Charity gambling involves casino games such as slot machines, roulette tables, black jack, bingo, etc. for the purpose of raising funds for charitable organizations. It is a quick and easy way for a not-for-profit organization to obtain needed operating expenses. These games can consist of a one night affair, where patrons buy in for a set amount, then either keep their winnings, or collect tickets for their winnings and receive prizes for the most tickets collected. Or, some charities run ongoing games, usually bingo, to subsidize their expenses. Unfortunately, the charity bingo industry has come under much scrutiny.
Bingo for charity, or not?
The days of bingo being for little ol’ ladies with gray hair are over. The once popular carnival game has become a multi-billion dollar business which has entrenched itself in world culture. Detecting the illegal side of the game is difficult, making abuse rampant.
In a report titled, Racketeering and Organized Crime in the Bingo Industry, the Pennsylvania Crime Commission reported:
Promoters have infiltrated this industry and have very little to fear from law enforcement because of their low profile and because of the benign way in which society views Bingo. However, the significant amount of monies which these scams, frauds and diversions of revenue produce, represent a multi-million dollar loss to legitimate charities with very little risk of the perpetrators being prosecuted. In a very real sense, fraudulent charitable Bingo is the perfect white-collar crime.
What makes it so easy?
The charity’s failure to notice
Charity organizations that use Bingo to raise funds rarely know anything about the game itself. Due to this fact, many organizations trust the staff that owns the facility where the games take place. Eventually the charity allows the facility owner to manage the accounts for the game, giving the charity an ample profit with little or no responsibility. Even though a low percentage of the game’s profits actually go to the charity, the organization ‘turns its head’ and allows the organizer to use their good name to skim ridiculous amounts of money.
- Not all games are reported to regulatory agencies. Underreporting the receipts and pocketing the difference is the biggest problem and easiest form of scamming.
- Misrepresentation of attendance is another easy scam. One IRS affidavit in Kentucky stated that a charity Bingo game averaged 650 players during the week and over 1000 on weekends. Only 350 players were reported. If we can assume the average amount spent per player to be around $15, the scam artist/owner was pocketing between $4500 and $9800 per night.
The pull tab phenomena
Pull-tabs, also known as charitable gaming tickets, break-opens, hard cards, banded tickets, jar tickets, pickle tickets, lucky 7 cards, Nevada club tickets, instant bingo tickets, generate more profit at bingo games than bingo itself. They are small paper game pieces containing a number of perforated windows, which have to be pulled open to reveal a series of numbers or symbols, much like a slot machine window.
Boxes of tickets are sold to charities in batches called deals. Each deal has a specified number of winners at different wining values. For example: one box of 2400 tickets sells for $1 each. The total winnings from the box are $1,992. This results in a net profit of $408.
A recent IRS examination in the state of Ohio found that scamming of pull-tabs has generated as much as a quarter of a million dollars annually. Game operators easily purchase pull-tab deals from the manufacturer for cash. The charity did not receive an invoice for the transaction, and the operator easily pocketed the total profits.