Virginia Regulatory Town Hall
Department of Agriculture and Consumer Services
Department of Agriculture and Consumer Services, Charitable Gaming
Charitable Gaming Regulations [11 VAC 20 ‑ 20]
Action Promulgation of Charitable Gaming Regulations by Department of Agriculture and Consumer Services, including electronic gaming provisions
Stage Proposed
Comment Period Ended on 11/23/2022
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11/16/22  10:43 am
Commenter: Ed Mann Adjutant/Quartermaster VFW Dept. of Virginia

Proposed Charitable Gaming Regulation

Comments on Recent Changes to Charitable Gaming Laws

I am Ed Mann, a member of the Veterans of Foreign Wars, and I represent The Department of Virginia

Thank you for the opportunity to comment on the Promulgation of Charitable Regulations by the Department of Virginia. The 69-page document is comprehensive and covers charitable gaming open to the public (bingo) and gaming open to only members and occasional guests of the organization in the social quarters. Current rules for proceeds expenditures of charitable gaming open to the public (bingo) are already in effect and followed. Compliance is monitored through quarterly and annual reporting with periodic inspections and audits. The VFWs in Virginia have strived to comply with the Virginia Charitable Gaming Regulations and will continue to do so. However, the proposed changes in the regulations will have severe negative impact on the VFWs. Some of these changes are so severe that they will likely result in curtailment of mission requirements and possibility closure of the Post. I offer the following comments and concerns.

The inclusion of the Social Quarter’s gaming into the reporting requirements will have significant impact on all concerned. However, the specific impacts will vary depending on the operations of the Post or Lodge.

The Social Quarters of qualified Posts have been exempted from the rules governing the use of charitable gaming proceeds as defined by the Code of Virginia for more than 20 years. Many of the Posts depend on the proceeds from charitable gaming in their social quarters to supplement Post operations and provide support and benefit to the members that fall within the stated mission of the organization.

A primary mission of the VFW is to help all veterans and their families and to foster camaraderie among our veterans. IRS Publication 3079 states one of the purposes of a veteran’s organization is “To provide social and recreational activities for its members.” The social quarters are a crucial tool for the VFW to assist in accomplishing the mission.

The new requirements being proposed are going to require major changes in the way business is conducted within our social quarters. In fact, it may cause some Posts to discontinue or curtail activities.

Specifically, the definition on Page 4 of “Reasonable and proper business expenses” means the same term as defined in Section 18.2-340.16 of the Code of Virginia, except that salaries and wages of employees whose primary responsibility is to provide services for the principal benefit of an organization’s members shall not qualify as a business expense.

The current regulations are geared to volunteer labor. This is the practice for bingo that is open to the public, however, almost all social quarters are staffed with paid employees and serve only members and qualified guests. To obtain and maintain a Virginia Charitable gaming permit, the activity must maintain its nonprofit 501 (c)(19) status. The federal code recognizes several activities that a 501 (c)(19) must provide, and one of those requirements is “Providing social and recreational activities for their members.” The use of proceeds from charitable gaming are critical for execution of this mission.


A large Post filed the 3rd quarter report for non-electronic gaming before the October 23, 2022 instructions were provided. Under the results previously required they would have qualified for a 13.275% use of proceeds.

Using the October 23, 2022 instructions which include the Social Quarters Receipts, the revised report for the same post reflects the UOP of 10.234%.

Under the amended rules, this Post was able to meet the 10% requirement. However, if prepared using the proposed regulations that exclude the use of building and utility expenses from the UOP, the result is the percentage falling to 2.5%. It will be difficult, if not impossible, for this Post to comply with the UOP requirements being proposed. The building and its operation are critical to being able to participate in charitable gaming.

The new requirements mandate an on-site manager and workers at all times; this is a requirement that cannot be filled with volunteers and will require paid employees due to the sheer number of hours required. These paid employees must supervise operating the gaming in the social quarters through accounting, bank deposits, cleaning, maintenance, security, and paying winners.

Code of Virginia 18.2-340.16, Definitions, Paragraph 15, Sub-Paragraph 5, states ”Reasonable and proper business expenses” means business expenses actually incurred by a qualified organization  in the conduct of charitable gaming and not otherwise allowed under this article or under Department regulations on real estate and personal property tax payments, travel expenses, payments of utilities and trash collection services, legal and accounting fees, cost of business, fixtures and office equipment and cost of acquisition, maintenance, repair, or construction of an organizations real property.  For the purpose of this definition salaries and wages of employees whose primary responsibility is to provide services for the principal benefit of an organization’s members may qualify as a business expense, if so determined by the Department.



Request the Gaming Commission allow the salaries and wages of the employees to be charged as expense to the gaming accounts, with the portion directly attributable to gaming to be charged to UOP.

On Page 5, Paragraph D of the proposed regulations, in accordance with Section 18.2-340.19.A.1 of the Code of Virginia, as a condition of receiving a charitable gaming permit or authorization to conduct electronic gaming, an organization shall use a minimum percentage of its charitable gaming receipts for lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized as follows:

1.For all charitable gaming other than electronic gaming, the minimum percentage shall be 10% of its gross receipts.

2.  For electronic gaming, the minimum percentage shall be 40% of its electronic adjust gross receipts.

The proposed code deletes the use of building expense as a UOP. The current code allows it. The operation and maintenance of the facility is required to be able to operate charitable gaming. The failure to allow these costs (as have been allowed in the past) will likely result in a significant number of organizations to fail to meet the minimum percentages and thereby losing their gaming permits.



Request the Commission to restore the language that is in the current Section 18.2-340.19 A.1.and include it the proposed Section 18.2-340.19 A 1 to allow property expenses to be used as UOP.


On Page 5 of the proposed Regulations, within Paragraph D, the proposed guidelines for Use of Proceeds(UOP) require that 40% of adjusted gross receipts be expended as UOP. As the legislation was being formed there was considerable discussion on whether to use gross or net receipts in this determination for electronic pull tabs. At the root of the discussion was that electronic pull tabs generated such large numbers it would be difficult to meet the 10% of gross receipts for UOP, so it was settled on using adjusted gross receipts. However, we believe 40% of Adjusted Gross Receipts is excessive and will be difficult, if not impossible, for most organizations to achieve. The issue is further aggravated by not being able to charge the direct salary costs to the proceeds, and the inability to use the funds to support membership activities that foster camaraderie among the membership as our charter requires. Current guidelines require donations to outside charities while ignoring the fact we are the same type of charity and constantly helping ANY individual veterans and/or their families in need, not just our membership. Further, current UOP guidelines do not allow the use of these funds for promoting membership activities such as membership appreciation events. We believe that these activities are crucial to fulfilling the stated mission of the VFW.



Request the Commission adjust the proposed electronic UOP of 40% down to 10% of Adjusted Gross Receipts to allow the organizations to support the charitable gaming operations and have sufficient funds to operate the Posts as our charter requires and allow use of funds to support membership functions.


      Other Concerns

The instructions for the new accounting and reporting requirements were issued on October 23, 2022 and were to be implemented after the fact, actually starting on July 1, 2022. As previously discussed, the Post had not been required to use and track expenditures as required by the current instruction. In most cases the Post did not have separate bank accounts for paper pull tabs in the social quarters separate from the electronic pull tabs in the social quarters. The Post were using funds for purposes not allowed under charitable gaming guidelines.




Request the Department establish a grace period to allow Posts time to align their accounting practices and adjust their business practices to comply with the gaming regulations without penalty.

On Page 21, Paragraph A.2, the proposed regulations require that a reconciliation form be completed and signed within 48 hours by the gaming manager. The concern is that in the social quarters where paper pull tabs and jar tickets are often not sold in complete boxes or bags that requiring daily inventory of the unsold tickets would overly burdensome.



Request the Commission revisit this requirement for the social quarters and adopt more reasonable reconciliation requirements and methods.

Current guidelines require that disbursements from gaming accounts be made by check. However, many legitimate purchases and donations can be made and documented by credit card.



Request the Commission allow VFW Posts to obtain a credit card only for use with the gaming account.


When filing the required quarterly reports, what is the acceptable method of reporting fees paid by the manufacturer? Does the organization wait for a 102 voucher from the manufacturer to accompany the report or does the manufacture report directly?



We request the Commission to consider the following requests:

  • Allow the wages and salaries directly related to gaming activities be charged to UOP with the remainder being charged to business expenses.
  • Restore the language that allows direct real property expenses to be charged to UOP with remainder charged to business expense.
  • Revisit the 40% UOP requirement for electronic pull tabs and adjust the requirement to a lower figure of 10%.
  • Allow the use of gaming funds to support membership functions such as appreciation dinners.
  • Establish a grace period to allow the VFW Posts to update their business processes and reporting requirements to comply with the new guidelines.
  • Revisit the daily reconciliation procedures and adopt procedures that are less cumbersome.
  • Allow the use of credit cards for authorized expenditures and donations.

The State of Virginia VFW will celebrate its 100th anniversary next year. That’s 100 years of helping veterans and their families, as well as being pillars of our communities. We need to continue this mission into the next 100 years, but the proposed regulations render that mission in jeopardy, as Posts will be forced to close or drop gaming all together.

Thank you for allowing me to address our concerns and provide input to make this a win/win for all involved.



Ed Mann, Gold Legacy Life Member


Department of Virginia
Veterans of Foreign Wars of the United States

CommentID: 205472