Minnesota Charitable Gaming Organizers Ask Lawmakers for Tax Breaks
Minnesota charitable gaming operators are asking the state legislature for tax breaks. Some of those charitable organizations say they pay more in taxes each year than they pay towards good works.
For instance, the Duluth charitable gambling foundation, Irving Community Association, said it pays more than double in taxes than it pays in charity work. Irving Community Assocation gives to chidren’s programs and food shelves in the Duluth area, but last year, ICA paid $2 to the state for every $1 it pays to good work.
Gambling Manager Feels Like a Tax Collector
Genny Hinnenkamp, a charitable gambling manager for Irving Community Association, says that the high tax rate is demoralizing to many nonprofits’ top staff. Knowing the money goes to government expenses makes one question their commitment to nonprofit gaming.
Hinnekamp said, “Our mission is to give back to the communities and take care of the children. But you wonder, is it worth just being a tax collector for the state?”
$306k in Charity Funds, $733k in Taxes
Last year, Irving Community Association paid $306,000. That is a helpful contribution to the community, but the foundation paid $733,000 in state taxes and fees in 2016, according to the association’s gambling manager.
The obvious implication is the association could fund more charity work if the state did not tax at such a high rate. The ICA joined the Allied Charities of Minnesota, a trade group of similar nonprofit gambling operations which is lobbying Minnesota state lawmakers for tax relief.
Department of Revenue Needs to Pay for Stadium
The Minnesota Department of Revenue is opposed to the tax relief plan. Nonprofit gaming taxes go into the state’s general fund. That fund pays for U.S. Bank Stadium, the Minnesota Vikings’ new domed stadium. The high tax rate was designed to keep a much-beloved NFL franchise in the state.
Currently, a charitable gambling tax relief bill is making its way through the Minnesota House of Representatives. Two separate House committees have passed the bill, which have bipartisan support. Allen Lund, who works as the head of the Allied Charities of Minnesota, discussed the current legislative initiative.
Genny Hinnenkamp on the Tax Rate
Genny Hinnenkamp recently testified before a House committee on the tax rate. She said that lawmakers were surprised to hear how much money was taken from the charitable organizations. Hinnenkamp said the fact that payments go to the US Bank Stadium make the issue more of an irritant.
U.S. Bank Stadium was built mainly for the sake of professional athletes. Irving Community Association works on behalf of “little leagues, youth hockey associations and after-school programs”, but has to work in an ad hoc situation. Flooding destroyed ICA’s headquarters in 2012, but the group still hasn’t been able to replace the damaged building.
$1.5 Billion in Charitable Gaming Revenues
In 2016, Minnesota gamblers spent $1.5 billion on charitable gambling, including pull-tabs, meat raffles, and bingo gaming. Of that money wagered, 80% is returned to players in the form of prize money. The remaining $300 million is divvied up among the state treasury and the charitable organizations themselves. The state receives the lion’s share of the revenues.
Minnesota Charitable Gaming
The Minnesota Gaming Control Board oversees all charitable gambling in the state. That includes bingo, pull-tabs, raffles, paddlewheels, and tipboards. Only registered nonprofit organizations in one of four categories can conduct charitable gaming: religious, veteran, fraternal, and “other nonprofit” organizations count.
Minnesota Paddlewheel Gaming: Tri-Wheel
Paddlewheel gaming involves a kind of wheel-of-fortune placed on the wall, which looks like a large, colorful dartboard. As players sit at tables around the room, paddlewheel is spun to produce results.
Minnesota Tri-Wheel is a good example of a local paddlewheel game.
Minnesota Pull-Tab Gaming
Minnesota pull-tabs are similar to the scratch-offs used in other states. These are produced on a large role of lotto cards which are separated by a perforfated tab. They are kept in transparent containers which allow the vendor to pull off the needed number of tabs. Minnesota now has electronic pull-tab games like Treasures of the Jungle, which has increased the popularity (and revenues) of the game.
Minnesota Tipboards: Legal or Not?
Minnesota tip tickets or tip boards are described by the Minnesota DPS page as “a board, placard or other device containing a seal that conceals the winning number or symbol, and that serves as the fame flare for a tipboard game”. They are a modified way to engage in sports-related betting which is not direct sports betting itself, which would be a violation of the PASPA federal law.
The bill which approved the Vikings Stadium also legalized sports-themed tipboards. The Minnesota Gaming Control Board declined to authorize them after the legislature passed them into law, fearing they were a banned form of sports betting. A tip board is similar to the sports lotteries offered in Delaware, Montana, and Oregon, but those states had their laws grandfathered in to the PASPA when it became federal law in 1993.
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