Ohio Gaming Law: October 2004 News

Games of Chance Are Illegal Unless Guidelines Are Followed Says Attorney General
October 20, 2004

Ohio Attorney General Jim Petro recently issued the following press release to inform Ohioans about the legality of games of chance.

Attorney General Jim Petro Reminds Ohioans That Games of Chance Like Texas Hold ‘Em Are Illegal Unless Guidelines Are Followed

October 20, 2004

COLUMBUS - They are called “games of chance” and playing any of them for profit under Ohio law is illegal unless the games are conducted under exemptions provided by Ohio's Charitable Gambling Law, Attorney General Jim Petro reminds Ohioans.

A “game of chance” is defined in Ohio law as poker, craps, roulette, or other game in which a player gives anything of value in the hope of gain, the outcome of which is determined largely by chance.

It is not a violation of Ohio law to have a poker game with your friends in your home, as long as all of the amounts wagered are paid to the winner or winners, and the “house” is not taking any portion of the amounts wagered.

Las Vegas Nights, also known as Monte Carlo or casino nights, are gambling activities where card games such as Texas Hold ‘Em, blackjack, poker and other “games of chance” are conducted by a qualified charity as a fund-raising event.

“Qualified charities are the only groups that should benefit from these gambling events. Ohio law enforcement will be monitoring newspapers and community events making sure that the Ohio gambling laws are not abused,” said Petro. “Charities should take advantage and properly utilize the laws created to help them raise money. If they have questions on how to legally conduct such an event, they can call our office.”

To be eligible to conduct charitable gambling activities:

A charitable organization must qualify as an IRS 501 (c)(3) tax-exempt organization and be one of 14 types specifically defined in O.R.C. 2915.01 .
The charity must, in most cases, be conducting its programming in this state for at least two years prior to conducting games of chance.
Not all 501 (c)(3) charitable organizations are eligible to conduct these events.
A charity may not sell, lease, or transfer its right to conduct games of chance. In other words, Las Vegas Nights and Texas Hold'em charitable fundraisers cannot be conducted by others “on behalf of a charity,” even if the charity is receiving some or all of the proceeds.

How the games can be conducted:

The games are conducted on premises that are either owned by the charitable organization for at least one year, premises leased from a governmental unit, or premises leased from a veterans or fraternal organization.
The games may not be conducted at for-profit establishments such as a hotel, restaurant, tavern, store, arena, hall or any other place of public accommodation.
The games can be conducted at festivals of the charitable organization for four days or less no more than twice a year, or for five days once a year.
No one may receive any form of compensation including tips, directly or indirectly, for operating or assisting in the operation of the games of chance.
Prizes are the only allowable expense to be deducted from the money or assets received from the conduct of the games of chance. After that, all of the money must be used by or donated to either an organization that is a 501(c)(3) public charity or a governmental unit.
A charity conducting such an event must maintain accurate financial records of all proceeds, and all proceeds must then be reflected in the charity's annual financial reports to the IRS and the Attorney General. Failure to maintain accurate financial records not only violates state and federal law, it could be deemed a breach of fiduciary duty resulting in civil litigation and penalties.
Currently no permit or license through the state of Ohio is required to conduct “games of chance.” Please note that some local jurisdictions may require permits or may have additional requirements to conduct these games. Contact the appropriate local agency for more information.

For more detailed information on Ohio statutes regarding gambling, Revised Code Chapter 2915 is available for viewing or printing at the Attorney General's website www.ag.state.oh.us, or you may contact the Attorney General's Charitable Law Section at (614)-466-3180

For additional information on this press release, contact:
Michelle Gatchell, Attorney General’s Office, (614) 466-3840

The Cincinnati Post reports that although the majority of gambling money has flowed to Southeast Indiana riverboat casinos since 1996, both horse racing tracks in the region are surviving. In Cincinnati and Northern Kentucky, thoroughbred horse racing is available almost year-round, with live racing available nine months out of twelve, and simulcast wagering available every month. River Downs ended its 2004 summer racing season betting at the same rate as last year, with a two percent increase in total wagering. John Engelhardt, track spokesperson, said that concession sales and estimated attendance had increased from last year. Turfway Park opened in mid-September for a month long meet, and the track so far has had a better year than in 2003. In general, race tracks obtain most of their money from wagers at their own facilities, and they make less money from bets placed on their races by gamblers at other tracks. The wagering at River Downs and Turfway together is small compared to the wagering at nearby Argossy, Grand Victoria and Belterra riverboat casinos. According to the Cincinnati Post, in 2003 the total amount wagered at Turfway was $351 million, while in comparison the total amount wagered at all three casinos was $9.3 billion. Currently, the racetracks are lobbying state legislators to allow them to have slot machines and other forms of gambling at their race tracks.

Lottery Commission Has Begun Overseeing Charitable Gaming From Attorney General's Office
October 20, 2004

The Plain Dealer recently reported that many state bingo operators are cautiously watching what happens as the Ohio Lottery Commission begins overseeing the operation of charitable gaming from the Ohio Attorney General's office. The Lottery Commission's director of charitable gaming, Linnette Lavelle, said that the commission will administer charitable bingo, and leave the enforcement of rules and regulations to the attorney general's office. Michael Zatazalo, a Columbus-based lawyer with Kegler, Brown, Hill & Ritter who represents bingo charities and distributors statewide, commented that his clients fear that the Ohio Lottery will use its position to compete with charities, which like the lottery sell instant game tickets. Zatezalo commented that in the minds of a lot of charities, the Lottery Commission has an incentive to keep licenses to a minimum. The Plain Dealer reported however that Lottery officials said that the change is fair and practical, and charitable bingo operators, such as fraternal organizations, should not worry. The change is expected to improve efficiency and provide greater accounting for money raised for charitable purposes under the Ohio Lottery. The attorney general's office will pay the Lottery Commission $1.2 million a year for personnel and administrative services. The commission will begin its new duties in four stages, the first of which began in mid-September. The first stage includes licensing and renewals for existing organizations, and creating a database to track licenses and license applications. Currently, approximately 2,000 groups have been issued licenses for charitable gaming, and new applicants should apply directly to the Ohio Lottery Commission, as long as they are registered as a charitable organization with the Ohio Attorney General's office.