Allied Charities of Minnesota

Update

26 Nov 2018 10:27 | Allen Lund (Administrator)

Electronic Pull Tabs: The cure for what ails charitable gaming?  

As I have returned home from Bemidji I have seen several “news” stories on how electronic pull tabs are now saving the day by paying for the Viking’s stadium with the potential of paying off the stadium bonds early.

As I am wont to say, let us peel that onion back a little further.

First off I want to reiterate that ACM is not anti electronics. Tools that deliver more profit per dollar wagered are preferred to tools that deliver less profit per dollar wagered.  

A little fact checking shows that all of our first $36.9 million in charitable gambling taxes goes into the general fund each fiscal year.  After that all charitable gambling taxes go into the stadium bond fund. In FY 2018 we paid $38.1 million into the stadium fund and the corporate unitary tax paid in another $20 million. In total, the stadium bond fund received $58.1 million, almost double the $31 million needed to make the bond payments. The stadium fund resides in the general fund. There is no funding of this type from dedicated accounts. The ability for the state to pay off the bonds early does not come into play until FY2021/22.

In my initial review of the GCB FY 2018 annual report the following occurred:

                Sales grew by $300 million ($1.7 billion to $2 billion) +15%

                Payout grew (83.4% to 84.3%) +1%

State taxes/fees grew by $9 million ($72 million to $81 million) +12.5%

Mission dollars grew by $6.5 million ($66 million to $72.5 million) + 10%

Rent grew by $4 million ($27 million to $31 million) +15%

                Cost of all games grew by $9.1 million ($34.7 million to $43.8 million) +26%

                Cost of paper games grew by $1.7 million ($25.7 million to $27.4 million) +7%

                Cost of electronic games grew by $7.4 million ($9 million to $16.4 million) +82%

                Paper games provided 72% of our net receipts and represented 63% of our total product cost

                Electronic games provided 16% of our net receipts and represented 37% of our total product cost

At the current electronic revenue share rates, if all of our paper games transitioned to electronic games, total product cost would increase by $55 million to $97 million. Mission dollars would drop to $48 million. 

The number of charities that are now required to conduct an outside annual audit has increased to 630 from less than 500 three years ago.

Our net per dollar wagered declined from 3.84 cents in FY 2017 to 3.62 cents in FY 2018.

The GCB Organization Annual report now includes a column of cash on hand. It shows that charities had $52 million dollars on hand at the end of FY2018. That sounds like a lot of money. Organizations saving for big ticket items (fire relief, hockey, snow, conservation and youth) rarely have the funds available to make a sizable purchase, except over time. $52 million divided between all of our organizations is $45,000 per organization. The number is a snapshot in time on a given day of a given year. If all organizations operated on the State’s fiscal year, that number would be vastly reduced. There are safeguards that have been put in place by the state of Minnesota and the federal government to ensure that an organization is not raising funds for the sake of raising funds. In fact, those same safeguards penalize us for holding on to cash beyond the end of our fiscal year. Those of you that have paid state and federal unrelated business income tax (UBIT) know the price imposed for not spending the funds that you have raised.  

Thanks go out to you that were in Bemidji. I hope that you learned a lot, laughed a lot and thoroughly enjoyed yourself. In 2019 we will be in Rochester November 21 – 23.

Applications for one year At-Large board members are being accepted until Monday, December 3. Applications can be found on the ACM website www.alliedcharitiesmn.org At-Large board members will be chosen by the ACM Regional Directors at the December 17 board meeting.

Regards,


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