Where's the 'charity' in charitable gambling? | StarTribune.com
Response to the The StarTribune.com article by Jean Hoppensperger
Hoppensperger did a marginal job representing the current issues of charitable gaming in the state of Minnesota. Charitable gaming in past years had been a huge contributor to charities and they still make significant contributions. Just not as much. There was a time when most gaming managers of charitable gaming operations could budget a month’s revenues based on the revenue’s of the same month in the prior year. This is true no more. What should have been researched and explained better in Hoppensperger’s article is why?
Hoppensperger uses a spokesperson who is out of the loop on current issues
Tom Nelson, the former state lawmaker who wrote the measure that legalized pull tab gambling was quoted in the article as saying, “It looks like it became a big business." An organization has to make the commitment to make it a business or get crushed by all the rules, regulations and expenses. Errors could mean fines, and closing down the operation. As a note, any fines must be paid from a nongambling source of funds.
Nelson was also quoted, “There was never an intent to fund buildings or staff.” There are limitations on how much that is allowable for rent and expenses at a gambling location. Nelson, now superintendent of Stillwater Area Public Schools, is too far removed from being a credible spokesperson for why charitable gaming donations are so low. First of all, pull tabs had been legalized in Minnesota in 1981 (Reference: http://www.house.leg.state.mn.us/hrd/pubs/gambhist.pdf). Since pull tabs were legalized 30 years ago, there had been many changes in the laws, rules and the gambling environment.
Secondly, most people who work for gaming operations are part time people and volunteers who work for each charitable gaming venture who are in the trenches selling pull tabs making minimum wages. No one who sells pull tabs make a career out of it. Most gaming operations have a part time gaming manager who needs to be flexible enough with their full time day jobs to take off of work at a moment’s notice to address any site issues for the charitable gaming enterprise including going in front of the Gambling Control Board to answer their concerns.
The Gaming Environment
People should take a look at the whole picture. People are not hanging out in bars as much to participate in pull tabs, as they used to. The Minnesota Gambling Control Board’s compliance officer, Gary Danger, talked about what he sees as the causes of declining charitable gambling sales for organizations — the smoking ban, recession, and competition for discretionary income such as the lottery, horse racing, tribal casinos, and entertainment in sports and arts venues (Reference: http://unioneagle.com/index.php?option=com_content&task=view&id=4907&Itemid=30)
How much are the gaming operators responsible for giving?
There is a 5 star rating system that is used by the Minnesota Gambling Control Board and Minnesota Gambling operations. This helps rate a gambling organization on how much of the money is spent on Lawful Purposes Expenditures (donations). Lawful purpose expenditures include charitable contributions, payments to local units of government, state gambling taxes, and building expenses related to veteran and fraternal organizations. Organizations with less than a three star rating are placed on probationary status. Probationary organizations must increase their rating to three or more stars by the end of the following fiscal year to avoid possible sanctions.
What Hoppensperger should have dug into
She missed the fact that in 2010 the average Minnesota charitable gaming operations paid out 81.7% of gross revenue in prizes. Then, on average out of what is left, 56% goes towards Allowable Expenses. Then from the Net, Taxes and Fees are 22.1% and in 2010 some of the larger gaming operations had to pay Taxes and Fees over 42% of their Net. It looks like State taxes and fees are taking more from gambling than the charities should be getting. Then 4.4% goes for Other Lawful Purpose Expenses which include miscellaneous allowed items such as audit costs, real estate taxes, and veteran utilities. For the average charitable gambling operation, that leaves 17.8% for Charitable Donations. (For more information see: http://www.gcb.state.mn.us/PDF_Files/FY10FinancialGrossRec.pdf)
In the past the state representatives and the governors saw charitable gaming as a vice and yet able to take gambling money in taxes. The Minnesota government has been starving the charitable gaming organizations that could be giving more of the money to charities. If Minnesota continues to squeeze these charitable organizations then more will continue to end their operations and then the state would have to compensate for the lost tax revenue by increasing more taxes on the remaining charitable gaming organizations or from somewhere else.
The link below is a great article that supports what I'm saying.
See also: King Wilson: No lack of charity, nor of taxes paid | StarTribune.com
http://www.startribune.com/opinion/commentary/112632964.html?elr=KArksc8P:Pc:Ug8P:Pc:UiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
More reciently...
- Here is a link to the Letter of the Day from Star Tribune by ROBERT MALBY, EDINA (Last update: January 8, 2011 - 8:40 PM) http://www.startribune.com/opinion/letters/113103614.html?elr=KArksc8P:Pc:U0ckkD:aEyKUiD3aPc:_Yyc:aUbPi87EK_g:D_vqnH_nchO7DU John
I first became involved in Charitable Gaming back in 1987. Back then it was a different animal. The time requirements of a gaming manager were much less than they are today. Today only the smallest of operations can manage with a volunteer manager and possibly totally volunteer pull tab staff.
ReplyDeleteIt would be interesting to graph all the areas you mentioned in your article, in five year increments. I suspect that this graph would show that as taxation increased, donations decreased in similar percentage.
That brings to question, what is the tax used for? Does it really cost the state that much to manage charitable gaming in this state?
@ Mr. Nobody - Thank you for your comment!
ReplyDeleteYes it would be interesting to see a graph of the areas in my article. Those reports are in a PDF format and in a Excel spreadsheet format it would be a easy task to graph the breakdowns.
I believe the all taxes aren't necessarily used to manage charitable gaming they are put into the state general fund.
It's funny how the state takes advantage of each of the charitable organization who with less taxes would be able to put back more money into the community.
In the past I've seen charitable gaming organizations give money to be spent in park improvements, fire department equipment, and police department equipment and as well money would go for scholarships, and other 501(c)(3) organizations.
All these past donations prevented municipalities from levying the money against property taxes for the improvements.
To me, these high gaming taxes against charitable gaming are just a donation to the state with the worthy charities getting a small percentage of the remainder.
Your Friend,
John A Stefani