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Charitable Gambling in Maryland Flourishing With No State Regulation

December 23, 1994

STEVENSVILLE, Md. (AP) _ When Linda Keats gets the urge to play the slots, she doesn’t have to hop a plane to Las Vegas or drive to Atlantic City. She can go right to the American Legion hall in her neighborhood.

″It goes for a good cause and I like that,″ she said as she pumped coins into a clanging one-armed bandit, observing her self-imposed limit of $20.

Charity gambling in Maryland is more than bingo and raffles. And, like in many states, it’s big money, often paying for fire protection and other essential services. Yet, games in Maryland operate virtually without state oversight.

It’s a situation ripe for abuse, some law enforcement authorities said.

″I think the citizens look at these things and think that it’s going for a good cause. But is it?″ said Mark Spurrier, director of the Baltimore County Police Department’s legal division.

A patchwork of laws allows certain games in some counties but not in others.

Bingo is permitted throughout Maryland. Tip jars, from which people pluck tickets in hopes of matching winning numbers, are limited to western Maryland. Casino nights are popular in Prince George’s County, a Washington suburb, and slots abound on the Eastern Shore of Chesapeake Bay.

Maryland apparently is the only state to allow some fraternal, veterans and social groups to run slot machines, provided that half the proceeds go to charity.

Nonprofit and fraternal groups say charitable gambling is an efficient way to raise money, bringing in more cash than dozens of fish fries.

″The county literally cannot fund fire protection without the casinos. The funds are not there,″ said Timothy Maloney, a lawyer for several casinos in Prince George’s County.

But Maryland’s gambling law doesn’t even define a charity.

″We do not know how much is generated. We do not know who is running the games, who is controlling the gambling,″ said State Police Maj. John Cook, lead investigator for a task force that looked into gambling last year.

The task force, named by Gov. William Donald Schaefer, proposed a state gambling commission, but the proposal failed in the Legislature this year, largely because of opposition from a powerful Senate committee chairman who has many slot-machine operators in his district.

″There are too many types of gambling going on now that we can’t totally account for in the state. It makes sense to have one set of guidelines to deal with them,″ Schaefer said.

Charity slots, which began in 1987, are limited to eight counties on the Eastern Shore. During the 1993-94 fiscal year, 57 slot operators reported charitable donations of $2.86 million on wagers of $43.67 million.

Clubs and other organizations that operate slots must present annual financial reports to the state comptroller, but they are barebones reports of how much revenue came in and how much went to charity. County sheriffs have regulatory authority over charity gambling, but some do audits, and some don’t.

State officials, therefore, don’t know for certain whether the money goes to charities or winds up in the pockets of the games’ operators.

In 1991, Baltimore County charities saw just $100,000 of the $12 million generated by charity bingo, according to testimony presented to the task force. Private operators, hired by charities to run the games, took almost $4 million, with $8 million going out in prizes.

A sting early this year resulted in the conviction of 48 people for operating tip jars and keeping the money for themselves.

In Prince George’s County, where Las Vegas-style casinos are a $20 million- a-year industry operated by 17 fraternal and social groups, the IRS raided four casinos last year and seized financial records, but the agency hasn’t charged anybody yet and the investigation is continuing.

In addition, the county is prosecuting five casino operators on charges of lying on financial reports. They are awaiting trial.

A state grand jury last year found some slot operators gave gambling proceeds to organizations that were not bona fide charities.

″This is not little old ladies playing in the church basement, although some of that still exists,″ said Jay Doshi, tax audit manager for Richmond, Va., where charitable games are licensed and audited by the city.

″It is important to know that some of these organizations have games that gross several hundred thousand dollars to several million dollars a game, and they have to be tightly regulated as cash businesses.″