Dec. 25 , 2006

The benefits of charitable gaming

By Jenni Sebora

What brought in a little over $67 million last year in charitable contributions in the state of Minnesota?

The answer – charitable gambling.

Over 1,400 Minnesota organizations are licensed to conduct charitable gambling at about 3,300 different locations.

The Lions clubs, fire department relief associations, Booster clubs, and American Legion posts in the cities of Howard Lake, Lester Prairie, Mayer, Montrose, New Germany, Waverly, and Winsted are among those 1,400 organizations.

These licensed organizations may conduct bingo, raffles, and tipboards, operate paddlewheels, and sell pull-tabs.

Pull-tabs are by far the most dominant form of charitable gambling, annually accounting for about 93 percent of gross receipts, with bingo accounting for another 5 percent, Control Board employee Gary Danger noted.

And Minnesota leads the way, being the highest-ranking state in overall charitable gambling gross receipts, due largely to its dominance in pull-tab sales.

In the fiscal year 2005, Minnesota grossed $1.374 billion in charitable gambling receipts, which was a 3.1 percent decrease from 2004.

Almost 82 percent of that amount went back to the players in prizes, and the remainder, a little over 18 percent, went to allowable expenses. Of that, half was paid out in operating expenses, leaving a remaining 9 percent, of which a portion (a little more than 4 percent) went to Minnesota Charitable Gambling taxes, leaving 5.1 percent that actually went to the charitable organizations, or as Dangers explained, approximately 5 cents out of a dollar (charitable gambling gross) went actually to charitable contributions, which equated to $67 million.

The largest single benefactor of charitable gambling is the State of Minnesota. Since 1985, more than $920 million has been paid to the state in charitable gambling taxes.

Allied Charities of Minnesota, the statewide organization of charitable gambling groups, which supports and lobbies for these non-profit groups, is currently lobbying to reduce charitable gambling taxes, Allied Charities board member Roger Olson noted.

“We, as non-profits, pay more taxes than a lot of other organizations that are for profit,” Olson said.

Among the other items that are part of Allied Charities’ lobbying agenda are to change the name from “lawful purpose” back to charitable gambling, and support for a statewide smoking ban, Olson noted, who is also the legislative chairman for Allied Charities.

Smoking bans, as well as the economy, Olson noted, are contributing to the decline in sales.

Counties, Hennepin and Ramsey, which have county-wide smoking bans, have experienced a significant decline in charitable gambling sales, Olson explained.

Other counties, such as McLeod, presently allow for bars to be exempt from the no-smoking status.

The support of a statewide smoking ban is to attempt “to keep everyone on the same playing field,” Olson noted.

Olson added that the economy, itself, is hurting the sales and ultimately, the charitable contributions that go out.

“The revenue isn’t there,” Olson said. Consequently, charitable gambling organizations have to maintain the cost of business with expenses increasing, which means less to give away, Olson added. Howard Lake Lions Club gambling manager Sam Gruenhagen agreed.

“Small operations are being run out of business – not enough sales, can’t meet expenses – expenses are staying the same,” Gruenhagen said of charitable gambling. Waverly Lions Club President Dave Rice agreed, noting that there has been a decline in charitable gambling sales, which equates to less money to give away.

Olson noted that a few things will have to happen, including community support of these various non-profit organizations.

“As the cost of doing business increases, it behooves everyone to run a tighter ship,” Olson also added.

As profits not spent for expenses can only be spent for “lawful purposes,” who is benefiting from charitable gambling in Minnesota?

Olson broke it down in percentages: 33.42 percent to festival organizations (non-profit); 22.11 percent to government; 20.1 to youth; 6.41 to relieve poverty, disability or homelessness; 5.80 to schools; 3.99 to military and humanitarian service; 3.78 to scholarships; 2.46 to churches; .86 to grooming trails; .43 to food shelves and dining and nutritional programs; .27 to wildlife management; .23 to community arts organizations and programs; .05 to problem gambling treatment.

And, as Gruenhagen said of charitable gambling money taken in, “Every penny that we take in, goes out. We don’t and can’t keep a penny. It’s for service to the community.”

Each of the organizations must file a monthly charitable gambling report tracking receipts, expenses, donations, and taxes paid to the Department of Revenue. And each organization must have a charitable gambling manager.

A charitable gambling manager must go through initial training, pass a test, and take continuing education classes regarding charitable gambling, Gruenhagen explained.

And it seems, most of our local non-profit organizations keep those charitable contributions local.

Lester Prairie Lions Club long-time member Joe Miller noted that almost 99 percent stays local to support the local school, its community, and community organizations, such as the Boy Scouts and summer recreation – youth baseball and softball.

Rice and Gruenhagen agreed.

The Waverly Lions Club supports numerous civic, school, church, and youth events, as well as supporting state and national Lions projects, such as the Lions Leaderdog program and the Sight First program, but Rice noted that most of its club’s contributions do stay local, and it is the same for Howard Lake Lions Club, Gruenhagen noted.

The Hollywood Booster Club also supports local youth events and activities through charitable gambling proceeds.

“Charitable gambling is one of the most effective community-based fundraising activities available to Minnesota non-profit /tax-exempt organizations today, and is an important community resource,” an executive director of the Allied Charities of Minnesota, King Wilson commented.

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