American Legion v. Az Gaming
1 CA-CV 15-0606
| Ariz. Ct. App. | Oct 25, 2016Background
- Appellants (American Legion and VFW posts), tax‑exempt under A.R.S. § 43‑1201(A), ran raffles using third‑party vendor RSG’s equipment and software.
- Appellants paid RSG on a per‑ticket basis up to 50% of raffle revenue.
- An Arizona Department of Gaming agent ordered the raffles stopped and threatened seizure of RSG equipment; Appellants sought declaratory relief that their raffles fit the nonprofit raffle exemption in A.R.S. § 13‑3302(B).
- Gaming moved for judgment on the pleadings; the superior court granted the motion, finding the raffles unlawful.
- On appeal, the Court of Appeals accepted the complaint’s facts as true and reviewed statutory interpretation de novo, affirming the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellants’ raffles fall within the § 13‑3302(B) nonprofit raffle exemption | Appellants alleged compliance with the statute’s requirements (no pecuniary benefit, local members manage raffles, five‑year existence) | Gaming argued the vendor arrangement (percentage payments to RSG) constituted indirect participation/benefit, disqualifying the raffles | Held: Raffles not exempt; payments to RSG based on ticket sales constituted indirect participation/benefit under § 13‑3302(B)(3) |
| Whether conclusory statutory recitations in the complaint suffice to survive judgment on the pleadings | Appellants relied on pleaded legal conclusions asserting statutory compliance | Gaming argued conclusory allegations without supporting facts fail Rule 8 notice pleading | Held: Conclusory parroting of statutory language insufficient; factual allegations required |
Key Cases Cited
- Estate of Ethridge v. Recovery Mgmt. Sys., Inc., 235 Ariz. 30 (App. 2014) (pleaded facts accepted as true on judgment on the pleadings)
- Giles v. Hill Lewis Marce, 195 Ariz. 358 (App. 1999) (standard for Rule 12(c) judgment on the pleadings)
- Mobile Cmty. Council for Progress, Inc. v. Brock, 211 Ariz. 196 (App. 2005) (de novo review of legal rulings on appeal)
- Cullen v. Auto‑Owners Ins. Co., 218 Ariz. 417 (2008) (conclusory legal statements insufficient under Rule 8)
- Halt v. Gama ex rel. Cty. of Maricopa, 238 Ariz. 352 (App. 2015) (statutory interpretation reviewed de novo)
- Benevolent & Protective Order of Elks No. 2656 v. State Dept. of Liquor Licenses & Control, 239 Ariz. 121 (App. 2016) (payments to a vendor based on percentage of sales constitute indirect participation under § 13‑3302(B))