Fraction of bingo money ends up in hands of charities

Most money paid out as prizes to winners.

But the vast majority of that money gets paid out as gambling winnings, leaving much smaller profits for the organization to split between charity causes and its operational expenses.

Nonprofits in Clark and Champaign counties made more than $2.1 million in profits from bingo games last year, with more than half — about $1.3 million — going to charity organizations.

Most of the local organizations that offer bingo are fraternal and veterans organizations, which get to keep the majority of the bingo profits for utility costs and facilities maintenance while giving the rest to registered charities.

“For 501(c)(3) charities, they keep all the proceeds. With veterans or fraternal organizations they keep up to 75 percent of the proceeds,” said Pete Thomas, chief of the Ohio Attorney General’s Office charitable law section.

Bingo license applications previously had been handled by the Ohio Lottery while the attorney general was responsible for investigating charity fraud. Now DeWine’s office handles all regulation of the industry, from licensing of charities and bingo machine manufacturers to site inspections and investigating possible fraud.

The Union Club of Springfield was censured by the state in 2011 for not giving its bingo money to approved charities. The attorney general’s office ordered the club split in two and an audit of the club’s finances. As of this summer, no audit has been performed because two accounting firms found the books unauditable.

Thomas declined to say if there any local groups are currently accused of bingo fraud, but the office provided the approved license renewals for 26 local non-profits that offer bingo. Each showed that the required amount of money was given to approved charities last year.

Instant bingo generates big money

Traditional bingo, with a caller and numbered cards, is actually a money loser for most local organizations that offer it. Those groups make some money back on concessions sold during weekly or bi-weekly games, but not enough to cover the cost of prizes.

The biggest windfall is instant bingo, sometimes called “pull tabs” or “rip offs.” Most of the fraternal and veterans organizations in the Springfield area offer this type of game exclusively.

Wings of Love Crusades, a Christian ministry that runs a bingo hall and flea market to support its charitable mission, lost more than $164,000 on traditional bingo last year, but ended up with more then $280,000 in profit once instant bingo and concessions were added in. Its organizers declined to comment. It keeps its bingo profits for its mission, but its bingo license and IRS forms don’t detail what that money was spent on.

In 2012, House Bill 386 changed the way that bingo can be conducted at outside locations. Nonprofits can now contract with restaurants and bars to offer instant bingo on their behalf.

Big Brothers Big Sisters of Springfield gets more than half of the proceeds from instant bingo played at Murphy’s Irish Pub.

“It’s a great way to raise money without taking a lot of staff time,” said Big Brothers Big Sisters President Linda Shaffer. The group made a total of $3,800 in 2013 for its programs through instant bingo at Murphy’s and Victory Lanes, from which it get to keep 100 percent of the proceeds because it administers ticket sales themselves.

The profits for the bar are minimal, according to Murphy’s owner Felix Guerra.

“It’s more to keep people in the bar. If they win they’ll usually return it by buying something,” he said.

The bar also assumes all of the risk if tickets don’t sell, according to Shaffer. They must pay the charity their share of the ticket price upfront, so the organization is guaranteed to make a small profit.

For some organizations, the profits from instant bingo aren’t marginal.

The Union Club of Springfield, Wings of Love, Fraternal Order of Eagles 397, Loyal Order of the Moose 1215 in Urbana and Amvets 148 in Medway all reaped six-figure profits last year.

The Union Club made more than $500,000 for the charitable arm of the club in 2012 and gave away more than $66,000 in scholarships, according to tax documents filed with the IRS. In 2013 they made more than $600,000 in gaming profits and gave away more than $150,000 in scholarships, Jerry Numbers, president of the charity board, said earlier this year.

The club also gives to the Community Mercy Foundation, Relay for Life, QUEST Adult Services and The Soup Kitchen, Numbers said.

Games highly regulated

The attorney general’s office reviews all 1,800 bingo licenses in the state to confirm that organizations spend the proper amount with recognized charities each year.

“The bingo community is licensed and regulated from manufacturers all the way to distribution of profits,” said Thomas with the charitable law section.

Each license holder must fill out an annual application to renew its license. It must include how much bingo revenue came in, how much was spent buying equipment and tickets, how much was awarded in prizes and how much the organization gave to specific charities.

The attorney general’s office can double check those numbers based on data from the ticket manufacturers, bingo machines and the charities themselves.

If a nonprofit doesn’t give the proper amount to charity, or is using its share for a non-approved purpose like paying officers, it could face a fine or lose its license.

In 2011, the Union Club was forced to pay a settlement to the state for not donating the required percentage of bingo profits to approved charities. The club’s board was ordered to split into two separate entities, one to over see the for-profit social club and bar, and the other to oversee the charity side of the club, a nonprofit. The bingo license is issued to the nonprofit side of the club and profits must stay within its control.

Profits down

Statewide, bingo revenue peaked in 2005 at $1.4 billion and has declined every year since. In 2013, bingo brought in just less than $800 million in revenue statewide, putting net profits at about $96 million.

Most local groups made slightly less in 2013 than in 2012, according to their annual applications. Collectively they took in about $20,000 less in profits, which means less money went to local charities.

The opening of racinos and casinos as other gambling options in Ohio might have had a slight effect, local nonprofit leaders said, but that isn’t the main factor in declining profits.

“People don’t spend money like they used to,” said Keith Sage, commander of American Legion Post 286 in New Carlisle.

Most money spent locally

Many of the fraternal and veterans organizations who profit from bingo write a check to their national or statewide parent organizations as their official charity donation. But many local leaders said their organizations then give the money back to them in a separate bingo charity fund so they can donate the money to local causes instead of spending it out of state.

“We’re always trying to do things for the community,” Sage said.

The bingo application for American Legion Post 286 lists nearly $6,000 given to the American Legion Department of Ohio Charities last year, but Sage said that money ends up back in Clark County through donations to little league and soccer teams, Tecumseh school programs and food pantries like Impact Bethel.

Other organizations break down exactly where the 25 percent goes on their annual applications.

The Springfield Elks gave 15 percent of its $55,000 in profits last year to the Elks National Foundation, 5 percent to Ohio Elks Charitable Trust and 5 percent to the Community Mercy Foundation.

The Elks organization expects individual lodges to donate a certain amount of money to charity each year that goes above and beyond the amount dictated by the state bingo laws, said Elks Secretary Barb Fitzwater.

“We sure do appreciate (the bingo profits) because of what we can donate,” she said.

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