Sunday, April 25, 1999

Bingo facing tougher enforcement


Games getting more difficult to monitor

BY JANE PRENDERGAST
The Cincinnati Enquirer

        The big business of bingo is getting new scrutiny from regulators concerned about how much of the money is really going to charity.

INFOGRAPHIC
Bingo receipts in Tristate
        Top officials in both Ohio and Kentucky have pledged more enforcement of their state laws in light of a $1 million investigation of alleged money-skimming by a bingo in Cincinnati and more license denials in the commonwealth.

        “We want them to be legiti mate,” said Susan Klimchak, spokeswoman for Kentucky's Public Protection and Regulation Cabinet. The department doesn't want to hassle legitimate charitable games, “but by the same token, we don't want people out there raising money for their own purposes.”

        Bingo is huge business. Americans spent billions on it last year. In the Tristate alone, people wagered more than $87 million in 1997.

        And the game's not just for little old ladies in Catholic church basements anymore.Bingos have sprung up in storefronts throughout Greater Cincinnati, as they have across the country. More than 64,000 charities across the United States and Canada benefit from charitable gaming, according to the American Gaming Association. More than 750 organizations were licensed in Kentucky last year, another almost 1,200 in Ohio.

        Bingo is exempted from laws prohibiting gambling, but only if the games provide enough proceeds to a designated charity. Checking to see if they make good on those promises can be difficult when more and more storefront bingos and pull-tab operations are cropping up all the time.

        Some examples:

        • The rabbi and other members of the Kneseth Israel Congregation in Roselawn are expected to plead guilty next month after an investigation, police say, found about $1 million missing. The money from the sale of instant tickets was supposed to benefit the synagogue. Some members of the congregation insist the rabbi did nothing wrong and that the investigation stems from anti-Semitism.

        • In one of the largest discrepancies Kentucky auditors have ever found, a Breckinridge County bingo hall remains closed after an audit this winter found almost $300,000 unaccounted for.

        • Six bingo groups' licenses were denied last spring

        and summer by Kentucky's cabinet, with the reason at least partly that the games didn't meet their charitable purposes. At least three of those were operating in Northern Kentucky — the Grant County Children of Domestic Violence, Kenton County Task Force on Child Abuse and the Sportsmen's Network.

        The state has denied about 50 applications in the past two years, according to Ray Franklin, commissioner of the cabinet's Department of Charitable Gaming.

        In Kentucky, state law requires organizations to have operated in the state for three years prior to their bingo applications and to be able to demonstrate “reasonable progress” in accomplishing their charitable purpose. They're also required to give at least 40 percent of their adjusted gross receipts from all gaming to charity.

        But because Kentucky has only allowed charitable gaming since 1994, cabinet officials said they did not feel until recently that they had enough years of documentation to determine if a group was making the reasonable progress. Because they now feel they do have enough documentation, Mr. Franklin said, the stepped-up enforcement can be done.

        “If a review of the information provided on an application for licensure fails to satisfy the three-year requirement, the license application will be denied,” he said.

        In Ohio, law requires only sit-down bingo halls to be licensed. Operators without that kind of site are much more difficult to monitor. And that combination leaves a wide-open market for groups to get into the booming — and lesser-regulated — instant pull-tab business.

        In Ohio in 1997, in fact, total bingo receipts dropped by more than $4 million from the year before, to $351.7 million. At the same time, however, estimated instant pull-tab receipts rose — from $518.3 million in 1996 to more than $520 million in 1997.

        That picture is the same in Kentucky. In 1997, pull-tabs generated $406.8 million, compared with $116.1 million for standard bingo.

        Crackdowns on charitable bingos are taking place across the country.

        In Mississippi in 1997, a legislative committee evaluated the state's bingo division and found state law did not adequately address the risk of fraud. Those weaknesses left uncharitable activities licensed by the state and the state itself with too little control, the committee said. Law changes are under way.

        In South Carolina, the state Department of Revenue is widely publicizing its crackdown, which has included at least five arrests of bingo operators. Undercover investigators found operators allegedly selling bingo cards for more than face value, allowing the operators to evade some taxes. The crackdown came after a 1992 investigation found that less than 1 percent of bingo proceeds was being returned to charities.

        “Before, you had bingos in church basements or schools,” said Joanne Mahorney, a member of the state gaming commission who has run bingo for The Point in Covington for 19 years. “Now everybody wants to buy or find a hall.

        “My problem is whether the charity is legitimate. That's where the money goes.”

       



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