Special Subcommittees of the House Committee on General Laws and Technology Studying Charitable Gaming Laws

September 15, 2009

The Special Subcommittees of the House Committee on General Laws and the Senate Committee on General Laws and Technology Studying Charitable Gaming Laws met at the General Assembly Building in Richmond.

Presentations

Staff Report
Staff provided a report on the three public hearings that were held on behalf of the Special Subcommittees to obtain comments and suggestions from all aspects of the charitable gaming community in Virginia. A total of 87 people attended the hearings, which were conducted in three regions of the state - Northern Virginia (Annandale), Tidewater (Norfolk), and Southwestern Virginia (Roanoke). Staff reported that while organizations that conduct charitable gaming were well represented, other sectors, including the charitable entities that benefit from the gaming operations and individuals who participate by playing the games, were not as well represented.

Staff advised that after the completion of public comment for each hearing, there was "town hall" type discussion on how charitable gaming is conducted in the state. These discussions were instrumental in developing consensus on some issues and generating several suggestions for legislative changes. In addition, Department of Charitable Gaming (DCG) staff at each hearing helped answer specific questions regarding the agency's processes and regulatory practices and moved towards developing a dialogue with the charitable gaming community.

Staff advised that over the course of the public hearings several themes appeared with some consistency and around which some consensus developed. These included the following key points:

• General objection to increasing the regular per-game bingo prize amount from $100 to $250.
• General agreement that the paperwork involved with obtaining and maintaining a permit is too complicated.
• General objection to increasing the number of gaming nights from two nights to four nights per week.
• General agreement to decrease the amount of time between gaming sessions from one hour to 1/2 hour.
• General agreement to use innovation to make the games more exciting.

For a complete description of the discussion regarding each item above, please see the Special Subcommittee’s website. Staff also advised that over the course of the public hearings several specific suggestions were made regarding legislation or changes that would require legislative action to implement. These included:

• Establishing DCG as a special fund agency similar to state entities charged with regulating professions and occupations. This would allow DCG to use permit and audit fees to directly support the agency's operations and provide enhanced service and support to permit holders.
• Reviewing the 10% threshold to ensure that it adequately includes all expenses related to gaming and makes appropriate allowance for the size of the operation and whether the organization owns or rents the gaming location.
• Removing Winner-Take-All games and instead increase the number of Lucky 7-type games from one to three per night and allow each game to start at $1,000 rather than the current $500.
• Allowing two $500 jackpot games rather than one $1,000 jackpot game.

Mike Sheffield, Division of Charitable Gaming, Department of Agriculture and Consumer Services
Mike Sheffield, a member of the Charitable Gaming Board, stated that he had received a communication indicating that, effective January 1, 2010, the Division would be merged with the Division of Consumer Protection within the Department of Agriculture and Consumer Services. Betty Bowman, current Executive Director of the Division of Charitable Gaming, indicated that she would be retiring.

Chairman Jones asked what would be the level of expertise related to charitable gaming when the transfer would occur in January 2010. Ms. Bowman stated that charitable gaming expertise was not limited to her and that all of the staff as far as she knew would remain. She indicated that when she came to the Division in 2003, there were 35 employees. When the merger with the Department of Agriculture and Consumer Services occurred the number of employees was at 30. This number was lowered to 23 by November of 2008 and as of the date of the meeting there were 21 employees.

Public Comment

Chuck Lessin, Charitable Bingo Association
Mr. Lessin stated that the groups that he represents believes that there needs to be a Department of Charitable Gaming and that more supervision was needed rather than less to prevent misappropriation and misuse. He indicated that most of the members of his organization would adamantly oppose the merger. Mr. Lessin stated that he would be presenting a compilation of 15 points of recommendation on behalf of his organization to the Special Subcommittees at a future meeting.

Bill Tennyson, Hampton Elks Lodge
Mr. Tennyson stated that bingo gaming has significantly decreased in recent years. He asserted that the Elks are against any significant increase in the prize amounts and increasing the number of playing nights. He indicated that his organization was not concerned about the decrease in the amount of time between gaming sessions.

Kevin Carol, Legislative Chair, Fraternal Order of Police of Virginia (FOP)
Mr. Carol provided written comments containing the positions taken by the FOP relating to the regulation of charitable gaming. According to the statement, the FOP supports the re-calculation of the use-of-proceeds formula for charitable giving to be based on gross receipts minus actual expenses incurred in the operation of the bingo game. The new adjusted gross use-of-proceeds amount would exclude (i) prize money, (ii) cost of bingo paper/computers used to operate the game, (iii) security needed to keep the players safe, and (iv) cost of audit fees. The FOP opposes raising the jackpot amounts above the present level and changing the allowable playing days from two to four. Finally, the FOP takes the position that the audit fee amounts to a tax and that if an audit fee is charged, then it should go directly to the support of the Division and not to the state's general fund.

Ronald Hicks, Virginia Elks
Mr. Hicks stated that no major changes should be made to the current law. He expressed concern that too many changes would move bingo to more of a gambling situation and less of a recreational activity.

David Bailey, Virginia State Firefighters Association
Mr. Bailey expressed concern on behalf of the Association that the Division was in his view being downgraded. He also stated that according to
§ 18.2-340.31 of the Code of Virginia, all money collected by the Division in terms of permit and audit fees should go to the Division.

Discussion of Special Subcommittees’ Work Plan

The Special Subcommittees then discussed the status of the study and how it will proceed. Chairman Jones asked Ms. Bowman if the current employees are able to handle the workload to which Ms. Bowman replied that the staff struggles to keep up with the workload. Chairman Jones then asked approximately what percentage of staff time is dedicated to assisting charitable organizations meet the use-of-proceeds requirement. Ms. Bowman stated in the past the practice was to go onsite to assist the organization, but that because of staff cuts assistance has been provided via telephone. She stated that the Division has four auditors, when there used to be 10, and that they try to perform audits every three years. In addition, the Division attempts to perform inspections of every gaming site three or four times per year. Currently the Division takes in approximately $3.2 million in fees and of that amount, $1.7 million goes to the direct support of the agency. The remainder is deposited in the general fund. There was discussion among the members on the information received during the meeting.

Chairman Jones directed staff to assemble all suggestions and disseminate them to the members at least one week before the next meeting. Any organization or group that wants to have a suggestion considered would need to send them to staff to be included in the document that will be sent to the members prior to the next meeting.

Next Meeting

The next meeting dates will be posted on the Special Subcommittee’s website and the General Assembly calendar as soon as information is available.

Chairman:
The Hon. S. Chris Jones

For information, contact:
Maria Everett, Amigo Wade, DLS Staff