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Officials say law governing bingo 'consultants' needs work

New Hampshire Sunday News

March 08. 2014 11:20PM

Charity bingo games have been around for decades, and dozens of groups depend on the revenue they raise for their programs and missions.

But while state law mandates that charities get 35 percent of gross revenues (after prizes) when they sponsor casino-style games of chance, there's no such requirement for bingo games and the popular "lucky 7" tickets sold at those games.

According to records from the New Hampshire Racing and Charitable Gaming Commission (RCGC), some bingo "consultants" earn tens of thousands of dollars a year in fees for helping charities with their games.

Charities last year netted anywhere from 31 percent to 100 percent of the revenues from their bingo and "lucky 7" sales. The rest went to "service fees" they paid consultants for tasks ranging from filing paperwork to running the games themselves.

What keeps the "charity'' in charitable bingo here is a state law that requires such games be run by volunteer members of the charities. And RSA 287-E:7 bars compensation to those members and "others" who operate games or assist in their operation.

But officials concede the law is ambiguous, since the very next paragraph states charities cannot pay any person or entity for "consulting, managing (and) assisting" at such games "unless agreed to in advance in writing by the charitable organization."

"There's a disconnect there, and we recognize that," said Sudhir Naik, deputy director of the RCGC.

Officials hope Senate Bill 242, which deals with "coverall" bingo games (prizes are awarded to the first players to cover all numbers), will help clarify the law. It would require charities to submit their written agreements with consultants to the commission.

That way, Naik said, "we can kind of oversee what's being charged and if it's unreasonable."

By law, charities can designate someone to run their bingo games if all their members are physically or mentally disabled. Only Special Olympics New Hampshire and Catholic War Veterans have such permission from the RCGC.

Carrie Hill is director of development for the Special Olympics, which hires Patricia Haskin of PH & SR Consultants to run two charity bingo games in Concord every weekend.

Last year, the service fees paid to Haskin amounted to $38,612, or 51 percent of the $76,159 raised. But Hill said that's "definitely" a fair split."She runs the show, she gets the volunteers, she manages the schedule," Hill said. "She does a great job with it."From our end, it's just the paperwork that needs to be done."

Hill said bingo provides a steady stream of income for Special Olympics; without it, the organization would probably have to organize another fundraising event.

Terry Knowles, assistant director of charitable trusts at the Attorney General's Office, said organizations are not allowed to pay their employees to run bingo and lucky 7. And without special permission from the state, she said, "the game has to be run by volunteers."

A bingo consultant, Knowles said, is "an outside person" who gives advice to the charity, akin to a lawyer or accountant. "They're not running the game," she said.

However, some charities do rely heavily on paid consultants to operate their games.

Dover Youth Hockey Association paid bingo consultant Kathy Gilpatrick $31,524 last year, 20 percent of its revenues from bingo and lucky 7, according to the RCGC. The organization cleared more than $129,000 from games held at Seacoast Bingo in Somersworth.

Tim Broadrick, DYHA treasurer, said Gilpatrick spends 10 hours every Sunday running bingo and lucky 7 sales and even more time on preparations, advertising and paperwork. He said a volunteer couldn't do what Gilpatrick does.

Without her expertise, he said, the organization wouldn't raise as much money and youngsters would have to pay hundreds of dollars more to participate in hockey. "For us, it's an investment," he said.

The RCGC relies on revenue reports submitted by charities for its records. And while it does have auditors, not every charity that runs bingo gets audited every year, Naik said.

Jennifer Stauffis, volunteer treasurer for Cocheco Valley Humane Society, was surprised to learn that commission records show the shelter paid 34 percent of revenues from bingo and lucky 7 tickets in 2013 to the woman who runs its games.

According to the RCGC, bingo games raised $11,077 for CVHS last year, and CVHS paid Brenda Rose $3,758 in fees.

But Stauffis, who recently took over the record keeping, said those figures appear incorrect; in past years, bingo raised about $60,000.

"I've seen the bank account," she said. "I am certain this is a venture that we're making money off."

She's looking into last year's filings to figure out what happened. And she has been in touch with the RCGC to try to get to the bottom of it.

Stauffis also got a call late last year from the AG's charitable trusts unit notifying her that CVHS cannot pay Rose, since Rose is listed as an employee. That's in violation of the state law.

Rose has another full-time job; the only work she does for CVHS is managing the bingo games, Stauffis said. But, she said, "they told us to stop paying her, and we stopped immediately."

And she said it's a measure of Rose's dedication to CVHS that Rose has continued to run the bingo games without pay. She even arranged her vacation time so she wouldn't miss a Saturday.While it's the RCGC that oversees charity bingo, Knowles said, in the past her office has stepped in if a charity consistently was losing money on its games.

"That's where we become involved because the gaming activity becomes part of a larger problem in an organization that does not have good governance or good internal controls.

"Our Number 1 priority is to protect charitable assets; that's what we do."

Meanwhile, the Internal Revenue Service is paying closer attention in recent years to charitable gaming, Knowles said; there's a new form for nonprofits to report proceeds from bingo or games of chance.

"They found nationally some organizations had been formed for the sole purpose of gaming, and the IRS really came down on that because you cannot form a charity whose sole purpose is gaming," she said. "The IRS will not give an exemption for that."

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