"Where does the money go?", "Is it going to a good cause?",
"Can we do that or play that here?", "Why can't we do this?"
These are probably the most common questions I get as the Gambling Manager at our Post.
These are great questions. Unfortunately, I can't always answer them all right away. Sometimes I have to research to insure my answers are correct. There are a lot of rules, laws, statues if you will, related to Charitable Gambling. What I did is create this page on our website so people can go and see some of the answers to those questions I am asked. This does not cover everything but hopefully helps you see why we do or do not do some of the things you ask here and understand why. I hope you find this useful. If you have any questions about Charitable Gambling please do not hesitate to ask.
I located these answers on internet at:
Types of Gambling Allowed
The only types of gambling that may be conducted by nonprofit organizations are
pull-tabs, bingo, paddlewheels, tipboards, and raffles.
Nonprofits have also held card tournaments, including Texas Hold’em contests,
under a state law limiting prizes and preventing direct benefit to the organization.
Use of Proceeds
An organization’s gross profits from gambling (gross receipts minus prizes) can be used only for
“Allowable expenses”
(defined as expenses directly related to the conduct of gambling) and
expenditures for “lawful purposes” (including gambling taxes). There are no specific limits on
how much a licensed organization can spend on allowable expenses, however, most licensed
organizations must spend at least 30 percent of gross profits annually on lawful purposes, or face
sanctions from the board. Bingo halls need only spend 20 percent.
“Lawful purposes”
include the following:
• Any expenditure by or contribution to a 501(c)(3) tax-exempt organization, or to a
501(c)(4) organization that conducts a community festival, if the organization meets
board operating and expenditure standards
• Contributions to, or expenditures to benefit, individuals or families to relieve poverty,
homelessness, or disability
• Contributions for treatment of problem gambling
• Contributions to an accredited educational institution
• Contributions to an individual, a school, or the scholarship fund of a nonprofit
organization whose primary mission is to award scholarships, where funds are awarded
through an open and fair selection process
• Activities that recognize military service
• Contributions or expenditures to honor humanitarian service demonstrated by
philanthropy or volunteerism
• Recreational, community, and athletic facilities primarily for persons under 21,
provided they do not discriminate on the basis of gender
• State, local, and federal taxes on gambling, state unrelated business income tax on
gambling, and state license and premises permit fees
• Property taxes on gambling premises an organization owns or, in the case of a veterans
organization, leases
• Contributions to government and government agencies (except a direct contribution to
a law enforcement or prosecuting agency)
• Contributions to or expenditures by a religious organization
• Contributions for citizen monitoring of surface water quality
• Department of Natural Resources-approved expenditures on public snowmobile and
ATV trails
• Expenditures for outdoor natural resources, including wildlife management projects,
maintenance and grooming of public trails, and DNR-coordinated safety training and
education, when approved by the DNR
• Nutritional programs, food shelves, and congregate dining programs primarily for
disabled persons or persons age 62 and older
• Contributions to community arts organizations or expenditures to sponsor arts programs
in a community
• For veterans organizations, payment of certain utilities on the building used as the
organization’s primary headquarters, and spending up to $5,000 in a year for meals and
other membership events for members and spouses that recognize military service
With limited exceptions, “lawful purposes” do not include the building, repair, maintenance, or
improvement of a building that an organization owns or leases, unless
(1) the building will be used exclusively for a lawful purpose;
(2) the building will be used extensively as a meeting place by other nonprofit organizations or
service groups with no rental fee; or
(3) the building replaces another building owned by the organization that is destroyed or made
uninhabitable by fire or catastrophe, or is taken by eminent domain.
Also excluded from “lawful purposes” are
(1) expenditures to influence governments or elections;
(2) contributions to a parent organization if the parent organization gives any money to
the contributing organization; and
(3) contributions from one organization to another unless the contribution is approved by the board.
Gambling Manager
Pine Island Post 184
Lic.# 00308