## Facts

- Delaware’s charitable-gaming regulations required a raffle permit before selling tickets for any raffle with a prize exceeding $5,000, required raffle net proceeds to be used for the charitable purpose stated in the permit application, and imposed recordkeeping, reporting, and ticket-content requirements.
- In July 2015, AmVets Post No. 2 submitted a raffle-permit application to the Delaware Division of Professional Regulation (DPR), listing a charitable purpose and stating maximum prize values for drawings.
- The application did not disclose that the raffle would operate as a progressive jackpot with funds carrying over from drawing to drawing.
- The Board approved AmVets’ application and issued permits for weekly raffles from August 1 through October 31, 2015.
- On October 10, 2015, DPR learned AmVets had been running a progressive raffle for more than six months and that the jackpot was about $140,000, even though AmVets’ permit materials listed the total value of prizes for the October 10 drawing as $600.
- DPR inspectors found additional compliance problems: inaccurate official raffle reports, raffle tickets missing required information, and missing records for ticket sales, winners, and charitable contributions.
- DPR also determined the raffle proceeds were not being used for the stated charitable purpose and instead were being rolled into the progressive jackpot.
- The State filed an administrative complaint with the Delaware Board of Charitable Gaming alleging violations of the Board’s regulations arising from AmVets’ raffle activities.
- After a hearing, a DPR hearing officer found AmVets did not maliciously deceive regulators but was not fully truthful about how the raffle would be played; the officer also found the raffle exceeded the $5,000 prize threshold by July 2015 and that AmVets sold tickets after that point without a valid permit.
- The hearing officer recommended a $19,000 fine for holding raffles without a valid permit, improper ticketing procedures, and failures in recordkeeping and accurate reporting; the Board adopted the recommendation and imposed the penalties.
- AmVets appealed the Board’s decision to the Delaware Superior Court.

## Issues

1. Whether substantial evidence supported the Board’s findings that AmVets ran a progressive raffle and otherwise violated charitable-gaming rules on permitting, reporting, ticketing, and recordkeeping.
2. Whether the Board committed legal error in interpreting and applying the charitable-gaming statutes and regulations to AmVets’ raffle conduct, including the permit requirement tied to the $5,000 prize threshold.
3. Whether the Board’s penalties (including fines and restrictions) were within its statutory authority and not arbitrary, capricious, or an abuse of discretion.

## Decision

- The Delaware Superior Court affirmed the Delaware Board of Charitable Gaming’s decision.
- The court held the Board’s factual findings were supported by substantial evidence in the administrative record.
- The court rejected AmVets’ legal challenges to the Board’s construction and application of the governing statutes and regulations, concluding the Board’s reading was reasonable and consistent with the regulatory scheme controlling charitable gaming.
- The court upheld the sanctions as within the Board’s authority and declined to substitute its judgment for the agency’s choice of penalty where the Board acted within lawful bounds.
- In a later order, the court denied AmVets’ motion for reargument.

## Legal Principles

- On judicial review of an administrative agency decision, the Superior Court determines whether the decision is supported by substantial evidence and is free from legal error; it does not reweigh evidence or make credibility determinations.
- “Substantial evidence” is relevant evidence that a reasonable mind might accept as adequate to support a conclusion.
- Courts generally give deference to an agency’s reasonable construction of statutes and regulations the agency is charged with administering, so long as the construction is consistent with the text and purpose of the law.
- An agency’s selection of sanctions will be upheld when the agency acts within its statutory authority and the sanction is supported by the agency’s findings; the reviewing court will not replace the agency’s judgment merely because a different penalty could have been chosen.
- A motion for reargument is limited and is not a method to repeat arguments already rejected or to raise arguments that could have been presented earlier.

## Conclusion

The Superior Court affirmed the Board’s sanctions against AmVets because the record contained substantial evidence that AmVets operated an undisclosed progressive raffle, sold tickets without a valid permit once prizes exceeded the $5,000 threshold, filed inaccurate reports, failed to keep required records, and sold tickets that did not meet regulatory requirements, and because the Board reasonably applied the governing charitable-gaming rules and acted within its authority in imposing penalties.


AmVets Post No. 2 v. Delaware Board of Charitable Gaming, 2017 WL 4403333 (2017)