Nonprofits: Small games act big loser
By Chris Buckley
Published: Saturday, Dec. 1, 2012, 12:16 a.m.
The Brownsville American Legion has closed, a victim of the unwieldy small games of chance law that many lawmakers felt would help, not hurt, nonprofit organizations.
Many legions, VFWs and volunteer fire companies may close their doors after the reporting aspects of state Act 2 of 2012 go into effect in February.
“We're dying,” said Russell Miller, commander of American Legion Post 301 in Connellsville.
“I have three to four legions ready to close.”
State Rep. Peter J. Daley, D-California, said legislators were led to believe nonprofit organizations that benefitted from small games of chance would be aided by the new law. Instead, it creates hours of weekly paperwork and severely curtails profits from such games, members of nonprofit organizations told Daley and a group of state legislators Friday during a press conference at the Donora American Legion.
Pennsylvania law since 1988 required all proceeds from small games of chance to be donated to charity. Legislators thought they were helping earlier this year when they passed Act 2, which increases prize limits and allows veterans clubs to keep 30 percent of their gambling proceeds.
But for clubs that say they've been keeping the money all along, unaware they were supposed to give it all away, the new law is a hindrance more than a help.
As a result, Daley said he and the southwestern Pennsylvania caucus are circulating a memo asking Gov. Corbett to place a moratorium on the act until the Legislature can address the concerns.
George A. Matis, a Redstone Township supervisor and member of the Fayette County community's fire company, said the law would kill bingos on which fire departments rely. He said municipal governments would have to raise taxes to fund volunteer fire companies if their fundraising source dried up.
“How do you tell 6,000 people we're going to raise their taxes to take care of the fire department?” Matis said.
The law permits clubs to keep just 30 percent of funds raised for their own use while requiring them to give the bulk to organizations providing community benefit. The money must be spent or allocated in the calendar year in which the proceeds are obtained.
Daley said officials of the Manheim VFW in Lancaster County – the largest such organization in the state – have vowed to shut down if nothing changes.
“If the (Manheim) VFW shuts down, God help all other VFWs,” Daley said. “How will fire departments survive?”
Daley said he and other lawmakers spent the summer visiting legions, VFWs and fire companies, listening to members' concerns.
State Sen. S. Timothy Solobay is a 35-year veteran of his hometown's fire department. The Canonsburg Democrat said he talked to VFW leaders in his district, seeking their input into ways to correct the act.
He noted that the act requires profits from small games of chance be used in the calendar year they are raised. He said fire companies buying large vehicles need to save money for annual payments.
State Rep.-elect Pam Snyder said that during the campaign, concerns over the small games of chance act were among the key issues she heard from voters.
“In my nine years as a county commissioner, two things we tried to do – make life easier for our firefighters and make life easier for our veterans,”said the former Greene County commissioner said.
State Rep. Brandon Newman said the push to repeal the act is a bi-partisan effort.
“It's important for all of us to understand what you do to make our communities operate,” Newman said.
State Rep. Rick Saccone, R-Elizabeth Township, admitted lawmakers “failed to look at the unintended consequences.”
“I'm still trying to figure out why government has to worry about what you put in a basket in a Chinese auction,” Saccone said.
State Rep. Jesse White, D-Cecil Township, said resolving the problem will require “street smarts” – understanding how to properly treat people and learning the role that many play in their communities.
“This was done by people in a room with a lot of book smarts,” White said of the act's creation. “But no one had street smarts – understanding what this is all about and what it's going to do to the people.”
State Rep. R. Ted Harhai said he could “sum up the act in one word – it stinks.”
“Actually, that's two words,” Harhai said with a smile, before turning a serious eye to the concerns of those fire company, VFW and legion leaders gathered at the event Friday.
“The last thing we want to do is hurt our fire departments and veterans. We're taking a long, hard look at how we can help, not hurt, our firefighters and veterans. We're all fighters. That's how we are in southwestern Pennsylvania.
“We're going to stick together and get it done.”
Act 2 requires organizations conducting Small Games of Chance to:
• Keep records of the names and addresses of any winner of more than $100.
• Withhold and remit income taxes on winnings.
• Report the number of W-2G forms issued.
• Report total gross winning that was reported on the W-2G form.
• Requires that only members of the organization holding the small games of chance license may sell raffle tickets.
• Disallow raffle tickets to be sold at convenience stores, if the employees selling tickets don't belong to the organization.
• Disallows tickets be sold at bars or other places holding a liquor license, other than the club selling the ticket.
• Keep no more thn 30 percent of funds for their own use.
• Give the remaining 70 percent to organizations providing community benefit, in the calendar year in which the proceeds were obtained.
• License holders for small games of chance to open separate bank accounts.
Chris Buckley is a staff writer for Trib Total Media. He can be reached at 724-684-2642 or firstname.lastname@example.org.
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