Overreaching regulations. Overzealous enforcement. Unscrupulous operators. Grey markets, legal loopholes, and all this in the name of charity.
These unfortunate issues have plagued the charity poker industry in the US for all most two decades now. An industry born out of archaic laws in place to help nonprofits raise money for a good cause that have been manipulated to allow poker games to run regularly in places they are otherwise illegal.
The question is: Are charity poker rooms using various charitable gaming regulations to raise money for charity? Or, are they doing it to raise gambling revenues in places where casino gambling is against the law?
Those looking will find a similar pattern in charity poker industries in several states, ever since poker boomed in the early 2000s.
How do charity poker rooms start?
First, a charity runs a successful charity poker tournament or casino night in a state that allows nonprofits to do so. Seeing the success, a charitable gaming organization either comes in or opens up. It takes over operational control of future events on behalf of the charity, for a fee.
The charitable gaming organization finds a venue it can operate out of. Then, it finds a revolving set of charities to work with in order to skirt around limits on the number of events each individual nonprofit can run.
The charity poker room is up and running. Operators pay the various charities the 35 to 50 percent of any revenue mandated by state law. They pay whatever tax the state charges as well.
Skirting around the law
However, as the operation matures, the charitable gaming organization behind it often seem to get restless. Ultimately, they look for new and innovative ways around the laws limiting the hours it can operate, or the games it can offer. Some even get funny with the money, looking for a way to keep more of the proceeds.
The popularity of the room increases, bringing more scrutiny from local regulators and law enforcement officials. Locals with an anti-gambling agenda put pressure on officials to ensure the charity poker rooms operate within the letter of the law.
The charity poker rooms are inevitably hit with various fines for even the most innocuous infractions, and they are often forced to shut down.
There are states with and without legal gambling that have embraced charity poker operations and all they can do for a local community and its charities. However, there are more that have followed the pattern outlined above, forcing them out or close to it.
Indiana eyes top grossing charity casinos
Indiana has gone after its two largest charitable gaming organizations over the past year.
In the summer of 2017, the Indiana Gaming Commission shut down Fort Wayne’s Fraternal Order of Eagles 3512 charity gaming nights. The commission alleged the organization violated state gambling laws, security regulations, and may have been providing less money to charity than state law mandates.
However, officials have not provided precise details on the various violations.
The Fraternal Order of Eagles 3512 charity gaming nights generated $3.9 million in revenue in 2017, tops among charitable gaming organizations in the state.
This summer, regulators set their sights on the Northside Knights of Columbus in Indianapolis, whose charity poker games generated $3.75 million last year, second only to the Fraternal Order of Eagles in Fort Wayne.
State regulators are now investigating the Northside Knights of Columbus regarding a series of undisclosed issues and possible license violations.
Northside Knights of Columbus officials claim the violations involve only very minor infractions. This includes things like not displaying enough “No Tipping” signs, giving free food to players, and not putting enough copies of its gaming license on the wall.
It could be that an anti-gambling element in the state have regulators nitpicking the top charitable gaming organizations’ every move. However, Indiana Gaming Commission officials claim the violations are not insignificant and they are treating the situation seriously.
New Hampshire’s charity poker boom
In New Hampshire, more than a dozen new charity poker rooms have launched since the state passed new charitable gaming statutes last year. The new laws allow the rooms to run poker, blackjack, and roulette games. However, they must give 35 percent of the proceeds to registered charities and 13 percent to the state.
The first fiscal year with charitable gaming in New Hampshire has seen the rooms generate more than $5.8 million for charity and $1.7 million in state tax.
However, not all the news is good news.
One operation was forced to close its doors for a week and hit with various fines for issues that mostly surround paperwork errors. Regulators might have a legitimate gripe, or it could be another nitpicking situation. Locals might not want this specific charity gaming operation in their backyard and they’re using gaming regulators to help remove it.
Of course, regulators and anti-gambling locals aren’t the only ones that have hurt the growth of charitable gaming across the country. Sometimes, the injuries sustained by charitable gaming organizations are self inflicted.
Too much, too soon in Massachusetts
In 2011, charity poker rooms across Massachusetts were thriving in a budding industry. Then, one operation took things a bit too far.
Places like the Portuguese National Club in Stoughton and Silver Fox in Everett ran regular tournament schedules and made sure the state got the five percent tax it charged on charitable gaming revenues.
Casino gambling was illegal in Massachusetts at the time. However, these charity poker rooms took advantage of an exception allowing charities to hold casino nights three times a year.
The poker rooms brought in a rotating group of nonprofits to play the charity role and keep the operations running several days a week.
However, then-Attorney General Martha Coakley soon got wind of the growth the budding industry was enjoying. She decided to take a closer look.
When Coakley said she would be specifically investigating the charity poker room at the former Raynham Park dog track, operators simply shut it down.
The Raynham Park operation had quickly grown into a full fledged 28-table casino with poker, blackjack, and roulette. There were poker games with $1,000 pots, despite the law not allowing anything over $25.
Raynham Park operators had to know it was far too much for gaming regulators to stomach. They saw no other choice but to shut down.
Since then, most of the rest of the charity poker rooms across Massachusetts have followed suit. They shut down rather than continue any ongoing cat and mouse game with regulators and Massachusetts law. And they did so just in time for state’s first legal and regulated commercial casinos to open.
Both sides guilty in Michigan
Over in Michigan, both sides of the charity gaming issue have been guilty of a number of transgressions.
The Michigan Gaming Control Board has been embroiled in a crackdown on charity gaming since 2012. More than two dozen charity poker rooms have been shut down after the Board levied various allegations. Allegations that include fraudulent activity like skimming charity revenues, setting up fake charities, and taking bribes.
However, various local charities and charity gaming organizations have maintained that a few bad apples should not spoil the bunch. Plus, the Board has cut off access to millions of dollars for charities, just to weed out these bad actors.
There’s no denying the crackdown has forced the decline of charity gaming in Michigan. Charitable gaming revenue peaked in 2011 at $197.3 million. It dropped to $86.3 million by 2014.
Michigan charity gambling proponents admit operators have been guilty of many of the violations the Board accuses them of. They have even accepted regulations cutting hours, restricting games, and forcing charities to be more involved.
However, they claim the Board’s continued focus on minor infractions amounts to harassment. Plus, the Board treats gaming suppliers, locations, and the charities involved like criminals.
Michigan’s charity gambling industry says it understands the need to weed out bad operators. It just doesn’t want to see the Board throw out the baby with the bath water.
The future of charity poker
In Michigan, and every other state dealing with this, charity gambling is going through an identity crisis.
Is it a way to raise money for charity? Or, is it just a way to skirt around gambling laws? It’s an unanswered question in most states. Unfortunately, an answer is required before a decision can be made on whether the industry should move forward, or simply shut down.