Massachusetts Charitable Gaming

On 29 September 1971, Massachusetts legalized charitable gaming by overturning a 1940s-era prohibition on bingo. The Massachusetts Department of Public Safety was given responsibility for the oversight of bingo operations. Then, on 4 September 1973, legislation transferred responsibility for bingo to the Massachusetts State Lottery Commission and on 1 March 1974, legislation was passed establishing rules and regulations controlling bingo. On 1 January 1978, Chapter 219 of the Acts of 1977 moved responsibility for collection of a 5% tax on bingo, raffles and casino nights from the Department of Revenue to the Massachusetts State Lottery Commission (MSLC). The Charitable Gaming Division (CGD) under the MSLC regulates all operations for games classified as charitable gaming. Charitable gaming currently includes bingo, casino nights, raffles and pull-tabs. Casino nights offer the opportunity to play games of chance, such as roulette, craps, blackjack and poker (including Texas Hold'em) tournaments.

The CGD issues licenses for bingo and one-day bingo to bona fide nonprofit organizations. Casino nights and raffle licenses are issued by the local municipality where the raffle or casino night events will occur.

To qualify, organizations must be nonprofits and have been in operation in the Commonwealth as a nonprofit for at least two years. The Massachusetts Attorney General's Office (AGO) does not require a nonprofit organization to hold an IRS 501(c) (3) status and feels this designation is "neither necessary nor sufficient for determining whether the organization is a public charity." Public charity organizations are required to register (and pay a one-time $100 fee) with the AGO. Charitable organizations that are exempt from registering and filing with the AGO include religious organizations, the Red Cross and certain veterans organizations.

The annual fee for a bingo license and a one-day bingo license is $50. Organizations are also obligated to pay a 5% tax on the gross proceeds of each bingo event. The tax revenue is distributed by the GDC, so that three-fifths (or 60%) goes to the general fund, and two-fifths (or 40%) goes to the Lottery to offset the cost of administering bingo.

In July 2000, an amendment to Chapter 10, Sections 37 and 38 (Bingo Laws) of the Massachusetts General Laws was signed, giving charitable organizations enhanced potential for fundraising by expanding the charitable gaming rules. The new statute, which took effect in October 2000, increased prize amounts by allowing progressive games with payouts as high as $3,000, up from the former maximum of $500; doubled the top prize for bingo games from $50 to $100 and allowed 50/50 games with prizes as large as $1,200; allowed a larger number of volunteer workers at bingo events; and gave organizations more autonomy in the sale of charitable gaming (pull-tab or break-open) tickets. Charity gaming tickets can be sold at the charitable gaming organization's site outside of the hours bingo is held and earn a gross profit of at least 30% of their resale value for charity organizations. Charitable organizations purchase these tickets in advance from the CGD for 10% of their resale value.

In April 2004, the CGD first offered a one-day bingo license giving qualified charities a way to augment their fundraising efforts by holding a one-time-only bingo night. Charity organizations issued a one-day bingo license may ask the Lottery to pair them up with an existing licensee to provide gaming assistance. The Lottery will also help one-day bingo licensees with creating a plan for their event, including authorizing on-site staff. Charity game tickets are authorized to be sold at the one-day bingo game; one-day bingo licensees need only pay for tickets sold at the event.

A qualified nonprofit organization wishing to hold a gaming event, such as a raffle, casino night or poker tournament, must obtain a permit from the municipality in which the event will be held. The organization is also required to hire police services from the hosting city or town. The nonprofit organization must pay the Lottery a 5% tax on the event's gross proceeds within 10 days after conducting the event. A raffle permit is valid for one year from the date of issue and has no limit on the number of raffles that an organization may hold during that one-year period. Casino night and poker tournament permits are valid for one calendar year, but the nonprofit may only hold three of these gaming events during that period. One gaming event of this type may not extend longer than five hours and only one event may be held in one day. Cash awards for casino night or poker tournaments are limited to $25; this limitation is not for noncash awards.

There are rigid rules around operating a poker tournament in Massachusetts. Prizes may only be awarded to winners at the end of an event, or at the end of a game, as long as the prizes were predetermined and did not change because of the number of players, the amount of proceeds collected or the outcome of the games played. Under Massachusetts law, it is illegal if a player has a chance of winning or losing money or something of value, and whether the win or loss depends on the outcome of a hand or game. It is also illegal for tournaments to pool winnings or use proceeds collected from players to award prizes. Even if only a portion of what was collected was awarded, it may still suggest an illegal pool under Massachusetts law.