My name is Herb Zimmerman. I am the Administrator representing the Centreville Moose Lodge #2168. We have 550 members in our Lodge.

After reviewing the proposed Charitable Gaming Regulations [Under Development] [11 VAC 20 ? 20] I would like to present the following observations, comments and suggested changes:

1. 11VAC20-20-10 Definitions – “Reasonable and Proper Business Expenses”

Comment – this definition referred to the Statute 18.2-340.16 which reads “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, costs of business furniture, fixtures and office equipment and costs of acquisition, maintenance, repair, or construction of an organization's 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. However, payments made pursuant to § 51.1-1204 to the Volunteer Firefighters' and Rescue Squad Workers' Service Award Fund shall be deemed a reasonable and proper business expense.” And then specifically “excepts” “ 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.”.  This is requirement reverses the statute’s definition.  Charitable gaming is one of the benefits we offer to our members. The proceeds from charitable gaming directly support the organization’s mission. The requirement to have a gaming manager on site at all times requires that our bartenders also serve as gaming managers. Operation of the social quarters is provided by our bartenders and an operating Social Quarters is mandatory to conduct charitable gaming.  These labor costs are directly related to the conduct of Charitable gaming.  We understand the desire to not pay salaries for incidental personnel that do not impact or provide services supporting charitable gaming operations.

Suggestion – please consider changing this definition to read “ … except that only salaries and wages of employees whose primary responsibility is to provide services, supporting charitable gaming,  for the members will qualify as a business expense.”  Basically, please allow us to pay the salaries of bartenders and the Administrator who all serve as gaming managers while on duty.

2. 11VAC20-20 (D)(2) – Use of Proceeds (UOP) for electronic gaming shall be 40% of adjusted gross receipts.

 Comment – As most people have said in their comments this is a very high percentage.  Cannot understand why it is not more in line with the 10% designated in 11VAC20-20 (D)(1) for all other charitable gaming (Bingo, raffles, pull-tabs, etc.). After all electronic gaming is only an automated version of pull tabs. Net proceeds from Electronic gaming must be used to pay the manufacturer’s rental which would amount, in most cases, to 50% of the gross proceeds. With a 40% UOP requirement, that would only leave 10% of gross proceeds to cover operational costs.  No organization could maintain operations and also provide charitable contributions with such a high UOP.

Suggestion –

1. use the same percentage for electronic Gaming UOP as is used for all other gaming proceeds.
2. or, allow non-profits to reduce the adjusted gross receipts with operational costs such as utilities, maintenance and labor costs.

3. 11VAC20-20-80(B) Disbursements for expenses must be by check

Comment – In this modern age, many vendors and organizations are encouraging electronic payments via credit card or even direct bank transfers. In fact our gaming vendors are asking that we arrange to pay the machine rental via direct bank transfer.  Our primary charity, Moose Charities, is accepting credit card donations.  All payments to the bank, for a credit card statement, are entered into our accounting system by line item and are charged to the appropriate accounts. We have income and expense accounts specifically identified for each of our gaming sources.

Suggestion – allow disbursements for expenses and donations via credit card. Organizations should be able to provide a documentation trail proving payments to credit card accounts trace directly to a gaming expense/donation.

4. 11VAC20-20-80(D) Bank accounts – all receipts must be deposited by 2^nd business day following session at which they were received.

Comment – this requirement, in essence will require that we deposit charitable gaming receipts 5 times a week.  Electronic gaming receipts are normally accumulated in the machines for an average of 2-3 days before collections are made. Electronic Gaming manufacturers provide their invoices on a weekly basis covering a period from Monday thru Sunday inclusive.  Normal operations include weekly reconciliation against manufacturer reports and deposits of funds every Monday.  Machine collections, counting and reconciliation requires an average of 3-4 hours labor.  To have to do this daily would be a considerable burden on the Administrator’s time (and costly to the Lodge).

Suggestion – please change this requirement to read “…by the 5^th business day following the session at which they were received.”

5. 11VAC20-20-90(A)(2) session reconciliation forms for bingo, pull-tab, seal cards, and electronic gaming reconciliations completed within 48 hours after the end of session

Comment – We currently can do this for Bingo because it is held once a week and it starts and ends at specific times.  Pull-tabs, seal-tab games and electronic gaming, however very often require that “deals” remain open for several days at a time.  Pull-tabs and Seal-Card games come in sets of 300 to 12,200 tabs a set.  They are sold from machines that hold 1,000 tabs per column for up to 8 different games. We can provide a reconciliation of each set at the time they are closed or all tickets in a deal are sold.  Doing a daily reconciliation would require emptying columns in the machines and physically counting each pull-tab. Electronic gaming reconciliation is controlled by the manufacturers and reported to us on a weekly basis. We use these reports to reconcile cash received and our deposits weekly.  To do this on electronic games, on a daily basis would require daily machine collections and reconciliation.  Machine collections, counting and reconciliation requires an average of 3-4 hours labor.  To have to do this daily would be a considerable burden on the Administrator’s time (and costly to the Lodge).

Suggestion – Require a reconciliation of each Pull-Tab and Seal-Card game set (deal) within 48 hours of closure of that deal. Require a reconciliation of electronic gaming plays, pays and deposits on a weekly basis.