Corruption in charitable gaming is running rampant due to inadequate oversight, lawmakers say

Virginia

RICHMOND, Va. (WRIC) — Corruption in Virginia’s charitable gaming industry is running rampant due to inadequate oversight and conflicts of interest.

That’s according to members of a General Assembly subcommittee studying reforms ahead of the 2022 legislative session. The bipartisan group met for the final time on Thursday to finalize their recommendations. 

Gary Opdyke, the bingo commissioner for Saint Gregory the Great Catholic Church Men’s Club in Virginia Beach, said a lot is at stake for legitimate operators in what he called the “Wild West” of charitable gaming.  

 “It is out of control,” Opdyke told the panel of lawmakers. “These unscrupulous operators as I call them are making it difficult and putting honest charities out of business.” 

House General Laws Committee Chair Paul E. Krizek said loopholes in state law are being exploited by charities in name only. 

“It’s really shame on the General Assembly because we have a swiss cheese approach to regulating this,” Krizek said. 

According to Sen. Bryce Reeves (R-Spotsylvania), one result of ambiguous state laws is an increase in gaming machines known as electronic pull tab devices. 

Reeves said they are becoming more common in bars and restaurants since the ban on skill games or “gray machines” took effect earlier this year. As business owners try to make up for lost revenue, he said the charitable games are popping up right next to gray machines now labelled with “out of order” signs. 

Reeves said conflicts of interest among members of the Charitable Gaming Board are to blame for the expansion. 

Credit: Sen. Bryce Reeves

State law attempts to put some limits on where charitable gaming can occur but authorizes these activities in so-called “social quarters.” Reeves accused the regulatory body of expanding the definition of a social quarters for financial gain.

“The regulatory board, in their own self interest, has said we can have social quarters in bars and restaurants as well and that is directly counter to what the intent of the General Assembly is. We don’t want to see gambling in bars and restaurants,” Reeves said. 

Reeves said members of the subcommittee are planning to introduce legislation to tighten up the definition of social quarters and increase penalties for violators, such as revoking liquor licenses.

In a recent report, the state’s watchdog agency found 92 percent of electronic pull tab devices were located in social quarters as of Aug. 2021. That’s significant because operators are currently not required to report gross receipts to the state for machines in these spaces, according to the Office of the State Inspector General. OSIG said those receipts are subject to audit to ensure the money is being used properly.

That OSIG report also found six of eleven current members of the Charitable Gaming Board had conflicts of interest. 

It caused a big stir recently after the chair of the board failed to recuse himself from writing rules for Texas Hold ‘Em poker tournaments he stood to benefit from, according to the Virginia Mercury. That’s another area where lawmakers are looking to crack down.

Additionally, Reeves said the committee is proposing legislation to strip the board of their regulatory authority to avoid future conflicts of interest. If passed, he said they will serve in an advisory capacity.

Long term, Reeves said the state should create a new commission to oversee all gambling in the Commonwealth.

“Our job is not to pick winners and losers. It is to set a level playing field. The one thing we don’t want to do is see our charities be decimated,” Reeves said.

The Charitable Gaming Board couldn’t immediately be reached for an interview. The Virginia Department of Agriculture and Consumer Services declined to comment.

VDACS Communications Director Michael Wallace would not provide contact information for the board as requested.

“VDACS does not speak on behalf of the Charitable Gaming Board as it relates to the topic of your inquiry,” Wallace wrote in an email. “For comment, you will need to contact the members of the Charitable Gaming Board directly. Their direct contact information is not available on our website.”

The OSIG report also noted that VDACS doesn’t have enough resources or authority to adequately enforce violations from operators, which could increase the risk of fraud. It noted that 6 of 14 staff positions dedicated to charitable gaming are currently vacant.

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