Article by William S. Ramsey, P.C.
FUNDING SERVICE ORGANIZATIONS
Every person involved with one of the not for profit organizations in our community knows one fact. The organization needs more money. This article will discuss the opportunities provided by the Maryland legislature for Howard County organizations to raise funds through gambling.
Which Organizations Are Eligible?
Only bona fide religious, fraternal, patriotic, educational, charitable organizations or volunteer fire departments which are legal residents of Howard County are eligible. I'll call them service organizations or the house. The games must be run by members of the organization. No individual may benefit - even tips from winners are forbidden.
What Games Are Permitted and Excluded?
Bingo, a paddle wheel, a wheel of fortune, a chance book or any other gaming device except a card game, a dice game, or roulette are permitted. Slot machines are not allowed. In addition, casino nights are not permitted.
Considerations in Raising Money Through Gambling.
Bingo. This is the bedrock of service organization gambling. A bingo night typically consists of 25-35 games with cash prized ranging from $25 per game to $1000 for the final game of the night, the "jackpot". A list of the games and the prizes are distributed to the players when they buy the printed sheets with multiple bingo squares. Each game is associated with a sheet with a certain colored border. Any number of sheets may be played; obviously the chance of winning increases with the number of sheets. It's essential to realize that the house can lose money if the prizes are not balanced to the number of sheets sold. A typical bingo operation may give away $1500 in a night (or other prizes, such as baskets, which cost $1500). If the average player buys $30 of sheets, the house will lose money if fewer than 50 players show up. Keying the size of the prizes to the number of players helps, but the turn-out is always important.
Pull-tabs (Also Called Jars). Pull-tabs should always be a feature of a bingo night, and should raise more money than the bingo games themselves. Pull-tabs are any of a variety of paper or cardboard devices sold for $1. The numbers or symbols inside the pull-tabs are not visible until they are torn open. Pull-tabs come in packages; when all of a certain package is sold, then the key is opened and the winning pull-tab identified. The return to the house on pull-tabs is about 30%. Since prizes are not awarded until the entire package is sold, the house cannot lose on pull-tabs.
Wheel of Fortune. The spinning of a large vertical wheel is a common feature of crab feasts, oyster dinners, bull roasts. etc. In a typical wheel, 64 spots are arrayed about the rim; the spot at the top after a spin is the winner. Each spot is marked with three numbers from 1-6. A player places a bet, say a dollar on a numbered square on a table. If the wheel stops at a slot bearing three different numbers, a bet on any of these three numbers would win 1 dollar and the return of the dollar bet. Some of the slots have duplicates or triplets, that is, the same number appears twice or three times. If a bet is on 5, and two 5's appeared at the top of the wheel; the player with a bet on 5 wins two dollars (in addition to return of the 1 dollar bet); similarly, if three 5's appeared, the player would win three dollars (in addition to the return of the 1 dollar bet). If 1 dollar is bet on each of the 6 numbers, the house breaks even when the spot contains three different numbers (3 dollars taken in from the 3 loosing numbers and 3 dollars paid out to the 3 winning numbers). The house makes money when duplicates appear (4 dollars taken in and 3 dollars paid out) and does even better when triplicates appear (5 dollars taken in and 3 dollars paid out). A typical wheel has 32 slots with three different numbers, 24 with duplicates, and 12 with triplicates. In 64 spins the house will take in $384 and pay out $336, living a profit of $48. A spin takes very little time. Lots of spins is the key to making money. The house will not lose with a wheel of fortune.
Lotteries can be divided into fixed prize, in which the house can lose money,
and variable prize, in which the house cannot lose money.
Fixed Prize Lotteries. These are what we normally think of in a service organization lottery. The key is the number of tickets sold - lots of money accompanies a strong sales effort, and disaster is inevitable if an inadequate number of tickets are sold. (Of course, donated prizes avoid this problem). Vast sums can be earned if enough tickets are sold. For example, I recently received a conservation club mailing with tickets for three lotteries. In one, two rifles or shotguns will be awarded every month for a year. The tickets cost $12 each. Some 170,000 tickets are being offered. Since it is likely the prizes cost less than $40,000 in total, this organization likely will make money with the sale of only about 2% of the tickets offered.
Variable Prize Lotteries. Here the total amount of the prizes depends on the total sale of the tickets. Suppose a service organization offers 1000 tickets for $50 each; each ticket having a number from 000-999. A three digit number is drawn twice a week for a year; the holder of the number drawn wins $250. A winner's number "stays in" - it is possible to win more than once. Suppose exactly 1,000 tickets are sold for a total intake of $50,000. Every drawing will have a winner. There are 104 drawings at $250 for a total of $26,000 in prizes, giving a profit to the house of $24,000. Now suppose only 100 tickets are sold for a total intake of $5,000. Only 10% of the drawings will be expected to have a winner. Of the 104 drawings, only10 or 11 will have a winner for total prizes of $2,500 to $2,750 and profit to the house of $2,250 to $2,500.
Of course, an organization with a philosophical objection to gambling will not want to use the gambling option for fund raising. For others, it may be just what's needed.
William S. Ramsey, Not Legal Advice.
The author may be reached at 410-740-2225 or email: firstname.lastname@example.org Not Legal Advice.