|Action||Promulgation of Charitable Gaming Regulations by Department of Agriculture and Consumer Services, including electronic gaming provisions|
|Comment Period||Ended on 11/23/2022|
I am a Member of American Veterans (AMVETS) Post 18. I am a Veteran. By this post, I am sharing my concerns about the new Promulgation of Charitable Regulation by the Department of Virginia.
I am also requesting alleviation of the burden placed on Veterans Service Organizations by this legislation. The 69-page document is comprehensive and covers charitable gaming open to the public (bingo) and gaming open to only members and occasional invited guests of the organization in the social quarters.
Current rules for proceeds expenditures of charitable gaming that are open to the public (bingo) are already in effect and followed. Compliance is monitored through quarterly and annual reporting with periodic inspections and audits.
Virginia’s AMVETS Posts have complied with the Virginia Charitable Gaming Regulations and will continue to do so; however, the proposed regulation changes will severely impact the Posts. Some of these impacts are so severe that they will likely result in curtailment of mission requirements and possible closure of Posts. If posts close, who will pick up the important mission of our Posts?
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.
The Social Quarters of qualified posts have been exempted from the rules governing the use of proceeds (UOP) as defined by the Virginia code for more than 20 years. Many of the Posts depend on the proceeds earned from gaming in the social quarters to supplement Post operations and provide support and benefit to the members that fall within the stated mission of the organization.
-AMVETS primary mission is to help all Veterans and their Families and to foster camaraderie amongst our Veterans. The IRS Guidelines 3079 states one of the purposes of a veteran’s organization is to provide the following “To provide social and recreational activities for its members.” The social quarters are a crucial tool for AMVETS to assist in accomplishing the mission.
The new requirement that is being proposed is going to require major changes in the way business is conducted. In fact, it may cause some Posts to discontinue or curtail activities due to the burdensome demands placed upon paid and volunteers.
Specifically, the definition on page 4:
“Reasonable and proper business expenses” means the same term as defined on 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) status. Federal Code recognizes several activities that a 501 (c) (19) must provide and one of those activities is “Providing social and recreational activities for their members.” The UOP 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% UOP.
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%.
This post was able to meet the 10%. 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 requirement mandates that a manager and workers be on site at all times of operation. This mandate 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 14 page 3/4states ”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 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.
I 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 be charged to UOP.
On page 5 Paragraph D of the proposed regulations in accordance with 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 deleted 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.
Thank you for allowing input on this matter. Keeping the gaming regulations simple for VSOs is important to the existence of Posts throughout the Commonwealth.
Veteran, U.S. Air Force