With a .87 billion state budget surplus, the Minnesota legislature is considering two bills that would ease the taxes on charitable gambling. One of the proposed measures, sponsored by House Ways and Means Committee Chairman, state Rep. Jim Knoblach, specifically targets bingo halls. “A bingo hall just costs a lot more to run than a pull tab booth that’s sitting in a bar somewhere,” Knoblach said. Another bill would reduce taxes for all charitable gambling organizations.
For years, the state’s 1,200 nonprofit organizations that sponsor charitable gambling have complained that the taxes they pay are unfair and that the state gets a bigger share of their proceeds than the charities they support, including youth sports associations to fire departments.
Tax laws for charitable gambling organizations changed in 2012 when the legislature passed a bill allowing electronic pull tabs and electronically linked bingo to help pay for a new Vikings stadium. The bill also changed nonprofit taxation from gross sales from gambling to net sales after prizes are paid out, with rates ranging from 9-36 percent, depending on the amount of sales. Al Lund, executive director of Allied Charities of Minnesota, said many charities got a tax break but some ended up paying more taxes. “It really depended on how you ran your business. It helped some, it hurt some,” he said, adding, “We believe that our chances are better than not this year of getting some relief. How deep it will go, we don’t know.”
A recent report analyzing data from the Minnesota Gambling Control Board indicated gross sales increased for some Central Minnesota charities by double digit percentages in 2014 compared to 2013, although the numbers declined for others. Overall, however, gambling is doing better than a few years ago when the economic recession left people with less spending money and the statewide smoking ban kept players out of bars and bingo halls.
Electronic pull tabs and bingo sales, weak at first, slowly have been gaining popularity. Last month e-gaming hit $4 million in sales, while paper pull tabs total $100 million in sales every month.
