Bingo, Raffles Legal Under New State Law
Last updated Friday, June 8, 2007 7:17 PM CDT in News
By Bob Caudle
THE MORNING NEWS
Elks, veterans and Little Leaguers may need a little time before they know how new state regulations will affect their games of chance.
The new rules for legally operating games of chance confused many.
Hugh Wilson, Fayetteville-Springdale Elks Lodge, said his group might not be able to afford continuing bingo given taxes on cards and annual fees.
"We've only got 15 to 20 people that play," Wilson said. "Someplace that's got a lot playing, like the VFW, will be OK."
People across Arkansas will be able to legally yell, "Bingo," when the law takes effect July 31. Act 388 of 2007 provides for the licensing and registration of nonprofit and charitable organizations to conduct games of bingo and raffles in the state.
Last year, Arkansas voters approved a constitutional amendment legalizing charitable bingo and raffles.
Organizations eligible to apply for licenses include nonprofit and tax exempt religious, educational, veterans, fraternal, service, civic, medical and volunteer rescue, firefighters and police organizations.
Eligible organizations must have been in continuing existence in Arkansas for at least five years. Licensing fees range from $10 to $100, depending on the type of license granted.
Tom Chastain, commander of the Springdale Veterans of Foreign Wars post, said the new law shouldn't bother the group.
"Unless there's something in there we haven't seen," Chastain said. "We'll have to wait and see what it amounts to before we make a decision on whether or not to continue. Right now, it only looks like we may have to limit our prizes."
The maximum prize per game is $1,000, and the total in prizes per session may not exceed $7,500. The law places a $50,000 annual limit on the value of the prizes if they're purchased and a $100,000 annual limit on the value of the prizes if they're donated.
Danny Mitchell with the state Department of Finance and Administration in Little Rock, the agency responsible for administrating the new regulations, said the tax is 1 cent per card with a 10 percent tax on buying the equipment.
"So, if your club buys a case of bingo cards, I think it's 9,000, you'd pay a $90 tax," Mitchell said. "That, plus the $100 per year sticker. If they've got their 501 tax number, they won't have to pay sales tax."
Section 501 of the federal tax code allows tax exempt status for nonprofit organizations.
Enforcement for violations of the state act, although technically under the Finance Department, would be handed to local authorities, according to Martha Hunt, the agency's chief counsel.
"We wouldn't enforce any criminal violations, only tax violations," Hunt said. "Criminal matters, we'd turn over to the prosecutor. The act gives us no authority for enforcement other than to levy taxes."
Hunt said some organizations can run lotteries without having to obtain a federal tax-exempt status. She said the determination will have to be on a case-by-case basis. Like the occasional raffle to help out a local ball team or sick child.
"That's not something I've looked at carefully," Hunt said. "I know there are provisions that not every organization had to hold a tax-exempt status."
The new law also holds that all proceeds above the cost of conducting the games are to be used only for charitable, religious or philanthropic purposes.
"I think the law has finally caught up with the people," said John Threet, Washington County prosecuting attorney. "The Legislature has basically codified what's been going on for years."
Threet said he, and former Washington County Prosecutor Terry Jones, did not bother with raffles or bingo games that were being run for charity.
"Nobody wants to go kick around the Girl Scouts or a Little Leaguer for trying to raise money," Threet said.
The prosecutors office shut down bingo operations in Springdale a couple of times, Threet said, that were being run for profit.
Breaking the provisions of Act 388, according to Threet, is a misdemeanor.
"That means prosecution will depend on the location of the infraction," Threet said.
If the crime occurs inside a city's limits, the city prosecutor will handle the case. If the law is broken in an unincorporated area of the county, the county prosecutor will get the case, he said.
Also, organizations holding the games are prohibited from hiring agents to run them or pay employees from the proceeds. The bingo sessions must end within five hours, and organizations may not hold more than two sessions a week.
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