONA DEPARTMENT OF GAMING, Defendant/Appellee.

No. 1 CA-CV 15-0606

Appeal from the Superior Court in Maricopa County

No. CV2015-006992

The Honorable Patricia A. Starr, Judge

AFFIRMED

COUNSEL

Laman Law Office PLLC, Phoenix

By Charley L. Laman

Co-Counsel for Plaintiffs/Appellants

Brian A. Hatch PLLC, Scottsdale

By Brian A. Hatch

Co-Counsel for Plaintiffs/Appellants

Arizona Attorney General’s Office, Phoenix

By Roger L. Banan

Counsel for Defendant/Appellee
AMERICAN LEGION, et al. v. AZ GAMING

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Andrew W. Gould delivered the decision of the Court, in 

which Judge Peter B. Swann and Judge Patricia A. Orozco joined.

G O U L D, Judge:

¶1 Appellants American Legion Posts 1, 62, and 105 and 

Veterans of Foreign Wars Posts 1433 and 1796 (collectively “Appellants”) 

challenge the superior court’s decision granting judgment on the pleadings 

to the Arizona Department of Gaming (“Gaming”). The superior court 

found Appellants’ raffle fundraisers, as described in their complaint,

constituted illegal gambling. We affirm for the reasons set forth below.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Because the superior court granted judgment on the 

pleadings, we state the well-pleaded facts from Appellants’ complaint

below and accept them as true.

1 Estate of Ethridge v. Recovery Mgmt. Sys., 

Inc., 235 Ariz. 30, 31 n.1 (App. 2014). 

¶3 Appellants are tax-exempt organizations under Arizona 

Revised Statutes (“A.R.S.”) § 43-1201(A). As part of their fundraising 

efforts, Appellants conducted raffle2 games using “gaming devices, 

software, tickets and related equipment” provided by third-party vendor 

 

1 Both parties agree the affidavit of Dennis Pogue, attached to 

Appellants’ complaint, is incorporated into the pleadings and is a part of 

the complaint. See Ariz. R. Civ. P. 10(c) (“A copy of a written instrument 

which is an exhibit to a pleading is a part thereof for all purposes.”).

2 We assume, without deciding, that Appellants’ fundraisers were in 

fact “raffles.” The term raffle is not defined in A.R.S. § 13-3301, nor is it 

defined under Arizona’s case law. The term is defined in the Arizona 

lottery regulations as “the selling of numbered tickets, where each ticket 

has an equal chance of winning a prize in a random drawing held after the 

completion of all ticket sales." Arizona Administrative Code, section R 19-

3-201 (18).
AMERICAN LEGION, et al. v. AZ GAMING

Decision of the Court

3

RSG. Appellants paid RSG “on a per raffle ticket basis” up to 50 percent of 

the revenue generated in each raffle. 

¶4 In early 2015, a Gaming agent visited Appellants’ locations, 

instructed them to discontinue their raffles, and threatened to seize the RSG

equipment. Appellants discontinued the raffles then sought a declaratory 

judgment that the raffles were permitted under A.R.S. § 13-3302(B). 

Gaming moved for judgment on the pleadings, arguing that Appellants’ 

raffles as described in their complaint and their accompanying affidavit did 

not fall within that statutory exemption. The trial court granted Gaming’s 

motion. Appellants timely appealed. 

DISCUSSION

¶5 A Rule 12(c) motion for judgment on the pleadings tests the 

sufficiency of the complaint; judgment should be entered for the defendant 

if the complaint fails to state a claim for relief. Giles v. Hill Lewis Marce, 195 

Ariz. 358, 359, ¶ 2 (App. 1999). On appeal, we assume the complaint’s wellpleaded factual allegations are true but review legal rulings de novo. Mobile 

Cmty. Council for Progress, Inc. v. Brock, 211 Ariz. 196, 198, ¶ 5 (App. 2005). 

¶6 The parties agree that Appellants’ raffles constitute gambling

under A.R.S. § 13-3301(4). The parties also agree that Appellants may 

lawfully conduct gambling if it falls within A.R.S. § 13-3302(B), which 

provides, in relevant part: 

An organization that has qualified for an exemption from 

taxation of income under section 43-1201 . . . may conduct a 

raffle that is subject to the following restrictions:

1. The nonprofit organization shall maintain this 

status and no member, director, officer, employee or 

agent of the nonprofit organization may receive any 

direct or indirect pecuniary benefit other than being 

able to participate in the raffle on a basis equal to all 

other participants.

2. The nonprofit organization has been in 

existence continuously in this state for a five year 

period immediately before conducting the raffle.

3. No person except a bona fide local member of 

the sponsoring organization may participate directly 
AMERICAN LEGION, et al. v. AZ GAMING

Decision of the Court

4

or indirectly in the management, sales or operation of 

the raffle.

A.R.S. § 13-3302(B)(1)-(3). Appellants contend they sufficiently alleged that 

their raffles met all of these requirements. We disagree.

I. Appellants’ Conclusory Allegations of Compliance Are Not 

Entitled to Deference.

¶7 Appellants first cite their allegations that “[n]o member, 

director, officer agent or employee . . . receives a pecuniary benefit other 

than participation in [the] raffles” and that “[o]nly [Appellants], its [sic] 

members and officers are solely involved in the management, operation or 

sales of the raffle.” These allegations simply parrot the language of § 13-

3302(B) quoted above; such “conclusory statements are insufficient to state 

a claim upon which relief can be granted,” because “a complaint that states 

only legal conclusions, without any supporting factual allegations, does not 

satisfy Arizona’s notice pleading standard under Rule 8.” Cullen v. AutoOwners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008). 

II. Appellants’ Arrangement with RSG Violated § 13-3302(B)(3).

¶8 Appellants next contend the trial court erred in interpreting § 

13-3302(B)(1), (3) and (4). We review statutory interpretation questions de 

novo. Halt v. Gama ex rel. Cty. of Maricopa, 238 Ariz. 352, 354, ¶ 9 (App. 2015). 

Because we conclude Appellants’ raffles did not comply with A.R.S. § 13-

3302(B)(3), and the trial court relied upon subsection (B)(3) in its ruling, we 

need not address the parties’ arguments regarding subsections (B)(1) and 

(B)(4). 

¶9 We interpreted subsection (B)(3) earlier this year in Benevolent 

& Protective Order of Elks No. 2656 v. State Dept. of Liquor Licenses & Control, 

239 Ariz. 121 (App. 2016). In Benevolent, we held that “the receipt of lease 

payments ‘based upon a percentage of sales or receipts from conduct of the 

games’ constitutes ‘direct or indirect participation in sales or operation of 

the raffle’” within the meaning of subsection (B)(3). Id. at 125, ¶ 26 (quoting 

1990 Ariz. Op. Att’y Gen. 57 (1990)). As a result, Appellant’s raffles, which 

involved payments to RSG “based on the number of raffle tickets sold” of 

up to “50% of the revenue generated by the raffle” do not qualify for a 

gambling exemption under subsection (B)(3). See Benevolent, 239 Ariz. at 

125, ¶¶ 26-27 (finding raffle was unlawful in part because vendor “received 

55% of the net proceeds”). 
AMERICAN LEGION, et al. v. AZ GAMING

Decision of the Court

5

¶10 Appellants contend “[t]he statutes . . . do not make it illegal 

for an outside company who sells or provides prizes, equipment, printed 

materials, and the like from so doing, or from making a profit in so doing.” 

We agree that subsection (B)(3) does not bar all such arrangements. 

However, it does bar arrangements like the raffles in this case where 

payment is “based upon a percentage of sales or receipts from conduct of 

the games.” Id. at 125, ¶ 26. 

CONCLUSION

¶11 We affirm the trial court’s ruling granting judgment on the 

pleadings to Gaming. We also award Gaming its taxable costs incurred on 

appeal upon compliance with Arizona Rule of Civil Appellate Procedure

21.