Proposed Charitable Gaming Regulations 11VAC20-20-10 through 11VAC20-20-610

The following comments are presented with regard to the proposed Charitable Gaming Regulations in VOL. 39 ISS. 5 of The Virginia Register of Regulations specifically in reference to electronic gaming provisions. These comments have been reviewed and approved by the Finance Committee of F.O.E Aerie 882 (Petersburg) and are respectfully submitted to the Charitable Gaming Board for review.

• Proposed regulation at:

11VAC20-20-20 D.2  “For electronic gaming, the minimum percentage shall be 40% of its electronic gaming adjusted gross receipts.”

11VAC20-20-40, K  “A social organization authorized to operate and conduct electronic gaming shall expend, at a minimum, 40% of its electronic gaming adjusted gross receipts for those lawful religious, charitable, community, or educational purposes for which the organization is specifically chartered or organized.”

Comment:

This requirement is harsh and repressive. In the case of our organization, it would create an unsustainable and crushing business environment resulting in certain operating losses and deficits resulting in the closure of the organization.

Proposed Solution:

Change this requirement to reflect and amount between a minimum of 10% to a maximum of 15%.

• Proposed Regulation at:

11VAC20-20-100  K  “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.”

Comment:

The proposed regulation is unduly restrictive. It ignores the distinction between profits derived from charitable gaming activities open to the public and those that are limited to our members.

The Petersburg Eagles has a well-established bingo game operation which is very popular in the area. As a result of the revenues generated by bingo, we annually donate over $150,000.00 to local charities, police, fire, EMS and provide scholarships to local students. The majority of these contributions come from profits flowing from bingo operations which is open to the public and operated by volunteers from our organization. We understand and agree with regulations prohibiting bingo profits from being used to benefit our members.

Electronic gaming is a different situation. It was introduced to our organization in 2012 and prior to its introduction our organization was in increasing financial decline. We were concerned about our ability to remain open to serve the community. Electronic gaming provided an alternative revenue stream allowing us to stabilize our financial accounts and begin to grow our fund balances.

Our business model has evolved to a point where our social quarters environment is dedicated to enhance our members’ electronic gaming experience. We serve discounted food and beverages to encourage attendance in our social quarters. We encourage our members to responsibly participate in electronic gaming as it is the only source of reliable revenue to sustain our organization.

Electronic gaming is restricted to members of the Eagles and the Auxiliary. Spouses, family, guests, and the general public are prohibited from participating in electronic gaming. One hundred percent of the profits from electronic gaming are derived from our members. Employees serve as electronic gaming monitors to ensure regulation are followed.  We fail to see any logic in the proposed change to limit these member derived profits from used to benefiting our members and compensate our staff.

Proposed solution:

Allow the salaries and wages of all employees to be charged as a reasonable and proper business expense of the electronic gaming account with the portion directly attributable to electronic gaming to be charged to "Use of Proceeds".