Allied Charities of Minnesota

News

  • 09 Aug 2017 10:34 | Amanda Horner (Administrator)

    It has come to our attention that Pilot Games is starting an organization to compete with ACM that will be more “electronics friendly”.

    ACM is a primary reason that electronics are available for play in Minnesota today. ACM has supported electronics as a tool. What we do not support is making less revenue on electronic pull tabs than we make on paper pull tabs.  We also do not support not having choices when it comes to payout, which Pilot does not offer as all of their games are at 85% payout. 

    Currently the average net for paper pull tabs is right at 4 cents per dollar sold.  That number has declined over the past several years as our payout average, cost of doing business and overall tax rate have all increased.  The average net for electronic pull tabs is currently less than 3 cents per dollar sold.  That is if your payout is at exactly 85%, which over time will not happen with an 85% game, whether paper or electronic they will pay out more than 85%. 

    Mr. Weaver has told me personally that if we could play 90% games that we would have more money than we know what to do with.  He cites Las Vegas as the example of how to run a gambling organization.  While I admit to not fully understanding how Las Vegas gambling works, I do know how charitable gaming in Minnesota works and I disagree with that statement.  With our cost and tax structure playing all 85% games is a prescription for going out of business, playing 90% games would only accelerate that.   

    ACM asked Pilot Games to offer less than 85% games and to lower their 31% revenue share.  They have declined to do either of those. We are now faced with going to the legislature to affect those changes.

    One has to wonder about the motives of for profit companies starting and funding an organization that is purported to represent charities.   I would tell them that two immediate changes that they can make are to lower their fees and make less than 85% games.  Those two changes alone would be of huge benefit to charities, their communities and missions.

    I am told that Pilot Games tells prospective customers that they will make 17% on their electronic tabs.  The question that needs to be asked is 17% of what? 15 cents on a dollar wagered (85% payout) equates to a net 2.5 cents, 10 cents (90 percent payout) equates to a net 1.7 cents.

    Here is a perfect example of what I am talking about and what is so wrong with our current situation.  In FY2017 our sales increased by $194 million.  Out of that $194 million we increased our bottom line funds for our communities and missions by $1 million.  Our return was one half of one percent.  The state on the other hand increased their bottom line by close to $11 million.  Their return was five percent.  Their return was ten times greater than ours.  Why?  Because of our payout percentage, cost structure and tax structure. 

    Our payout percentage, cost structure and tax structure are providing too little reward on our work and risk.  We did all of the work and took all of the risk, but received only a pittance of the reward.  Electronic pull tabs played a part in this.  One is left to wonder what Pilot Games return on investment was and how that compared to ours. 

    I have been told that charities should be accepting of making less on electronic pull tabs as there is less work to do.  We do not agree with that.  There is less work to do than paper pull tabs, but there is still work to do and we are supposed to be about making money for our communities and missions, not about making manufacturers or the state rich. 

    ACM believes that every charity has the right to decide what tools they choose to use.  We will never accept a mandate to use any tool and we encourage every charity to fully understand what they are netting on every tool that they choose to use.  We will never support bars having electronics without a charity.  We have lost sight of what charitable gaming is supposed to be about and that is becoming more evident every day.  Use Pilot Games, don’t use Pilot Games, but do it with your eyes wide open.

    Regards,

    Al


  • 31 Jul 2017 10:20 | Allen Lund (Administrator)

    We streamlined the annual certified inventory process for lawful gambling organizations to simplify reporting and reduce paperwork for you.

    The updated process is effective July 31, 2017.

    More time to conduct your annual inventory

    To provide more flexibility, you now have more time – up to 30 days after your fiscal year ends – to conduct and submit the annual certified inventory and cash count. You are no longer required to conduct the annual certified inventory and cash count at the close of business on the last day of the organization’s fiscal year or before the start of business on the first day of the new fiscal year.

    Fewer forms to fill out

    To reduce and simplify paperwork, we:

    • Eliminated the Annual Certified Cash Count by Site (Form CC).
      • You no longer need to audit games in play to reconcile start banks.
    • Condensed the Annual Certified Physical Inventory and Cash Count Summary (Form CI).
      • List the total cash count for each site. You no longer need to report the total dollar value of ending inventory.
    • Revised sections of the Annual Certified Physical Inventory and Cash Count Summary by Site (Form INV).
      • List the total cash count for all forms of gambling.
      • List all pull-tab, tipboard, raffle board, and paddlewheel games in your possession, including those in play. You no longer need to report the dollar value for each game (including paper bingo and raffles).
      • If your organization conducts paper bingo, you now submit the Physical Inventory/Bingo Paper Monthly Summary (Form LG903) for each site.

    New forms available on website

    If your fiscal year ends July 31 or later, you must use our updated forms (below) to report the annual inventory and cash count summary.

    For more information, see the Lawful Gambling Tax Instruction booklet.

    Questions?

    If you have questions, contact the Lawful Gambling Tax Unit at 651-297-1772 or lawfulgambling.taxes@state.mn.us.



  • 21 Jul 2017 12:01 | Amanda Horner (Administrator)

    This article originally ran in Duluth News Tribune on July 21, 2017. View the original article here.

    Charitable gaming in Minnesota is still limping along, but its obituary was written this week anyway after the fiscal year ended and the disappointing numbers could be considered.

    It isn't that Minnesotans are giving less to worthy causes. It's that the state's taxes on raffles, bingo, and the sales of pull tabs are now totaling more than the proceeds that are able to be contributed to Little League neighborhood baseball, scholarships, police dogs, local zoos, youth football, food shelves, and other good causes. Charitable gaming has been supporting such things in Minnesota for more than seven decades, ever since 1945.

    "And this was the first year more was paid in taxes to the state than was able to be donated to the local causes," Amanda Horner, the administrator of Allied Charities of Minnesota, which oversees the state's 1,200 charitable nonprofits, said in an interview Wednesday with the News Tribune Opinion page.

    Those nonprofits include the Irving Community Club in West Duluth, which serves as a great example of what's happening with state taxes on charitable gaming as high as 36 percent. Irving's profits from pull tabs and other gaming last year totaled a little more than $1 million. Of that, $733,000 — a whopping 72 percent — went to the state's coffers in St. Paul in taxes and fees. Just $306,000 was able to be doled out to support and to help pay for community wants and needs. Put another way, for every $1 Irving used to support kids and neighborhoods, it paid more than $2 to the state in taxes and fees.

    "We are tax collectors for the state of Minnesota," Irving Community Club's Genny Hinnenkamp said in an interview in May with the News Tribune Editorial Board. "That's practically all we are."

    It isn't right. It's upside down. Taxing charitable donations at such levels is just cold.

    "It's really sad," Hinnenkamp said. "The government is that greedy that they take away from the children."

    Most lawmakers agree — verbally and publicly anyway. But legislatively? A request this past session to stop taxing the money charitable nonprofits distribute to schools, youth-serving organizations, T-ball teams, and others in real need went nowhere. The charitable organizations argued to lawmakers that they'd be happy to continue paying state taxes on pull-tab sales, the paper used to produce pull tabs, the wages paid to pull-tab operators and others, and more. But do their charitable contributions really have to be taxed, too?

    The bottom line for a majority of elected state leaders proved to be the bottom line: Charitable gaming produces big bucks for the state, including for the new Minnesota Vikings stadium. With hardly anyone other than the charitable nonprofits and their association screaming for change, why mess with a lucrative and politically painless funding source?

    Charitable gaming's obituary was shared by Horner with the News Tribune Opinion page after being written by Allied Charities Executive Director Al Lund.

    "In fiscal year 2017, sales were up 12 (percent), but taxes were up 16 (percent)," Lund lamented, calling the situation "the strangling of the golden goose."

    "It was a good run," he wrote at alliedcharitiesmn.org. "Charitable gaming will now be known as The State of MN Charity. Details are yet to be worked out, but beneficiaries of past charitable donations will need to go to St. Paul to ask for help. In lieu of flowers, relatives ask that you not send any money to the state."

    And don't rest in peace — not until this taxing situation can be made rightside up again.

  • 19 Jul 2017 08:54 | Amanda Horner (Administrator)

    Details are not yet fully in, but indications are that on June 30, 2017 Charitable Gaming in Minnesota crossed the Rubicon.  Reports are that in fiscal year 2017 sales were up 12%, but taxes were up 16%.  As a result, more money went to the state than there was for local needs.

    Born in 1945 to raise funds for church and community needs by conducting bingo (mostly in church basements and at county fairs) it culminated in 2017 with the strangling of the golden goose. 

    It was a good run, but at the conclusion of fiscal year 2017 Charitable Gaming paid more in taxes to the state of MN than it had for communities and missions. 

    The post mortem will continue, but all indications are that there were two contributing factors.  The 2012 stadium bill that made millionaire professional football team owners into billionaire professional football team owners at the expense of Minnesota communities and a seemingly insatiable appetite by the state for increased tax revenue at the expense of community based non-profit groups.

    Charitable Gaming will now be known as The State of MN Charity.  Details are yet to be worked out, but beneficiaries of past charitable donations will need to go to St. Paul to ask for help.

    In lieu of flowers relatives ask that you not send any money to the state.  A memorial service will be held sometime in the future, details to follow.   


  • 30 Jun 2017 10:52 | Allen Lund (Administrator)

    Members,

    I wanted to relate something to you that has been troubling me.  In the not too distant past I had two legislators tell me that they would like to better understand what charitable gaming organizations do with the money that we raise.  The first time this was said to me I thought it was an honest request for more information.  The second time I realized that it was not an isolated incident, but something that must be being circulating at the legislature. 

    I believe that the people that do not want any change in the status quo for licensed charitable gaming organizations are planting seeds of doubt as to whether or not we are being good stewards of the money that we raise.  They are doing this by talking about our seventh consecutive fiscal year dollar sales increase (I can’t understand why they constantly complain when their sales just keep going up.).  Talking about how few of us are paying the high taxes (Really only a small percentage of them pay the high taxes.).  Talking about how qualified 501’s can transfer funds (Did you know that some of them pay themselves?).  Talking about pay (Did you know that there are gambling managers who actually get paid?).  All of this is designed to negate/counter our concerns over how we are treated by the state. 

    The message that I want to leave with you today is this:  WE CANNOT DO ANYTHING THAT IS NOT EXPRESSLY APPROVED IN RULE OR STATUTE.  Contrast that with MN Lottery operating under the assumption that they can do anything not expressly prohibited in statute.  If the state does not like a provision that we currently operate under they can work to change that, but people need to stop making it seem like we are making it up as we go along.  There is NO ONE that would trade with us for our laws, regulations or tax structure.  Just ask the for-profit gambling competitors if they would and see what they say.

    I could take (NOT ACCEPT) the state telling us that there will be no tax relief, that we will just have to come to grips with paying for the stadium for the next 25 years.  Better that than implying that we are operating in a gray area, on the fringes of society and that is why no changes will be forthcoming for us.

    I have sent the donations that were made in the legislator’s districts to the legislators in question.  The lists impressed me greatly.  The work that you folks do for little or no pay and even less recognition is in my eyes amazing.  If you have not already done so, share your 2016 donations with your legislators.  What we do and how we do it is not easily explained to those unfamiliar with charitable gaming, it takes time and effort.  Legislators need to fully understand that you and your organizations are assets to your community and to the state, not liabilities.  Do not apologize for what you do to help your communities or missions.  If we do not stand up and defend what we do, it will someday be taken from us. 

    There is nobody that can tell your organization’s story better than you can.  Do it for your organization, your community and yourself.  Do it today. 

    Regards,

    Al


  • 27 Jun 2017 09:00 | Allen Lund (Administrator)

    Members,

    ACM has long believed that having only one lease agreement with the distributor for e-tabs and paying sales tax on that full amount is wrong. We have drafted two agreements, one that deals with the lease of the equipment (which sales tax will be collected on) and one that deals with the revenue sharing (which sales tax will not be collected on).  We left the amounts for both of those blank, that is between you and your distributor. Below are the two agreements.  Use these as you see fit.

    ACM-AGREEMENT for electronic pulltab games V.3[1] (3).pdf

    ACM-LEASE AGREEMENT FOR ELECTRONIC PULL Tabs (4).pdf


  • 02 Jun 2017 10:27 | Amanda Horner (Administrator)

    This article was written by Al Lund and originally appeared in the Rochester Post Bulletin on May 31, 2017.

    Toward the end of the 2017 legislative session, a seven-page bill (House File 1415) legalizing the online daily fantasy sports business was heard in committee in the Minnesota House of Representatives. The bill also licenses, regulates and taxes for-profit companies such as Fan Duel and Draft Kings. All in the space of seven pages.

    By comparison, Minnesota's community-based, non-profit charitable gaming organizations -- the operators of bingo, raffles and pull tab games that invest directly in their local communities -- have at least 200 pages of statutes and rules that regulate everything they do.

    The organizations that the Legislature believes need more regulation than the secretive, billion-dollar fantasy sports enterprises include groups like the Rochester American Legion Post 92. This nonprofit raises funds for local missions like youth baseball and hockey programs, Boy and Girl Scouts troops and high school graduation parties

    In addition to the excessive regulation, the Rochester American Legion is taxed at a rate of over 27 percent and paid more than $33,235 more in taxes to the state than they were able to donate to their mission.

    The Rochester American Legion Post 92 is only one of many organizations working throughout Southeast Minnesota to make our communities better places to live and work – all at no cost to taxpayers.

    The Legislature's treatment of the Legion and similar groups is unfair and here's why:

    Charitable gaming is not against competition or afraid of competition, but a leveling of the playing field is needed. Giving the keys to the state to for-profit competitors that only take is hard to understand and even harder to stomach.

    Fantasy sports will be the fourth group of for-profit direct competitors to charitable gaming (card rooms, horse racing and casinos being the other three). They are all being regulated and taxed

    at a fraction of charitable gaming. We would take their deal in a heartbeat.

    These other gaming organizations are taxed at only the corporate rate of 9.5 percent. If charitable gaming organizations had that rate, we would have had another $35 million to help our communities and missions. Charities are paying up to seven times the rate of their for-profit

    competition. That is an insult to everything that we do and stand for.

    The two behemoths in daily fantasy sports, Fan Duel and Draft Kings, have not paid any tax or provided any social benefits to Minnesota in the five years that they have been in business. Charitable gaming is paying $60 million in taxes this fiscal year and putting another $60 million into our communities. Add to that the fact that we are employing thousands of people and paying $25 million in local rents, helping to keep our sites in business.

    The daily fantasy sports bill was abruptly pulled by its authors before the end of session, keeping the games legal and operating with even less regulation than outlined in the bill. The issue is all but certain to come up again in future legislative sessions.

    Between now and February 2018 when the Legislature re-convenes, we will be talking to Minnesotans about the importance of tax and regulation relief for charitable gaming organizations. The current structure of community charities paying 36 percent in order to pay for the billion-dollar NFL stadium while fantasy sports and other forms of gaming in Minnesota enjoy a tax rate of less than 10 percent does not sit well with many Minnesotans. Many communities across the

    state are already feeling the effects as charities are forced to turn down local grants to pay their tax bill.

    What our members are asking for is simple: either treat for-profit gaming companies like us, or treat us like everybody else.

    "Something has to change," said Roger Vangness, Legion Post 92 gambling manager. "We didn't get into charitable gaming to be a revenue stream for the state. We want to help our

    community."


  • 23 May 2017 14:41 | Amanda Horner (Administrator)

    This article originally appeared in the Fargo Forum on May 22, 2017. View the original article here.

    A bill (H.F. 1415) licensing and regulating Daily Fantasy Sports (Fan Duel, Draft Kings and others) recently was heard in committee in the Minnesota House of Representatives. The legislation is seven pages.

    By comparison, Minnesota's community-based, non-profit charitable gaming organizations - the operators of bingo, raffles and pull tab games that invest directly in their local communities - have at least 200 pages of statutes and rules that regulate everything they do.

    The organizations the Legislature believes need more regulation than the secretive, billion-dollar fantasy sports industry include Moorhead Youth Hockey Association, a group raising money to make the expensive sport of hockey affordable for local kids.

    In addition to the excessive regulation, Moorhead Hockey is taxed at a rate of 30 percent and now pays $53,036 more in taxes to the state than it is able to spend on its core charitable mission. The Legislature's treatment of the Moorhead Youth Hockey Association and other non-profit charities working to make our communities better places to live and work is unfair and here's why: Fantasy sports will be the fourth group of for-profit direct competitors to charitable gaming (card rooms, horse racing and casinos being the other three). They are all being regulated and taxed at a fraction of charitable gaming. We would take their deal in a heartbeat. These other gaming organizations are taxed at only the corporate rate of 9.5 percent. If charitable gaming organizations had that rate, we would have had another $35 million to help our communities and missions. Charities are paying up to seven times the rate of their for-profit competition. That is an insult to everything that we do and stand for.

    The two behemoths in daily fantasy sports, Fan Duel and Draft Kings, have not paid any tax or provided any social benefits to Minnesota. Charitable gaming is paying $60 million in taxes this fiscal year and putting another $60 million into our communities. Add to that the fact that we are employing thousands of people and paying $25 million in local rents, helping to keep our sites in business.

    Allied Charities of Minnesota, the organization representing charitable gaming, supported legislation in this year's session to provide relief to charities. The bill stalled with no sign of resuscitation. Despite a $1.6 billion state surplus, a bipartisan agreement on the need for tax reform for over-burdened groups and a clear message from the 2016 elections that voters in Greater Minnesota are feeling left behind, most legislators refused to even listen to us.

    Perhaps the greatest irony and slap in the face is that community-based charities are paying tax rates of up to 36 percent in order to pay for the billion-dollar NFL stadium. Meanwhile, fantasy sports couldn't exist without taxpayer-funded stadiums and ship all the benefits out of state.

    We're not giving up. ACM plans to redouble its efforts in the coming legislative sessions to gain regulatory and tax relief for charities. We hope everyone who cares about the future vitality of Moorhead will urge their legislators to support us.

    Lund is executive director of Allied Charities of Minnesota


  • 18 May 2017 21:42 | Amanda Horner (Administrator)

    This article originally appeared on WJON on May 18, 2017.

    MAY 18 – When you spend time playing pull tabs, bingo, and meat raffles a big chunk of the money you spend is going to the state, not the charity you’re there to support.

    Al Lund is the executive director of Allied Charities of Minnesota. He says charitable gaming has been left out of any kind of tax relief for this legislative session.

    Minnesota taxes charitable gambling at 36 percent, far higher than the next closest state of North Dakota’s 10 percent.

    This was never intended to be a boon to the state. Charitable gaming was intended to benefit our local communities. We have 200 charities now, out of 1,200 that conduct charitable gaming, that are sending more to the state than they do for their communities and their missions.  We believe in our heart of hearts that is wrong.

    He says North Dakota charges only 10 percent as their top tax rate.  He says they would take that deal.

    One of their other issues is the competitors in gambling in Minnesota – horse racing, casinos, and card rooms – pay the corporate tax rate, even though they are for-profit companies. That corporate tax rate is 9 1/2 percent.

    Lund says, in Minnesota, for every dollar spent on charitable gaming .50 cents goes to expenses, .36 cents is paid in state taxes, and that leaves .14 cents left for donations to local communities.

    The current tax structure was put into effect in 2012.

    Lund says they have about three of their member organizations quit doing charitable gambling each month, because they’re paying more to the state than their community.

    Deb Fischer from the Central Minnesota Noon Optimist Club says last month, after prizes and expenses, her organization gave about $1,800 to charity and paid nearly $10,000 in state taxes.  Fischer says their club runs pulls tabs, bingo, and meat raffles at six bars and one gas station. Their mission is about helping kids.



    Read More: Charitable Gaming: 36 Percent State Tax Rate Not Fair | http://wjon.com/charitable-gaming-36-percent-state-tax-rate-not-fair/?trackback=tsmclip


  • 18 May 2017 12:56 | Amanda Horner (Administrator)

    This article was written by the Duluth News Tribune Editorial Board and originally appeared on May 18, 2017.

    It's called charitable gaming because the tens of millions of dollars raised in Minnesota every year from raffles, bingo, and the sales of pull tabs help support Little League neighborhood baseball, scholarships, police dogs, local zoos, Animal Allies, youth football, food shelves, and other community needs and niceties.

    But Genny Hinnenkamp, the gambling manager for Irving Community Club, the largest charitable-gaming nonprofit in Duluth, has another name.

    "We are tax collectors for the state of Minnesota. That's practically all we are," she said last week in an interview with the News Tribune Editorial Board.

    Hard to argue with her when a whopping 72 percent of Irving's charitable gaming profits goes in taxes and fees to state coffers. Irving's profits last year totaled a little more than $1 million. Of that, $733,000 went to St. Paul. Just $306,000 was able to be doled out to support and help pay for community wants and needs in West Duluth.

    Put another way, for every $1 Irving uses to support kids and neighborhoods, it pays more than $2 to the state in taxes and fees.

    It's not right. It's upside down, argues Allied Charities of Minnesota, charitable gaming's overseer in the state. Irving is among about 200 of the 1,200 licensed charitable gaming nonprofits in Minnesota that are upside down that way.

    No surprise then that charitable gaming advocates were in St. Paul in force this legislative session looking for relief. So more money could be directed to doing more good in their local communities, they asked if they could stop paying taxes on the money they charitably distribute to schools, youth-serving organizations, T-ball teams, and others in real need. They'd still pay state taxes on pull-tab sales, the paper used to produce pull tabs, the wages paid to pull-tab operators and others, and more. But do their charitable contributions really have to be taxed, too?

    The ask hardly seems unreasonable. Taxing charitable donations is just cold. "It's really sad," as Hinnenkamp put it. "The government is that greedy that they take away from the children."

    Most lawmakers agree — verbally and publicly anyway. But legislatively? The request went nowhere this session.

    And that actually shouldn't be surprising either. Charitable gaming is little-noticed and produces big bucks. The state expects to receive about $60 million this year by taxing charitable gaming. No longer taxing donations on the back end would reduce the state's take by $16 million. Other than the charitable gaming organizations, no one is screaming for the state to take the hit. So why should they, lawmakers can figure.

    Charitable gaming also is helping to pay for the Minnesota Vikings' football stadium in downtown Minneapolis. The first $36 million the state gets annually from pull-tab taxes goes to its general fund. The rest goes to the stadium. Lawmakers clearly see little reason to mess with a funding source so politically painless.

    But, "All we're trying to do is get more money into our communities. That's it," Lund said. "Instead, our biggest 'charity' is the state."

    That hardly seems charitable.


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