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Small games of chance

  • Small games of chance
    Copyright 2013
Published January 21. 2013 05:07PM

That much-needed fire equipment, money for people whose homes have burned down, help for cancer patients, or oil for the church furnace can depend on a toss of the dice, a ticket dropped into a basket or the luck of the draw. Nonprofit organizations have for decades offered small games of chance, including casino nights, Chinese auctions or football pools to raise money to continue to help their communities.

Last year, state lawmakers updated the regulations governing how the games are run, the money distributed and the operations reported to state. It was the first update since 1988.

The amendments, says Todd Merlina, enforcement supervisor for the Pennsylvania State Police Bureau of Liquor Control Enforcement, are "decent and fair to organizations," and were created to provide "accountability to avoid fraudulent misuse" of small games of chance.

The Local Option Small Games of Chance Act amendments increased prize limits, and allow organizations to keep more of the proceeds from the games. But the myriad and complex new rules also tightened reporting requirements and enacted detailed rules for running the games and caused great confusion.

Local organizations can access for detailed information.

Questions regarding licensing to conduct small games of chance should be directed to the county treasurer in the county where the organization is located. In Carbon County, that's Ron Sheehan (570) 325-2251. In Schuylkill County, the treasurer is Jacqueline V. McGovern, (570) 628-1433. Publicity surrounding the updates has also made organizations aware that, technically at least, such popular and seemingly innocuous fundraisers as Chinese auctions and casino nights are illegal.

State police have been offering seminars to explain the changes, but some local lawmakers say the new laws are intimidating people who are only trying to do good.

"The Local Small Games of Chance Act falls woefully short of providing Pennsylvania's valuable volunteer service organizations with a viable means of generating funds," says state Sen. John Yudichak, D-Luzerne/Carbon/Monroe. "Recent changes to the law were meant to increase available games and prize money; however, the effect has been more confusion and frustration for local groups."

"While I support the current one-year delay of the new law, it is clear that the legislature needs to rewrite the small games of chance act to make it perfectly clear what games are permitted under the law and to make it easier to raise the necessary funds to keep these vital organizations alive in our communities," Yudichak says.

"Chinese auctions and casino nights are technically illegal. Bingo is regulated by a separate law. County treasurers, who award licenses for small games of chance, can advise groups how to modify Chinese auctions into raffles, which are legal."

State Sen. David G. Argall, R-Schuylkill, and parts of Berks, Carbon, Northampton, Monroe and Lehigh counties, says he's pushing for changes.

"Last year, the legislature tweaked the law to allow nonprofits and charitable organizations to keep more money they raise through small games of chance," he says. "After hearing about concerns with Act 2 of 2012 from constituents, I am supporting legislation offered by Sen. (Tim) Solobay, (D-Canonsburg) that would allow club licensees to keep more money for operating expenses as well as legalize monthly drawings, Chinese auctions and other events and games that have been played for many years in our region."

Solobay's bill would exempt smaller organizations from the reporting requirements if they make less than $100,000 from small of chance. It would also increase the amount of proceeds organizations may keep for operating expenses from 30 percent to 50 percent. It would also allow monthly drawings, Chinese auctions, Night at the Races, coin auctions, and other events and games organizations and groups have traditionally offered.

"The primary purpose of allowing of small games of chance has all along been to assist veterans' clubs, volunteer fire companies, and other nonprofit associations raise money for charitable or civic purposes. While Act 2 of 2012 was meant to aid these organizations in this goal, it has unfortunately resulted in widespread confusion and hardship. With many of these organizations now struggling to make ends meet, the changes above would help them survive and ensure that their significant contribution to the local community continues," Solobay wrote in a Jan. 3 note to senators.

What's new

The updated Local Option Small Games of Chance Act, signed into law on Feb. 2, 2012, changes include general prize limits for all games of chance except weekly drawings: $1,000 for single chance; $25,000 total for operating week. Weekly drawings are only limited by the $25,000 weekly limit.

Prize limits for raffles include $10,000 per calendar month, with the exception of Special Permit Raffles: $100,000 per year. ($150,000 for certain organizations); no $1,000 limit on individual chance; prizes not included when calculating weekly total. There are additional exceptions for daily and weekly drawing prizes under specific circumstances, and for major league sports drawings.

Also, organizations may keep more of the proceeds (defined as what's left after deducting the costs and prizes from the gross revenue generated by the game).

The new reporting requirements require detailed record-keeping. The records, which include the amount of prizes awarded and how much money was used for public good, must be electronically filed with the state Department of Revenue for each preceding year. Initially, the new laws required that filing be done by Feb. 1 of this year. However, at the request of some lawmakers, that date has been pushed back to Feb. 1, 2014. That allows organizations time to be able to update their record-keeping.

The state department of revenue made the change after Sen. Solobay and Richard Kasunic, D-Dunbar, asked for the deadline to be pushed back.

In the original 1988 version, the Small Games of Chance Act, "no organization could keep any money. It all had to go to a public interest," says Merlina.

The changes allow organizations to keep 30 percent of the proceeds for operational expenses.

The changes also give nonprofit organizations some wiggle room when it comes to popular and traditional fundraisers. for example, Chinese auctions can be tweaked to be defined as raffles, provided certain strict requirements are met.

"These are the games that are used most often illegally because of misunderstanding of how to make them legal," Merlina says.

One local nonprofit organization has always made sure it follows the letter of the law to a T.

The Blue Mountain Health System, which operates Gnaden Huetten and Palmerton hospitals, has traditionally held casino night and Chinese auctions, among other fundraisers.

"One of the concerns is some of the smaller non-profits using (small games of chance) for fund raising is the bookkeeping behind it," says Joseph Guardiani, director of Fund Development/Government Relations for BMHS. "For example, what records you have to retain, and how long you have to retain them. For Blue Mountain Health System, it's not a big problem because we have the software and means to track the information."

But smaller entities might find it daunting.

Further, for games like Chinese auctions, in order to be done so that the game is legal, tickets must be printed in very specific ways and contain certain information.

"My understanding is that they are legal as long as the consumer has a ticket stub as a receipt, with sequential numbers and matching information," he says.

BMHS has modified the way it conducts fundraising. Guardiani gave as an example the law that requires the top prize not be more than the price one pays to play.

"For casino night, we used to issue raffle tickets, but we cannot do that anymore. Now, the top casino night winners will get a prize that does not exceed their admission price," he says. "In essence, the gambling is for entertainment, not for winning."

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