House requires all raffle profits go to charity
NASHVILLE (AP) — All net proceeds from a charity gaming event must go to the charity under changes to a bill approved Wednesday by the House Finance Committee.
The bill authorizing charity gaming originally did not require that any specific amount or percentage of the take go to the charity. It was amended earlier this week to say 50 percent of the net had to stay with the sponsoring agency.
The Finance Committee decided the public expects all the money to go to the charities holding the games, and changed the bill to require that.
Certain expenses still can be deducted.
“We can’t guarantee against every eventuality, but the bill is stronger than when we started; in fact it’s real strong,” said House sponsor Rep. Harry Tindell, D-Knoxville. “There are a lot of safeguards. I feel comfortable the overwhelming number of charities will abide by the spirit and letter of the law.”
The percentage of the net proceeds directed to charity was changed at the behest of several lawmakers, who said they thought 50 percent was not enough.
“I’m worried the floor is too low,” said Rep. Tre’ Hargett, R-Bartlett.
Rep. Tim Garrett, D-Goodlettsville, said, “I believe the people think every dime is going to the charity.”
The amendment to require 100 percent of the net proceeds was adopted unanimously.
The charity gaming legislation has undergone significant transformation in the last week. It originally would have opened the state to for-profit operators, raising the specter of the Rocky Top scandal of the 1980s when large operators took advantage of the state’s lax laws and oversight to run bingo games that were highly profitable for them but did little for the charities the games were allegedly intended to benefit.
The potential for abuse in the original bill caught the attention of several lawmakers and eventually Gov. Phil Bredesen, who stepped in and helped broker a compromise that eliminated third-party operators and added other safeguards.
Charity games were included in the amendment to the Tennessee Constitution approved by voters in November 2002 that removed the prohibition against lotteries. That created the state lottery, and charity games were envisioned as next in line. The only charities that can hold these games are organized under section 501(c)3 of the Internal Revenue Service code.
The bill authorizing charity games is expected to be before both the House and Senate next week. Lawmakers have struggled to write it so legitimate charities could hold annual fund-raisers using games of chance — rubber duck races, cakewalks, raffles and the like — without making the state vulnerable to unscrupulous operators.
The law still precludes gambling on what are considered games of skill — such as poker and blackjack — and the state constitution prohibits the use of casino-type games such as slot machines or roulette.
The committee added two other amendments Wednesday. One says companies or individuals providing services to charity games — such as tickets or advertising — cannot have had a felony conviction within the previous 10 years.
The second says other nonprofit organizations organized under a different section of the IRS code which convert to 501(c)3s can count their previous years of existence toward the five-year threshold for holding a gaming event.
The bill specifies that any organization holding an event has to have been in existence for five years.
An effort to lower that threshold to three years was defeated in the committee.
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Tennessee General Assembly: http://www.legislature.state.tn.us/