Chapter 0417

Chapter 417 Oregon Laws 2003

AN ACT

SB 716

Relating to charitable gaming; amending ORS 167.118, 464.250, 464.350 and 464.510; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 167.118 is amended to read:

167.118. (1) When a charitable, fraternal or religious organization is licensed by the Department of Justice to conduct bingo, lotto or raffle games or Monte Carlo events, only the organization itself or an employee thereof authorized by the department shall receive money or property or otherwise directly profit from the operation of the games, except that:

(a) The organization operating the games may present a prize of money or other property to any player not involved in the administration or management of the games[; and].

(b) An organization licensed to conduct Monte Carlo events may contract with a licensed supplier of Monte Carlo event equipment to operate the event, including the provision of equipment, supplies and personnel, provided that the licensed supplier is paid a fixed fee to conduct the event and the imitation money is sold to players by employees or volunteers of the licensed charitable, fraternal or religious organization.

(c) A person may sell, rent or lease equipment, including electronic equipment, proprietary computer software and real property to a licensed charitable, fraternal or religious organization. Rent or lease payments must be made in compliance with the provisions of ORS 464.510.

(d) An organization licensed by the department may act as an escrow agent to receive money or property to be awarded as prizes.

(2) A charitable, fraternal or religious organization [shall] may not operate bingo, lotto or raffle games or Monte Carlo events except at such locations and upon such days and for such periods of time as the department authorizes pursuant to this section and ORS 464.250 to 464.380, 464.420 and 464.450 to 464.530.

(3)(a) An organization licensed by the department to operate bingo or lotto games [shall] may not award a prize exceeding $2,500 in value in any one game. An organization licensed by the department to operate a Monte Carlo event may not present any prize of money, or a cash equivalent, to any player.

(b) Notwithstanding any provision of this chapter to the contrary, a bingo licensee may operate two games per year with a prize not to exceed $10,000 per game and, if approved by the department, may also participate in a linked progressive game involving only Oregon licensees, without regard to the number of games or the size of the prize awarded.

(4) Each charitable, fraternal or religious organization that maintains, conducts or operates any bingo, lotto or raffle game or Monte Carlo event under license of the department must operate such games in accordance with rules adopted by the department.

(5) It is unlawful for a licensee to permit the operating expenses of the games to exceed 18 percent of the annual handle of its bingo, lotto and raffle operation.

(6) It is unlawful for a charitable, fraternal or religious organization licensed by the department to operate bingo, lotto or raffle games if:

(a) The handle of the games and events exceeds $250,000 in a year; and

(b) The games and events do not generate for the organization’s purposes, after the cost of prizes and operating expenses are deducted from the handle, an amount that equals or exceeds five percent of the handle.

SECTION 2. ORS 464.250 is amended to read:

464.250. (1) The Department of Justice shall have the following powers and duties relating to the regulation of bingo, lotto or raffle games or Monte Carlo events:

(a) To authorize and regulate the operation of bingo, lotto and raffle games and Monte Carlo events permitted under ORS 167.117 and to adopt rules in accordance with applicable provisions of ORS 183.310 to 183.550 for the performance of the department’s duties.

(b) To issue and renew licenses and permits for operation of bingo, lotto and raffle games and Monte Carlo events, including the manufacturers and suppliers of equipment and supplies necessary for the operation of such activities and escrow agents holding money or property to be awarded as a prize, and to adopt license and permit fees. Licenses and permits shall be valid for a period of one year unless renewed. The department shall set fees at an amount sufficient to cover all costs incurred by the department in its activities. License fees shall consist of an initial payment, which shall be in an amount established by rule, prior to issuance or renewal of the license, together with a monthly payment constituting a percentage of the licensee’s monthly gross income from the operation each month thereafter. An applicant for a license or a permit shall submit with the application a sum adequate to pay the required initial fee payment. If the application is later withdrawn by the applicant or if it is denied by the department, the department shall retain such portion of the amount submitted to it as will pay the reasonable costs expended for processing and investigating the application. In a particular case, if the fee adopted by the department is less than the actual expenses of the department to investigate that particular application, the department may charge to that particular applicant an additional fee to repay the department for those costs. The department may refuse to proceed with its investigation or to issue a license until the department has been fully paid for those costs. The department shall create at least two classes of licenses for each activity regulated under this section. The licensing and operational requirements for licensees and the extent to which background checks are conducted under paragraph (d)(B) of this subsection shall be commensurate with the size of the licensee’s bingo, lotto, raffle or Monte Carlo event operations. The department shall adopt rules exempting from licensing any organization that would otherwise qualify for a license and that is engaged in minimal bingo, lotto or Monte Carlo event activity.

(d) To adopt requirements as to what information an applicant must provide to the department. However, each license applicant must provide, and the department shall require, the names and addresses of all persons having a management or ownership interest in the bingo, lotto, raffle or Monte Carlo event operation or in the premises on which the operation is conducted and the names and addresses of all officers and directors of the applicant organization. The department shall also require the names and addresses of all persons employed in bingo, lotto, raffle or Monte Carlo event operations. The following apply to applications under this paragraph:

(A) An applicant shall certify, under oath, that the persons named on the application are all of the persons known by the applicant to have an interest in the bingo, lotto, raffle or Monte Carlo event operation or the premises on which the operation is conducted including all officers and directors of the applicant organization.

(B) The department may require fingerprints, a photograph, a handwriting sample and background checks on any person seeking a license from it or any person holding an interest in any bingo, lotto, raffle or Monte Carlo event operation or in the premises on which it is conducted. The department may also require fingerprints or background checks of any manager or other employee of such a bingo, lotto, raffle or Monte Carlo event operation.

(e) To adopt record keeping requirements for licensees of the department and the submission of reports to the department as the department determines necessary. The department may require licensees to record and report income from bingo, lotto, raffle, Monte Carlo events, concessions and other related operations, the amounts received from each player, the costs and expenses of operations, the nature and value of prizes and the fact of distribution of such prizes to the winners thereof. The department may adopt internal financial and inventory control requirements under this paragraph that are based on and commensurate with the size of a licensee’s bingo, lotto, raffle or Monte Carlo event operations.

(f) To regulate and establish maximum limits on income derived by licensees from bingo, lotto, raffles or Monte Carlo events. However, in establishing limits, the department shall take into account:

(A) The nature, character and scope of the activities of the licensee;

(B) The sources of other income to the licensee; and

(C) The percentage or extent to which income derived from bingo, lotto, raffles or Monte Carlo events is used for charitable purposes, as distinguished from nonprofit purposes other than charity.

(g) To regulate the manner of operation of bingo, lotto and raffle games and Monte Carlo events conducted by licensees, including the approval of which games may be played and the equipment to be used. The department shall regulate the types of equipment, rules and methods of play to ensure the integrity and fairness of the games.

(h) To cooperate with state and local law enforcement agencies in investigating matters within the scope of the department’s duties and responsibilities.

(i) To establish maximum limits on compensation paid to persons employed by charitable, fraternal or religious licensees, for the purpose of conducting licensed games, not to exceed 200 percent of the federal minimum wage standard, or in the case of a person who supervises a bingo, lotto, raffle or Monte Carlo event operation for a charitable, fraternal or religious organization and is subject to the limitations of ORS 464.340, 300 percent of the federal minimum wage standard, and to establish maximum limits for other expenses connected with such operations. In establishing these limits, the department shall consider the amount of income received, or expected to be received, by the organization from the bingo, lotto, raffle, Monte Carlo events, concessions and other related operations and the amount of money the operation could generate for the organization’s purposes absent such expenses. The department may also take into account other factors, including but not limited to whether charitable purposes are benefited by the activities.

(2) The department [shall] may not require persons working as volunteers in a bingo, lotto, raffle or Monte Carlo event operation conducted by a bona fide charitable, fraternal or religious organization to obtain permits for such work if the persons do not receive compensation of any kind from the organization other than reimbursement for actual or reasonable expenses, or have any managerial or supervisory responsibility in connection with it. The department may require that bingo, lotto, raffle and Monte Carlo event operators employing unlicensed volunteers submit to the department periodically the names, addresses and dates of birth of the volunteers. The department may adopt reasonable character standards for volunteers, and if a volunteer does not meet the standards, the department may require that the licensee not allow the volunteer to work for the licensee.

(3) Subject to ORS 167.118, the department by rule may establish value limits for prizes awarded at bingo, lotto or raffle games or Monte Carlo events and may regulate or prohibit the giving to patrons of any other thing of value to promote attendance at the games.

(4) The department by rule may establish a maximum amount that a person may wager at a Monte Carlo event.

SECTION 3. ORS 464.350 is amended to read:

464.350. (1)(a) The Department of Justice by rule may establish limits on the number of hours per day and days per week that organizations licensed by the department may operate bingo or lotto games or Monte Carlo events.

(b) After January 1, 1988, the department, by its rules, shall not permit the operation of bingo or lotto games by any licensee for more than 15 hours in any one week nor for more than three days in any one calendar week.

(2) An organization authorized by law to operate Monte Carlo events:

(a) May not conduct more than seven Monte Carlo events in any 12-month period;

(b) May not directly or indirectly rent a facility for a Monte Carlo event from a licensed manufacturer or supplier of Monte Carlo event equipment; and

(c) May not enter into a binding legal contract with a licensed supplier of Monte Carlo equipment to conduct events for a period in excess of one year.

(3) No Monte Carlo event shall be conducted that exceeds 12 hours in length. For the purposes of this subsection, each 12-hour period shall begin at the official starting time of the Monte Carlo event and run continuously, whether or not contests of chance are continuously operated.

(4) Monte Carlo events shall not be conducted at the same location more than 15 times in a calendar month or more than 40 times in a calendar year.

SECTION 4. ORS 464.510 is amended to read:

464.510. (1) The Department of Justice may prohibit the operation of a licensed bingo, lotto, raffle or Monte Carlo event operation if, in the determination of the department, the rent for the premises on which the operation is conducted, or the fees for Monte Carlo event services or equipment by a supplier of [Monte Carlo event] gaming equipment, are unreasonably high. Rent [shall] may not be paid, either in whole or in part on the basis of a percentage of the receipts or profits derived from the bingo, lotto, raffle or Monte Carlo event operation. The department may by rule establish additional standards of suitability for premises used in the conduct of bingo, lotto, raffles or Monte Carlo events.

(2) As used in subsection (1) of this section, “unreasonably high” means that the price charged for the space, equipment or services is significantly above the fair market value for the space, equipment or services and the amount charged for the space, equipment or services will result in a comparatively small profit for the licensee.

(3) Rent [shall] may not be paid to a related taxpayer, as that term is defined in Section 1239 of the Internal Revenue Code as amended and in effect on December 31, 1996.

(4) An organization conducting a bingo, lotto, raffle or Monte Carlo event operation shall keep such records of the operation as required by the Department of Justice.

(5) The premises on which the operation is conducted and all records required by the department shall be subject to inspection and audit at any reasonable time, with or without notice, upon demand by the department or its designee or the district attorney for the county in which the operation is conducted or the district attorney’s designee. The records shall be subject to inspection and audit also by the Superintendent of State Police or the superintendent’s designee and by the sheriff of the county in which the operation is conducted or the chief of police of the city in which the operation is conducted, or the designee of either, for the purpose of determining compliance or noncompliance with state law and the rules of the department.

(6) As used in this section, “reasonable time” for inspection of records includes but is not limited to:

(a) If the records are located anywhere upon premises, a portion of which are regularly open to the public or to members and guests, anytime that the premises are open for business, whether or not bingo, lotto, raffles or Monte Carlo events are being conducted at that time; and

(b) If the records are not located upon premises described in paragraph (a) of this subsection, then anytime between the hours of 8 a.m. and 9 p.m., Monday through Friday.

(7) The operator of a bingo, lotto, raffle or Monte Carlo event operation shall provide to the department, at such reasonable intervals as the department may determine, reports detailing all receipts and disbursements in connection with the bingo, lotto, raffle or Monte Carlo event operation, together with such other reasonable information as the department may require in order to determine whether the operation complies with the provisions of state law and rules of the department relating to the operation of bingo, lotto, raffles or Monte Carlo events.

SECTION 5. This 2003 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2003 Act takes effect on its passage.

Approved by the Governor June 17, 2003

Filed in the office of Secretary of State June 18, 2003

Effective date June 17, 2003

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