Charitable Gaming: Wager Limits
Some background...As some of you know, I volunteer at a school that has frequent gambling events to raise money. It's real money gambling but of the $1-$5 variety. It includes craps, blackjack, roulette, money wheel and a few poker tables. We have about 40 tables and everybody except the craps dealers are volunteers. Players buy imitation money (chips) from the house so only about 3 people actually touch cash. It's a lot of fun but, it's also a LOT of hard work.
In Michigan, these events are formally referred to as a "millionaire party". Non-profits can conduct a maximum of 16 events per-year. Millionaire parties became legal in 1972 and, at that time, the daily wager limit was set at $2,000. It was last adjusted in 1999 and the daily wager limit is currently $15,000. Plus, any chips used as seed money count against the wager limit. So, if all the dealers start out with say $2,000 in their trays, the house can only sell $13,000 in chips to players for that day. Chips redeemed by players can not be resold once the wager limit is reached.
FYI--all the controversy about poker rooms here in Michigan centers about them frequently selling chips well beyond the $15k limit. As as result, the state is creating new rules for all charity gaming that will severely impact ALL charity gaming, not just poker.
We had our big annual 4-day event a few weeks ago. Like always, we were jammed. And, like always, we sold out of chips by 9:00 PM each night. When that occurs, players will not come in to the room for the simple reason they can not play. As a result, we lose any incremental admissions revenue, any incremental gaming revenue and, any incremental food and beverage revenue. It's maddening!
About a year ago, I asked an official from the State what was the reason for the wager limit. his response was to the effect; "We don't want charities to get hurt too bad if they lose." To me, that is folly because most charitable gaming is structured where over the course of a day, the house will make money. Some tables win, and some lose but overall, the house makes a profit. Plus, you then add in admissions and food and beverage, the entire event is in the black. Also, in poker, it is impossible for the house to lose because they make their money by collecting rakes. So, the line "We don't want charities to get hurt too bad if they lose" is unfounded. And, should a charity ever lose, it's their own darn fault by offering wagers (HE) that are in line with a real casino.
I advocate the total dismantling the wager limit rules and allow the charity to set its own dollar threshold for gaming as it deems appropriate. Frankly, I think one could build a strong case for this:
The current wager limit was last adjusted in 1999 and is too low to meet the gaming needs of 2014
Wager limits can prevent the organization from recovering from adverse trends that frequently occur during the ebb and flow of gaming (traditional gaming)
Wager limits prevent the charity from making meaningful income from their events, money that is used for the benefit of others
Other legal gaming venues such as the lottery and casinos do not have similar limitations imposed on them
Wager limits are counter-intuitive to the game of poker because player success is attributed as much to the size of ones stack as it is to the cards dealt
Wager limits force charities to turn away players, depriving them of admission revenue, gaming revenue and food and beverage revenue
Only the legislature can raise or lower the wager limit and we plan to pursue these matters there soon. However, I can see a legislator taking the position against such a change based on the same flawed mentality provided by the state official that they are protecting the charity's best interest in keeping the wager limit low.
In order to get any legislation passed, politicians have to have rock solid information to back them up. they rarely support something "just because". In other words, politicians rarely take risks. I would be interested and grateful for any further points that you might have that would contribute to those that I have already listed as to eliminating the wager limit. Thanks.
I think maybe doubling it seems fair.
I'm sure there are things to do creatively to make more money.
Quote: FinsRuleThe limit shouldn't be eliminated at all. That is too lucrative.
I think maybe doubling it seems fair.
I'm sure there are things to do creatively to make more money.
Thanks for your input.
Respectfully, "lucrative" is exactly what we want to achieve. Nobody tells the Salvation Army they have to stop taking money when their pots become full. Rather, they simply empty the pot. Same applies here.
And, I don't see what being "fair" has any relevance. It seems "unfair" when the wager limit deprive the organization from making the most that it can in the short time window available to it.
Actually, there are very few "other things" to do creatively to make more money. The gaming laws are very strict and narrow as to what an organization can and can not do during their event. One easy route taken by some less informed charity is to make the odds more closely aligned to those of a real casino. The other is to increase the minimums and maximums at the tables. Both are frick'n nuts and the sure pathway to financial ruin for the organization. If what I propose with the elimination of the wager limit, I still would not change the event from a $1 - $5 min/max game and I sure as heck would not try to make the games (HE) like that of a real casino. All I am trying to achieve here is meeting supply and demand. Players dictate that.
If actual cash may be gambled with how do you keep track of limits? Why can't you sell MatchPlayChips for five dollars that are valid only if bet with an additional 45 dollars in cash. (its still a five dollar chip, not a fifty dollar chip). The commemorative chip is theirs whether they pay the forty five dollar activation fee or not.
Or sell guaranteed admission.
Or schedule a valuable giveaway for which winners must be present even if they were unable to buy chips with which to gamble they can sit around and wolf down expensive burgers and hotdogs and two dollar sodas waiting for the giveaway rather than being turned away.
For example: I make a not-for-profit that helps the homeless population. Of course, as being the executive director, I take home a salary of 200,000. And my friends are employees that also take home six figure salaries. The homeless people get the rest.
So I run a casino, and since I don't pay any taxes, I can run them out of business. Which then hurts the taxpayers of Michigan!
Quote: FleaStiffSo its not really CASH gaming just chips sold for that specific event?
If actual cash may be gambled with how do you keep track of limits? Why can't you sell MatchPlayChips for five dollars that are valid only if bet with an additional 45 dollars in cash. (its still a five dollar chip, not a fifty dollar chip). The commemorative chip is theirs whether they pay the forty five dollar activation fee or not.
Or sell guaranteed admission.
Or schedule a valuable giveaway for which winners must be present even if they were unable to buy chips with which to gamble they can sit around and wolf down expensive burgers and hotdogs and two dollar sodas waiting for the giveaway rather than being turned away.
It's real gambling however, players purchase imitation money (chips) at the cashier's table that they'll gamble with at the tables. In that manner, only a few people touch real money. We have our own custom chips with unique logo. It would be really hard for someone to counterfeit but, I suppose it could happen. More than likely, people keep their chips to come back the following day or another event. 99.9% cash them out at the end of the night.
The house must keep a count of how much seed money went out to a table and every chip sale transaction. If the state comes in and finds that your numbers don't total up, you're toast. Plus, you can not have one penny more than $15,000 in chips physically in the room during the event. If the state finds more, you're toast.
What got the poker rooms in trouble was they were selling more than $15,000 in chips. They had a computer program that once the chip count got to say, $13,000, it would automatically re-set itself down to say $8,000. Then, if the State came in to do a random check, the poker room operator would say, "look, we've only sold $8,000 so far." However, a quick check of the player's stacks on the tables showed $50,000 to $100,000 was actually in action. The poker rooms are ruining it for all charitable gaming and, I have no sympathy for the charities that get suspended for allowing the poker rooms to conduct these abuses.
We have raffles and 50/50 drawings etc, to make a few extra dollars but, the bottom line is that a person won't pay $5 admission if they can't buy chips to play. That said, when we reach the wager limit, we stop collecting the admission money and let people in for free. Most just walk around and then leave. Some however, buy a beer or two which is a good thing. Some actually go up to players that have won and buy chips from the player. There is nothing illegal about that. Actually, that is money that we would otherwise given to the player when they cash in. In another player's hands, it is money that the house is going to make a percentage off of in all likelihood.
Quote: FinsRuleI meant lucrative in the sense that fake organizations would be created to just run casinos.
For example: I make a not-for-profit that helps the homeless population. Of course, as being the executive director, I take home a salary of 200,000. And my friends are employees that also take home six figure salaries. The homeless people get the rest.
So I run a casino, and since I don't pay any taxes, I can run them out of business. Which then hurts the taxpayers of Michigan!
You must be a licensed 501-C 3 non profit. Plus, you have to demonstrate where your money as a non-profit goes. Plus, the officers must undergo a through criminal background check. Plus, officers can only be paid something like $50 for their work. There are a ton of other requirements in addition. The most scrutiny comes from organizations that are nonprofit but not necessarily a charity. For example, a local booster club is filed as a 501 C3 and can get a license. The money they make is for new uniforms for the band. I have difficulty with some of that stuff but, it's not my call.
To the best of my knowledge, only the 3 Detroit casinos pay taxes. All the other casinos in Michigan are tribal and the state does not see as much, if any, of the money made from these casinos. The 3 Detroit casinos pay about $500,000 per day in taxes. Without that moola, Detroit would be bankrupt. Oops, I'm sorry, Detroit already is bankrupt, even with the half million per day!
Quote: RivaYou must be a licensed 501-C 3 non profit. Plus, you have to demonstrate where your money as a non-profit goes. Plus, the officers must undergo a through criminal background check. Plus, officers can only be paid something like $50 for their work. There are a ton of other requirements in addition. The most scrutiny comes from organizations that are nonprofit but not necessarily a charity. For example, a local booster club is filed as a 501 C3 and can get a license. The money they make is for new uniforms for the band. I have difficulty with some of that stuff but, it's not my call.
To the best of my knowledge, only the 3 Detroit casinos pay taxes. All the other casinos in Michigan are tribal and the state does not see as much, if any, of the money made from these casinos. The 3 Detroit casinos pay about $500,000 per day in taxes. Without that moola, Detroit would be bankrupt. Oops, I'm sorry, Detroit already is bankrupt, even with the half million per day!
Getting a 501-C 3 is easy. Demonstrating where the money goes to is easy. Criminal background check is easy. I have never heard of the CEO of a not-for-profit only being able to make $50... The last two not-for-profits I worked for, the President made a lot more than $50...
Quote: FinsRuleGetting a 501-C 3 is easy. Demonstrating where the money goes to is easy. Criminal background check is easy. I have never heard of the CEO of a not-for-profit only being able to make $50... The last two not-for-profits I worked for, the President made a lot more than $50...
I am talking about the chairperson of the gaming event not charging more than $50 for his/her efforts. Has nothing to do with the how much money a person associated with that non-profits makes as an employee.
Quote: RivaI am talking about the chairperson of the gaming event not charging more than $50 for his/her efforts. Has nothing to do with the how much money a person associated with that non-profits makes as an employee.
Fine, I think that tiny detail can be easily fixed.
Anyway, I think you get why you don't want non-tax paying entities run full casinos...?
Quote: FinsRuleFine, I think that tiny detail can be easily fixed.
Anyway, I think you get why you don't want non-tax paying entities run full casinos...?
Actually, most now agree that the casinos, both Detroit and Indian, are behind the push to close down the poker rooms in Michigan. The mentality from the casino is, "if you are going to gamble, it should be here."
Poker has become a $200 million business in Michigan and the casinos want all that action. The state knows that they can not close down charities and charitable gaming. So, what they have attempted to do is make it impossible for the poker rooms to operate as a viable business thus forcing the charities to fly solo. Most charities do not have the resources to conduct an event without partnering with a poker room. As such, most charities will be forced to abandon this type of fundraising and with it, the money they donate to some very worthwhile causes. It's almost evil the way the state is going about this thing.
One of other my reasons for wanting eliminate the wager limit is that now, the charity can make more money from their own events so they will not be so dependent on the poker rooms as they currently are. Right now, many charities are slaves to the poker rooms. They don't complain because they still make money with very little effort.
Quote: rudeboyoiWhat's the rake at these charity poker rooms? Is there a drop for like bad beat jackpots or high hands also?
I'm not sure as I have never been in one. A member here, "Ibeatyouraces" has been a dealer at a few locally.
My general understanding is that the house rakes $6 per hand and if no flop, no rake.
The poker rooms provide the location, equipment and chips, dealers and expertise. They do this in exchange for 50% of the charity's profits for the night. So, the more rakes, the more profits. That's why they hire good dealers, to speed things up.. Some rooms host up to 4 charities at the same time, each in their own demarcated area and making 50% off of each. Plus, the room keeps all the money from the food and beverage sales. I was told that a recently closed poker room, Snookers, was a $30 million per year business. And, they were padlocked by the state for guess what?? Selling chips in excess of the daily limit.
Quote: Riva
edit posted 2x
Quote: IbeatyouracesThe Detroit casinos lost millions in revenue and many players when the charity poker rooms opened.
But its for the kids so alls OK right? Well whatever remains from the charity after paying expenses and salaries.
Quote: djatcBut its for the kids so alls OK right? Well whatever remains from the charity after paying expenses and salaries.
It would depend on the mission of charity sponsoring the event. Lions club gives money to eye-vision issues. Some give money for children's toys at Christmas. Some give to feed the hungry. It all depends.
Actually, it is the poker room that takes all the risk for the event. The poker room pays for the room, the equipment, the dealers and provides the expertise. That's 100% free to the charity. If the charity makes say, $4,000 for the night, 50% or $2,000 goes to the poker room operator. Out of that, the operator must pay for rent, equipment, dealers, etc. If it is a bad night and/or poorly attended, the poker room takes the gas, not the charity. The MOST a charity can be out in a poker room scenario is the $50 cost of a license plus having a few of their members on site during the event.
Quote: IbeatyouracesThe Detroit casinos lost millions in revenue and many players when the charity poker rooms opened.
I have read where many casinos are cutting back on poker rooms because they can get a better yield on their square footage with other games such as slots. They provide poker on the hope that after the player is done with the game, they play at another game, where the casino makes more loot. So, poker is a necessarily evil, so to speak.
Notwithstanding, there is a huge contingent of poker players that prefer the low-key, laid-back, poker room scenario and probably would not go to a casino under any circumstances. The option is there for players to go to the casinos now to play poker and its very evident that casinos are not the preferred locale.
Quote: IbeatyouracesMotorcity expanded and has five extra tables. Greektown closes at night and reopens at noon. Greektown used to run great tournament and now they can't get anything going. MGM is just too small, six or eight tables.
My point exactly; the dogs simply don't like the casino dog food!
Now, eliminate the wager limit entirely and let the charities make more money. They can then get off the proverbial tit of the poker rooms.
Frankly, I don't know why I am giving away all this good advice to charities doing poker. All I want to accomplish through all of this is to stop turning away players at 9:00 PM every night because I've reached the stupid and meaningless wager limit.
It's also hard to believe that the state of Michigan, with the highly-publicized disastrous decline in population, jobs, and all the rest since that year, can't see the need for higher charity support. So you should get the media involved, and local celebrities who are charity pillars. There are tiers of charities, just like anything else. Figure out which one(s) have the old-money society's attention and target them. Get appointments with the doyennes in that group, even if you don't service their charity, and explain your situation, and ask for their help. You never know which lady will help you, and it's likely her husband is someone of standing in the business/political community. (That's how those groups work; go through the wives.)
One or more high-profile Monte Carlo nights benefitting those targeted charities, with formal attire, pictures in the local society pages, some extra opportunities to win things/silent auction/whatever, and THEN run out of chips because of the cap. Tell people over the microphone why you're cutting them off; if you've invited the right crowd, you will have high-powered locals on your side. They don't like being told "no", and they like to exercise their power to change things they don't like.
Quote: beachbumbabsI think you have to start with a push to change the law to allow CPI or similar indexing, and start with base year 1999. Do the math, and show them what 15K buys now in real money, and ask them for at least equivalent spending power today, with further raises tied to future inflationary increases (but no regression). Part of your proposal will likely need a cap on the 50% you share with the poker room, with 100% above that cap going to the charity. It's pretty easy to make politicians look like crap if they fail to respond to an even-handed proposal when it's for charity. Suggest you imply but not threaten with that possibility.
It's also hard to believe that the state of Michigan, with the highly-publicized disastrous decline in population, jobs, and all the rest since that year, can't see the need for higher charity support. So you should get the media involved, and local celebrities who are charity pillars. There are tiers of charities, just like anything else. Figure out which one(s) have the old-money society's attention and target them. Get appointments with the doyennes in that group, even if you don't service their charity, and explain your situation, and ask for their help. You never know which lady will help you, and it's likely her husband is someone of standing in the business/political community. (That's how those groups work; go through the wives.)
One or more high-profile Monte Carlo nights benefiting those targeted charities, with formal attire, pictures in the local society pages, some extra opportunities to win things/silent auction/whatever, and THEN run out of chips because of the cap. Tell people over the microphone why you're cutting them off; if you've invited the right crowd, you will have high-powered locals on your side. They don't like being told "no", and they like to exercise their power to change things they don't like.
Good advice. Thanks.
Most of the charities and non-profits involved with the poker rooms are of the smaller variety such as a local fraternal organization or school/church group. Typically, they have smaller member numbers so it's difficult for them to put on a fundraising event or any kind without partnering with a poker room. It's not like they are some mega charity like the Red Cross etc, who is highly unlikely to get involved in anything like poker. It's more grass roots stuff.
I happen to think that many of these charities are giving the farm away to the poker room but, they do not believe that they have any choice. Again, if they could make more money, they would not be so dependent on the poker rooms. As for my organization, we are the location (all events on premise), we are the supplier (own 100% of our equipment and 99% of the staff are volunteers) and we are the charity. So, we do not share with anyone. Plus, we primarily offer traditional games with perhaps 10 poker tables.
I simply want to increase the wager limit because we turn people away early each evening.
Quote: RivaGood advice. Thanks.
Most of the charities and non-profits involved with the poker rooms are of the smaller variety such as a local fraternal organization or school/church group. Typically, they have smaller member numbers so it's difficult for them to put on a fundraising event or any kind without partnering with a poker room. It's not like they are some mega charity like the Red Cross etc, who is highly unlikely to get involved in anything like poker. It's more grass roots stuff.
I happen to think that many of these charities are giving the farm away to the poker room but, they do not believe that they have any choice. Again, if they could make more money, they would not be so dependent on the poker rooms. As for my organization, we are the location (all events on premise), we are the supplier (own 100% of our equipment and 99% of the staff are volunteers) and we are the charity. So, we do not share with anyone. Plus, we primarily offer traditional games with perhaps 10 poker tables.
I simply want to increase the wager limit because we turn people away early each evening.
Even with (especially, sometimes) smaller, local charities, it's worth looking at the archives of the society pages for the last year or two, cross-reference the names with the charities they support, and see if any are your clients. There are local charities everywhere that are pet causes of the powerful, often something founded by them. It's not all Red Cross and United Way. Look at the Board of Directors for each of your clients. Cross-index again, and see who poses with whom in those pictures, or who's at the same functions. It's a very small circle in most communities.
I was a volunteer fundraiser and pillar for several years, and grew up in politics, so I'm not totally talking out my backside, but I don't claim to be a pro. This is what works when you're talking about changing laws in that arena.
Quote: RivaI happen to think that many of these charities are giving the farm away to the poker room but, they do not believe that they have any choice. Again, if they could make more money, they would not be so dependent on the poker rooms. As for my organization, we are the location (all events on premise), we are the supplier (own 100% of our equipment and 99% of the staff are volunteers) and we are the charity. So, we do not share with anyone. Plus, we primarily offer traditional games with perhaps 10 poker tables.
I simply want to increase the wager limit because we turn people away early each evening.
Riva, do you think the politicians would go for a proposal that would allow an increased wager limit only for events on the charity's premises? From what you have posted, it sounds like the poker rooms are the "enemy" in the eyes of the politicians and their backers (casinos?). You could argue that allowing the non-profits to increase the handle on events that they host on their own property will not benefit the big, bad poker rooms, but will help the charities greatly. And it would solve your problem in the process.
Quote: JoemanRiva, do you think the politicians would go for a proposal that would allow an increased wager limit only for events on the charity's premises? From what you have posted, it sounds like the poker rooms are the "enemy" in the eyes of the politicians and their backers (casinos?). You could argue that allowing the non-profits to increase the handle on events that they host on their own property will not benefit the big, bad poker rooms, but will help the charities greatly. And it would solve your problem in the process.
Joeman, that is PRECISELY what is inserted in to SB 878, a bill to redefine charitable gaming in Michigan and to counter the silly rules that the State is currently trying to impose. Specifically: the bill stipulates that if you are the charity and you are your own supplier, that the wager limit per day is $50,000. "Supplier" is the key word here because currently, the charities rely on the poker room to be their "supplier" in that they provide the room, the tables and equipment, the chips, the dealers. Most charities could not conduct an event if it were not for these "suppliers.
However, there are organizations, like mine, that provide everything on their own; the location, equipment , dealers, etc. internally. We do not partner with anybody. We own all of our equipment. As such, we would enjoy a $50,000 wager limit. And, if you do use a supplier, the wager limit would go increase marginally to $20,000.
It would be a giant leap for some small charities to become their own suppliers. However, the incremental dollars they would earn would allow them to recover that investment in a relatively short period of time. A few years ago, we purchased a used 14' craps table for $2,500. We recovered that investment by 10:00 PM the very first night the table was put in use and, that was 10 years and 100 events ago. Again, some charities would never make that investment and as a result, give the house away to the suppliers.
