Game fundraisers facing state law requiring oversight, better records

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A new state law regulating "small games of chance" is prompting a large uproar from veterans, fraternal and firefighter clubs, who use such small-scale gambling to raise funds to run their organizations and give aid to local charitable groups.

Several Pittsburgh-area legislators are leading the charge to repeal the law's new record-keeping and reporting requirements, reports that must be sent to the state starting in February.

Rep. Peter Daley, D-Washington, and other critics say many fraternal clubs -- Veterans of Foreign Wars, American Legion, AmVets, volunteer firefighters, Elks, Moose and Sons of Italy -- lack the staff to compile records and will have to increase operating costs, meaning less aid to the community, such as food banks, youth groups and park improvements.

One new requirement will force clubs to keep records of the names and address of anyone who wins more than $100 and also to withhold income taxes on winnings and send them to the state. They would also have to report the total amount won by bettors each week.

Mr. Daley said the clubs would be hurt financially by the new regulations on the "small games of chance," such as sales of raffle tickets, picking numbers from "punchboards" and buying sealed tickets called "pull-tabs."

Before legislators voted on the bill in January, "nobody sat down and looked at all the issues and how it was going to affect the clubs," said Russell Miller, Fayette County American Legion commander, whose club is in Connellsville.

He wrote a Nov. 25 letter to Legion district officials and said the small-games law "is hurting numerous veteran clubs. ... Many of our posts in District 24 are on the verge of closing because they aren't making enough money to pay utilities, wages and other overhead."

Mr. Miller said the new law adds to the damage the poor economy has done to the fraternal clubs.

Mr. Daley claims the law "wasn't properly vetted with fire and fraternal groups" before being approved in January, adding he has collected 4,000 petition signatures demanding changes.

The controversial measure, House Bill 169, was sponsored by Rep. Sheryl Delozier, R-Cumberland, in an effort to help the fraternal clubs by making the small games of chance more lucrative and attracting more bettors. She said it has already helped two clubs in her House district, just west of Harrisburg.

One major change the law made is to raise the clubs' prize limits to as much as $25,000 per week (up from $5,000), although only the larger clubs can manage so much betting. An individual can now win $1,000 on one game, up from $500, the limit set in 1988 when the original small games of chance law was enacted.

"The clubs wanted the increase in prize money, and they got it," Mrs. Delozier said.

Similar bills were introduced in the past five sessions but died. She, however, got HB 169 passed easily in the House in January on a 178-10 vote. Gov. Tom Corbett signed it in February but the first reports aren't due until February 2013.

Mrs. Delozier said she's puzzled by the outcry. "The bill had a wide base of support from both Republicans and Democrats," as well as from the governor. She said the final bill was a compromise based on talks with legislators, the veteran and fraternal groups, district attorneys, the attorney general's office, state police and county treasurers, who issue the small games of chance permits to the clubs.

She said the governor and law enforcement officials said that with the large increase in prize limits under the new law, better accounting was needed to show who placed the bets, how much each person won, how much a club was keeping for its own operation and how much money was actually going to benefit community groups.

She said the law makes a serious increase, from $5,000 a week to $25,000 a week, in the amount of small-games-of-chance tickets a club can sell.

"I know some clubs don't like the new reporting requirements, but with a five-fold expansion in betting, we wanted to make sure the money was properly accounted for," Mrs. Delozier said.

Mr. Daley and Pittsburgh-area legislators such as Sen. Tim Solobay and Reps. Ted Harhai, Jesse White, Rick Saccone and Brandon Neuman, will try to change the new law when the 2013-14 legislative session opens in January.

Some local veteran and fire organizations have said their statewide groups didn't fully explain all the bookkeeping effects of the new law and thus clubs didn't press legislators to vote against it. "I don't think legislators realized what they were doing," Mr. Miller said.

The new law also prohibits raffle tickets to be sold at convenience stores or bars if employees there don't belong to the particular sponsoring organization. Sometimes club members have dropped off raffle tickets at bars or stores for sale by clerks, but that must stop under the new law.

Another problem, Mr. Miller said, is that the new law limits -- to 30 percent -- how much of the raffle ticket funds a vets or fire club can keep for its own use. The other 70 percent of the raffle ticket sales must go for community-benefit organizations.

"The 70/30 [split] is not working," said Mr. Miller. "Many of our posts are on the verge of closing. The law should be changed to benefit the clubs. Lawmakers want to amend the law when they return to session in January."

Mrs. Delozier said the original 1988 "small games" law didn't allow the clubs to keep any percentage of the money, other than what they needed to cover operational expenses. So putting the 30 percent into the bill guarantees them a certain amount by law, she said. But Mr. Daley insisted he's been deluged with complaints, which he said "should be a real eye-opener to all of my colleagues in Harrisburg."

Mr. White said that because the first new reports are due to the state by February, "The clock's really ticking on this. Hopefully we'll show up in 2013 with bipartisan energy and help these clubs, fire departments and veterans organizations, who do good work in their communities."

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Freelance writer Tom Barnes:


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