Bingo! won't be yelled in Salem anytime soon -- at least not at the VFW building. VFW Vice Commander Charles Nelson says the new regulations require a lot more than the local organization wants to get into.
"We're just a little organization," Nelson said. "In order for us to hold weekly bingo we'd need a lot more help. Everything has to be done by volunteers and the record keeping the state requires is a little overwhelming."
In November of 2006 Arkansas voters approved a constitutional amendment that would allow bingo and raffles to be carried out by non-profit organizations. The amendment requires the organization to have held their non-profit status for at least five years and use all net proceeds for charitable, religious or philanthropic purposes.
Bingo and raffles have been used in Arkansas for years to raise funds for various institutions. But, it wasn't until 1997 when the Arkansas Supreme Court interpreted Article 19, Section 14 of the state constitution to include bingo halls as gambling houses, that local law enforcement across Arkansas began clamping down on these activities. That's when the drive began to legalize charitable bingo and raffles.
Proponents of the amendment said that nonprofits such as churches, volunteer fire departments, volunteer police organizations and veterans groups would be able to bring in much needed funds. However, the 14-page rules of Act 388 of 2007 have many wondering how small nonprofits can comply to the regulations -- especially the record keeping part.
In accordance with the Act, records relating to bingo and raffles must be kept for six years. The records must contain the names, addresses and telephone numbers of all volunteers present and involved in administering bingo and raffles, as well as the names, addresses and telephone numbers of all prize winners and the prizes they were awarded. If the prize was donated, the name, address and telephone number of the donor must also be kept on file.
"We would need a minimum of three volunteers to operate the bingo games - a caller, a checker and someone to operate the concession," Nelson said. "Then we would need a volunteer to take on the record keeping which is a pretty big job. On bingo night we would have 20-50 people playing. We only had $20, $25 and $30 prizes and a progressive prize that might increase to $200 to $300. Nothing big, but it would take a lot to keep the records up."
In addition to the extensive record keeping, nonprofit organizations that want to operate bingo or raffles must apply to the Department of Finance and Administration for a license. The $100 fee authorizes the organization to conduct both bingo games and raffles at a specified location for one year or until the renewal date of June 30 each year.
According to Danny Mitchell, manager of the miscellaneous tax division for the state of Arkansas, if an organization wants to hold a bingo fundraiser at a fair or festival and not at the licensed building, an additional license must be purchased. Mitchell said that in most cases the temporary license will cost the organization $25.
Organizations that do not regularly conduct bingo or raffles can be issued a temporary license to conduct one bingo session ($25); a class one temporary raffle license to conduct one raffle ($25); or a class two temporary raffle license to conduct one raffle in which the total prize package is less than $500 ($10).
Each year the nonprofit organization must reapply for the license and send a report, with records maintained to support the report, which contains: the total amount of gross receipts from bingo and raffles; net proceeds from the events; how these net proceeds will be applied; and a list of business related expenses.
The nonprofits must purchase bingo equipment, bingo faces (cards) and raffle tickets from authorized distributors or manufacturers, who must also have an Arkansas license ($2,500). These faces and tickets are numbered and marked with an Arkansas seal in the "free" space of the bingo face.
Mitchell said that organizations who already own bingo equipment will not have to purchase new equipment, which has a 10 percent tax added to it, but will have to purchase new faces which have a one-cent tax per card.
"The one-cent tax per card doesn't sound like much," Nelson said. "But, we've been paying $26 for a box that contains 9,000 faces and now they will cost us at least $116 a box. Plus, we would have to buy from a supplier that is licensed in Arkansas. We could have absorbed that extra cost, or raised our price for the cards, but that was just a little part of the problem."
Mitchell said that the one-cent tax on cards has been the main complaint his office has received. "Some organizations feel that the tax they are paying on the cards is taking away from their charitable funds," Mitchell said. "The only alternative might be to require those who operate bingo to purchase a tax number for $50 like other businesses do and pay sales tax on their total receipts each month. That would mean having to fill out a monthly report. Now, the distributor is the one responsible for paying this tax to the state."
Because these regulations were issued as emergency regulations there is the possibility the Department of Finance and Administration or the General Assembly could change the regulations after receiving public comments. Mitchell said that anyone who would like to make a comment on any of the regulations can do so by mailing it to the Arkansas State Revenue Department, Miscellaneous Tax Division, P.O. Box 2240, Little Rock, AR 72203.
"A nonprofit organization is tax exempt," Nelson said. "And, this is the way the state is collecting their taxes. With the tight regulations, the only one making money is the state. But, one reason this country is so great is because if we don't like something, we can say something."
Nelson said the local VFW has about 40,000 bingo faces that can't be used in Arkansas. "We will probably try and sell them to someone in a neighboring state," he said.
Although the Salem VFW have made the decision not to hold weekly bingo games, the future may bring a different decision. "Right now, we're going to just sit tight and see if anything changes," Nelson said.