I am responding as the Judge Advocate for the Department of Virginia, AMVETS. We are respectfully requesting that the Governor, Attorney General, and Gaming Commission reconsider the proposed gaming regulation that is yet to be promulgated 

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 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 possibility closure of 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 as defined by the Virginia code for more than 20 years. Many of the Posts depend on the proceeds 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 among 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.

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 use of proceeds from charitable gaming are critical for execution of this mission.

A large Post filed the 3^rd 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 (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 3/4 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 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.

We request the Commission 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 AMVETS 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 and strenuous.
• Allow the use of credit cards for authorized expenditures and donations.

Thank you for your consideration in this matter.

Sincerely,

Ralph Hensley

Judge Advocate

Department of Virginia

AMVETS