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AN ACT relating to charitable gaming. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. KRS 238.505 IS REPEALED AND REENACTED TO READ 3
AS FOLLOWS: 4
As used in this chapter: 5
(1) "Adjusted gross receipts" means gross receipts less all cash prizes and the 6
amount paid for merchandise prizes purchased; 7
(2) "Affiliate" means any corporation, partnership, association, or other business or 8
professional entity or any natural person that directly or indirectly, through one 9
(1) or more intermediaries, controls, is controlled by, or is under common control 10
with a licensed manufacturer, distributor, or charitable gaming facility; 11
(3) "Bingo" means a specific game of chance in which participants use cards or 12
paper sheets, or card-minding device representations thereof, divided into 13
horizontal and vertical spaces, each of which is designated by a letter and a 14
number, and prizes are awarded on the basis of the letters and numbers on the 15
card conforming to a predetermined and preannounced configuration of letters 16
and numbers selected at random; 17
(4) "Card-minding device" means any mechanical, electronic, electromechanical, or 18
computerized device that is interfaced with or connected to equipment used to 19
conduct a game of bingo and that allows a player to store, display, and mark a 20
bingo card face. A card-minding device shall not be designed and manufactured 21
to resemble any electronic gaming device that utilizes a video display monitor, 22
such as a video lottery terminal, video slot machine, video poker machine, or any 23
similar video gaming device; 24
(5) "Chairperson" means the chief executive officer and any officer, member, or 25
employee of a licensed charitable organization who will be involved in the 26
management and supervision of charitable gaming as designated in the 27 UNOFFICIAL COPY 23 RS BR 840
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organization's charitable gaming license application under subsection (13)(g) of 1
Section 4 of this Act; 2
(6) "Charitable gaming": 3
(a) Means bingo, charity game tickets, raffles, and charity fundraising events 4
conducted for fundraising purposes by charitable organizations licensed 5
and regulated under this chapter; and 6
(b) Does not include slot machines, electronic video gaming devices, wagering 7
on live sporting events, or simulcast broadcasts of horse races; 8
(7) "Charitable gaming facility" means the premises on which charitable gaming is 9
conducted; 10
(8) "Charitable gaming supplies and equipment": 11
(a) Means any material, device, apparatus, or paraphernalia customarily used 12
in the conduct of charitable gaming, including bingo cards and paper, 13
charity game tickets, and other apparatus or paraphernalia used in 14
conducting games of chance at charity fundraising events subject to 15
regulation under this chapter; and 16
(b) Does not include any material, device, apparatus, or paraphernalia 17
incidental to the game, such as pencils, daubers, playing cards, or other 18
supplies that may be purchased from normal sources of supply; 19
(9) "Charitable organization" means a nonprofit entity organized for charitable, 20
religious, educational, literary, civic, fraternal, or patriotic purposes; 21
(10) "Charity fundraising event" means an activity of limited duration at which 22
games of chance approved by the department are conducted, including bingo, 23
raffles, charity game tickets, special limited charitable games, and wagering on 24
prerecorded horse races, KRS Chapter 230 notwithstanding, and which attract 25
patrons for community, social, and entertainment purposes apart from charitable 26
gaming, such as fairs, festivals, carnivals, licensed charitable gaming 27 UNOFFICIAL COPY 23 RS BR 840
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organization conventions, bazaars, and banquets. For the purposes of this 1
subsection, "banquet" means a formal meal or feast held by a charitable 2
organization for community, social, or entertainment purposes apart from 3
charitable gaming; 4
(11) "Charity game ticket": 5
(a) Means a game of chance using a folded or banded paper ticket, or a paper 6
card with perforated break-open tabs, or electronic pulltab device 7
representations thereof, the face of which is covered or otherwise hidden 8
from view to conceal a number, letter, symbol, or set of numbers, letters, or 9
symbols, some of which have been designated in advance as prize winners; 10
and 11
(b) Includes charity game tickets that utilize a seal card, and pulltabs, both 12
paper and electronic representations thereof; 13
(12) "Commissioner" means the commissioner of the Department of Charitable 14
Gaming within the Public Protection Cabinet; 15
(13) "Department" means the Department of Charitable Gaming within the Public 16
Protection Cabinet; 17
(14) "Distributor": 18
(a) Means a person who sells, markets, leases, or otherwise furnishes to a 19
charitable organization charitable gaming equipment or supplies, or both, 20
used in the conduct of charitable gaming; and 21
(b) Does not include: 22
1. A resident printer who prints raffle tickets at the request of a licensed 23
charitable organization; or 24
2. A licensed charitable organization that affects a one (1) time donation 25
of charitable gaming supplies or equipment to another licensed 26
charitable organization if the donation is first approved by the 27 UNOFFICIAL COPY 23 RS BR 840
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department; 1
(15) "Door prize" means a prize awarded to a person based solely upon the person's 2
attendance at an event or the purchase of a ticket to attend an event; 3
(16) "Electronic pulltab device": 4
(a) Means an electronic device used only for charitable gaming to facilitate the 5
play of an electronic pulltab; 6
(b) Shall be a tablet or other personal computing device, other than a mobile 7
phone or similar handheld device, as approved by the department; 8
(c) May only operate on a closed network or intranet that is confined to the 9
licensee's premises, and shall not be Internet-accessible by patrons, but 10
shall be connected to a central server system solely for the purposes of 11
monitoring, reporting, accounting, and software maintenance; and 12
(d) Shall not be designed and manufactured to resemble any electronic gaming 13
device that utilizes a video display monitor, such as a video lottery terminal, 14
video slot machine, video poker machine, or any similar video gaming 15
device; 16
(17) "Electronic video gaming device": 17
(a) Means any device that possesses a video display and computer mechanism 18
for playing a game; and 19
(b) Does not mean any electronic representation of charitable gaming games 20
identified, defined, and approved by statute or by administrative regulation 21
of the department; 22
(18) "Gross receipts" means all moneys collected or received from the conduct of 23
charitable gaming; 24
(19) "Immediate family" means: 25
(a) Spouse and parents-in-law; 26
(b) Parents and grandparents; 27 UNOFFICIAL COPY 23 RS BR 840
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(c) Children and their spouses; and 1
(d) Siblings and their spouses; 2
(20) "Manufacturer": 3
(a) Means a person who assembles from raw materials or subparts any 4
charitable gaming equipment or supplies used in the conduct of charitable 5
gaming or creates, including a person who converts, modifies, or adds to or 6
removes parts from charitable gaming equipment and supplies; and 7
(b) Does not include: 8
1. Any person who services or repairs charitable gaming supplies and 9
equipment, so long as that person replaces or repairs an incidental, 10
malfunctioning, or nonfunctioning part with a similar or identical 11
part; or 12
2. Any distributor who cuts, collates, and packages for distribution any 13
gaming supplies and equipment purchased in bulk; 14
(21) "Net receipts" means adjusted gross receipts less all expenses, charges, fees, and 15
deductions authorized under this chapter; 16
(22) "Raffle" means a game of chance in which a participant is required to purchase 17
a ticket for a chance to win a prize, with the winner to be determined by a random 18
drawing; 19
(23) "Seal card" means a board or placard used in conjunction with charity game 20
tickets, that contains a seal or seals which, when removed or opened, reveal 21
predesignated winning numbers, letters, or symbols; 22
(24) "Secretary" means the secretary of the Public Protection Cabinet; 23
(25) "Session" or "bingo session" means a single gathering at which a bingo game or 24
series of successive bingo games are played, excluding bingo played at a charity 25
fundraising event; 26
(26) "Special limited charitable game" means roulette, blackjack, poker, keno, money 27 UNOFFICIAL COPY 23 RS BR 840
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wheel, baccarat, pusher-type games, any dice game in which the player competes 1
against the house, and any other game of chance as identified, defined, and 2
approved by administrative regulation of the department; 3
(27) "Special limited charity fundraising event" means any type of charity 4
fundraising event, commonly known as and operated as a "casino night," "Las 5
Vegas night," or "Monte Carlo night," at which the predominant number or 6
types of games offered for play are special limited charitable games; and 7
(28) "Year" means calendar year except as used in KRS 238.535(11), 238.545(4), 8
238.547(1), and 238.555(7), when "year" means the licensee's license year. 9
Section 2. KRS 238.520 is amended to read as follows: 10
(1) The Charitable Gaming Advisory Commission is created to be composed of nine 11
(9) members consisting of: 12
(a) The secretary of the Public Protection Cabinet or his or her designee; 13
(b) The Attorney General or his or her designee; 14
(c) One (1) representative from the Kentucky Commonwealth's Attorneys 15
Association; 16
(d)[ One (1) representative from the Kentucky Charitable Gaming Association;] 17
[(e)] One (1) certified public accountant; 18
(e)[(f)] Two (2) members[One (1) member] selected from the public at large; 19
(f)[(g)] One (1) representative selected from the Joint Executive Council of 20
Veterans Organizations of Kentucky; 21
(g)[(h)] One (1) representative from Catholic organizations; and 22
(h)[(i)] One (1) representative from Kentucky's volunteer firefighter 23
organizations. 24
The certified public accountant, the two[one] (2)[(1)] at-large members[member], 25
and the representative[ representatives] from the Kentucky Commonwealth's 26
Attorneys Association[ and the Kentucky Charitable Gaming Association] shall be 27 UNOFFICIAL COPY 23 RS BR 840
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appointed by the Governor. The[ representative from each of the two (2) 1
associations, the] one (1) representative from the Joint Executive Council of 2
Veterans Organizations of Kentucky, the one (1) representative from the Catholic 3
organizations, and the one (1) representative from the volunteer firefighter 4
organizations shall be selected from a list of at least three (3) names submitted to 5
the Governor by the respective association. 6
(2) [Initial appointments to the commission shall be for staggered terms as follows: one 7
(1) member for a term of one (1) year; two (2) members for a term of two (2) years; 8
two (2) members for a term of three (3) years; and two (2) members for a term of 9
four (4) years. Thereafter, ]Each member shall be appointed for a term of four (4) 10
years, and[. No member from the public at large shall be appointed in the same 11
year.] vacancies shall be filled in the same manner as the original appointment for 12
the unexpired portion of the term. No member of the commission may serve more 13
than two (2) full terms. 14
(3) The Charitable Gaming Advisory Commission shall provide ongoing advice and 15
input to the department and to the General Assembly but shall not become directly 16
involved in the licensing and regulation of charitable gaming by the department. 17
(4) The commission shall meet semiannually[ quarterly], upon the request of the chair 18
or four (4) of its members or as otherwise directed by the department. Five (5) 19
members shall constitute a quorum for conducting business. The commission shall 20
annually elect a chairman from its membership, and no person elected chairman 21
shall serve more than two (2) consecutive terms of one (1) year each. Members 22
shall receive no compensation for serving on the commission, but shall be 23
reimbursed for travel expenses for attending meetings and performing other official 24
functions, consistent with state reimbursement policy for state employees. 25
Section 3. KRS 238.525 is amended to read as follows: 26
(1) Licenses shall be issued by the department on an annual or biennial basis, except as 27 UNOFFICIAL COPY 23 RS BR 840
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otherwise permitted in KRS 238.530 and 238.545. A license term may be 1
determined by the department in any manner it deems appropriate to facilitate 2
efficient licensing. The department shall charge a renewal fee not to exceed the 3
maximum amounts established in KRS 238.530, 238.535, and 238.555. 4
(2) The department may issue a temporary license to an applicant who has met the 5
requirements for a license. A temporary license shall be valid from the date of 6
issuance until the regular license is issued or for a period of sixty (60) days, 7
whichever is shorter. A temporary license shall not be renewed, except for good 8
cause and shall not exceed a total of nine (9) months in length. 9
(3) An applicant for any license to be issued under KRS 238.530 and 238.555 shall be 10
subjected to a state and national criminal history background check by the 11
department, with the assistance of the Department of Kentucky State Police and the 12
Federal Bureau of Investigation. An applicant for any license to be issued under 13
KRS 238.535 shall be subjected to a state criminal history background check and 14
may, if deemed reasonably necessary, be subjected to a national criminal history 15
background check by the department with the assistance of the Department of 16
Kentucky State Police and the Federal Bureau of Investigation. The criminal history 17
background check shall apply to the chief executive officer and the chief financial 18
officer or director of an applicant; any employee or member of an applicant who 19
has been designated as chairperson of the charitable gaming activity; the applicant 20
itself; and any individual with a ten percent (10%) or more financial interest in the 21
applicant.[ The department shall require the fingerprinting of all applicants for 22
licensure under KRS 238.530 and 238.555 and may require, if deemed reasonably 23
necessary, the fingerprints of all applicants for licensure under KRS 238.535, who 24
are natural persons in connection with the national criminal history background 25
check to assure the identity of the applicant or applicants.] The department may 26
charge a reasonable fee not to exceed the actual cost of [fingerprinting and] records 27 UNOFFICIAL COPY 23 RS BR 840
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searching. 1
(4) No applicant shall be licensed and no license holder shall be able to maintain a 2
license if an individual associated with the applicant or license holder in a capacity 3
listed in subsection (3) of this section or the applicant or license holder itself has 4
been convicted of a felony, gambling offense, criminal fraud, forgery, theft, 5
falsifying business records, violation of KRS 238.995(7), or any two (2) 6
misdemeanor crimes in federal court or the courts of any state, the District of 7
Columbia, or any territory, consistent with the provisions of KRS Chapter 335B 8
within ten (10) years preceding the application for licensure. 9
(5) All manufacturer and distributor applicants shall be required to disclose on their 10
application any criminal charge, administrative action, or civil litigation initiated 11
against them in any jurisdiction. An application may be denied based upon these 12
disclosures[No applicant shall be licensed unless all applicants required to be 13
fingerprinted under the provision of subsection (3) of this section have been 14
fingerprinted. The Department of Kentucky State Police may submit fingerprints of 15
any applicant to the Federal Bureau of Investigation for the national criminal 16
history background check]. The department may by administrative regulation 17
impose additional qualifications to meet the requirements of Pub. L. No. 92-544. 18
(6) If a change occurs in any information submitted during the license application 19
process, the applicant or licensee shall notify the department in writing within thirty 20
(30) days of the date the change occurred. 21
Section 4. KRS 238.535 is amended to read as follows: 22
(1) Any charitable organization conducting charitable gaming in the Commonwealth of 23
Kentucky shall be licensed by the department. A charitable organization qualifying 24
under subsection (12) of this section but not exceeding the limitations provided in 25
this subsection shall be exempt from the licensure requirements when conducting 26
the following charitable gaming activities: 27 UNOFFICIAL COPY 23 RS BR 840
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(a) Bingo in which the gross receipts do not exceed a total of twenty-five 1
thousand dollars ($25,000) per year; 2
(b) A raffle or raffles for which the gross receipts do not exceed twenty-five 3
thousand dollars ($25,000) per year; and 4
(c) A charity fundraising event or events that do not involve special limited 5
charitable games and the gross gaming receipts for which do not exceed 6
twenty-five thousand dollars ($25,000) per year. 7
However, at no time shall a charitable organization's total limitations under this 8
subsection exceed twenty-five thousand dollars ($25,000). 9
(2) (a) Any charitable organization exempt from the process of applying for a license 10
under subsection (1) of this section, shall notify the department in writing, on 11
a simple form issued by the department, of its intent to engage in exempt 12
charitable gaming and the address at which the gaming is to occur. Any 13
charitable organization exempt from the process of applying for a license 14
under subsection (1) of this section, shall comply with all other provisions of 15
this chapter relating to the conduct of charitable gaming, except: 16
1. Payment of the fee imposed under the provisions of KRS 238.570; and 17
2. The quarterly reporting requirements imposed under the provisions of 18
KRS 238.550(7), unless the exempt charitable organization obtains a 19
retroactive license pursuant to subsection (9) of this section. 20
(b) Before January 31 of the year immediately following the year of exemption, a 21
charitable organization exempt from licensure under the provisions of 22
subsection (1) of this section shall file a financial report with the department, 23
on a form issued by the department, that contains the following information: 24
1. The type of gaming activity in which it engaged during that year; 25
2. The total gross receipts derived from gaming; 26
3. The amount of charitable gaming expenses paid; 27 UNOFFICIAL COPY 23 RS BR 840
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4. The amount of net receipts derived; and 1
5. The disposition of those net receipts. 2
(3) An exemption that has been granted to a charitable organization for the preceding 3
calendar year shall be automatically renewed on January 1 of the following year. 4
(4) If upon receipt of the financial report the department determines that the 5
information appearing on the financial report renders the charitable organization 6
ineligible to possess an exemption, the department shall notify the charitable 7
organization that its exemption is rescinded. The organization may request an 8
appeal of this rescission pursuant to KRS 238.565. 9
(5) If the annual financial report is not received by January 31, the exemption is 10
automatically rescinded unless an extension of no more than thirty (30) days is 11
granted by the department. The organization may request an appeal of this 12
rescission pursuant to KRS 238.565. 13
(6) If an exemption is revoked because an organization has exceeded the limit imposed 14
in subsection (1) of this section, the organization shall apply for a retroactive 15
license in accordance with subsection (7) of this section. 16
(7) If an organization exceeds the limit imposed by any subsection of this section it 17
shall: 18
(a) Report the amount to the department; and 19
(b) Apply for a retroactive charitable gaming license. 20
(8) Upon receipt of a report and application for a retroactive charitable gaming license, 21
the department shall investigate to determine if the organization is otherwise 22
qualified to hold the license. 23
(9) If the department determines that the applicant is qualified, it shall issue a charitable 24
gaming license retroactive to the date on which the exemption limit was exceeded. 25
The retroactive charitable gaming license shall be issued in the same manner as 26
regular charitable gaming licenses. 27 UNOFFICIAL COPY 23 RS BR 840
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(10) If the department determines that the applicant is not qualified it shall deny the 1
license and take enforcement action, if appropriate. 2
(11) Once a retroactive or regular gaming license is issued to an organization, that 3
organization shall not be eligible for exempt status in the future and shall maintain a 4
charitable gaming license if it intends to continue charitable gaming activities, 5
unless the charitable organization has not exceeded the exemption limitations of 6
subsection (1) of this section for a period of two (2) years prior to its exemption 7
request. 8
(12) (a) In order to qualify for licensure, a charitable organization shall: 9
1. a. Possess a tax exempt status under 26 U.S.C. secs. 501(c)(3), 10
501(c)(4), 501(c)(8), 501(c)(10), or 501(c)(19), or be covered 11
under a group ruling issued by the Internal Revenue Service under 12
authority of those sections; or 13
b. Be organized within the Commonwealth of Kentucky as a 14
common school as defined in KRS 158.030, as an institution of 15
higher education as defined in KRS 164A.305, or as a state college 16
or university as provided for in KRS 164.290; 17
2. Have been established and continuously operating within the 18
Commonwealth of Kentucky for charitable purposes, other than the 19
conduct of charitable gaming, for a period of three (3) years prior to 20
application for licensure. For purposes of this paragraph, an applicant 21
shall demonstrate establishment and continuous operation in Kentucky 22
by its conduct of charitable activities from an office physically located 23
within Kentucky both during the three (3) years immediately preceding 24
its application for licensure and at all times during which it possesses a 25
charitable gaming license. However, a charitable organization that 26
operates for charitable purposes in more than ten (10) states and whose 27 UNOFFICIAL COPY 23 RS BR 840
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principal place of business is physically located in a state other than 1
Kentucky may satisfy the requirements of this paragraph if it can 2
document that it has: 3
a. Been actively engaged in charitable activities and has made 4
reasonable progress, as defined in subparagraph 3. of this 5
paragraph, in the conduct of charitable activities or the expenditure 6
of funds within Kentucky for a period of three (3) years prior to 7
application for licensure; and 8
b. Operated for charitable purposes from an office or place of 9
business in the Kentucky county where it proposes to conduct 10
charitable gaming for at least one (1) year prior to application for 11
licensure, in accordance with subparagraph 4. of this paragraph[ 12
and paragraph (c) of this subsection]; 13
3. Have been actively engaged in charitable activities during the three (3) 14
years immediately prior to application for licensure and be able to 15
demonstrate, to the satisfaction of the department, reasonable progress 16
in accomplishing its charitable purposes during this period. As used in 17
this paragraph, "reasonable progress in accomplishing its charitable 18
purposes" means the regular and uninterrupted conduct of activities 19
within the Commonwealth or the expenditure of funds within the 20
Commonwealth to accomplish relief of poverty, advancement of 21
education, protection of health, relief from disease, relief from suffering 22
or distress, protection of the environment, conservation of wildlife, 23
advancement of civic, governmental, or municipal purposes, or 24
advancement of those purposes delineated in KRS 238.505(9)[(3)]. In 25
order to demonstrate reasonable progress in accomplishing its charitable 26
purposes when applying to renew an existing license, a licensed 27 UNOFFICIAL COPY 23 RS BR 840
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charitable organization shall additionally provide to the department a 1
detailed accounting regarding its expenditure of charitable gaming net 2
receipts for the purposes described in this paragraph; and 3
4. Have maintained an office or place of business, other than for the 4
conduct of charitable gaming, for at least one (1) year in the county in 5
which charitable gaming is to be conducted. The office or place of 6
business shall be a separate and distinct address and location from that 7
of any other licensee of the Department of Charitable Gaming,[;] except 8
that up to three (3) licensed charitable organizations may have the same 9
address if they legitimately share office space. A licensed charitable 10
organization that relocates its office or place of business to another 11
Kentucky county after obtaining a charitable gaming license shall not 12
be required to have maintained for at least one (1) year an office or 13
place of business in the county to which it has relocated in order to 14
renew its charitable gaming license and conduct charitable gaming in 15
the county. 16
(b) 1. A charitable organization that has established and maintained an office 17
or place of business in the county for a period of at least one (1) year 18
may hold a raffle drawing or a charity fundraising event, including 19
special limited charity fundraising events, in a Kentucky county other 20
than that in which the organization's office or place of business is 21
located. 22
2. For raffles, the organization shall notify the Department of Charitable 23
Gaming in writing of the organization's intent to change the drawing's 24
location at least thirty (30) days before the drawing takes place. This 25
written notification: 26
a. May be transmitted in any commercially reasonable means, 27 UNOFFICIAL COPY 23 RS BR 840
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authorized by the department, including facsimile and electronic 1
mail; and 2
b. Shall set out the place and the county in which the drawing will 3
take place. 4
Approval by the department shall be received prior to the conduct of the 5
raffle drawing at the new location. 6
[(c) Any charitable organization that was registered with the county clerk to 7
conduct charitable gaming in a county on or before March 31, 1992, shall 8
satisfy the requirement contained in paragraph (a)4. of this subsection if it 9
maintained a place of business or operation, other than for the conduct of 10
charitable gaming, for one (1) year prior to application in a Kentucky county 11
adjoining the county in which they were registered.] 12
(13) In applying for a license, the information to be submitted shall include but not be 13
limited to the following: 14
(a) The name and address of the charitable organization; 15
(b) The date of the charitable organization's establishment in the Commonwealth 16
of Kentucky and the date of establishment in the county or counties in which 17
charitable gaming is to be conducted; 18
(c) A statement of the charitable purpose or purposes for which the organization 19
was organized. If the charitable organization is incorporated, a copy of the 20
articles of incorporation shall satisfy this requirement; 21
(d) A statement explaining the organizational structure and management of the 22
organization. For incorporated entities, a copy of the organizations' bylaws 23
shall satisfy this requirement; 24
(e) A detailed accounting of the charitable activities in which the charitable 25
organization has been engaged for the three (3) years preceding application 26
for licensure; 27 UNOFFICIAL COPY 23 RS BR 840
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(f) The names, addresses, dates of birth, and Social Security numbers of all 1
officers of the organization; 2
(g) The names, addresses, dates of birth, and Social Security numbers of all 3
employees and members of the charitable organization who will be involved 4
in the management and supervision of charitable gaming. No fewer than two 5
(2) employees or members of the charitable organization who are involved in 6
the management and supervision of charitable gaming, along with the chief 7
executive officer or the director of the applicant organization, shall be 8
designated as chairpersons; 9
(h) The address of the location at which charitable gaming will be conducted and 10
the name and address of the owner of the property, if it is owned by a person 11
other than the charitable organization; 12
(i) A copy of the letter or other legal document issued by the Internal Revenue 13
Service to grant tax-exempt status; 14
(j) A statement signed by the presiding or other responsible officer of the 15
charitable organization attesting that the information submitted in the 16
application is true and correct and that the organization agrees to comply with 17
all applicable laws and administrative regulations regarding charitable 18
gaming; 19
(k) An agreement that the charitable organization's records may be released by 20
the Federal Internal Revenue Service to the department; and 21
(l) Any other information the department deems appropriate. 22
(14) (a) An organization or a group of individuals that does not meet the licensing 23
requirements of subsection (12) of this section may hold a raffle if: 24
1. The gross receipts do not exceed five hundred dollars ($500); 25
2. All proceeds from the raffle are distributed to a charitable organization; 26
and 27 UNOFFICIAL COPY 23 RS BR 840
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3. The organization or group of individuals holds no more than three (3) 1
raffles each year; 2
and shall be exempt from complying with the notification, application, and 3
reporting requirements of subsections (2) and (13) of this section. 4
(b) An organization or a group of individuals that does not meet the licensing 5
requirements of subsection (12) of this section may hold a raffle if: 6
1. The organization holds a special event raffle license issued by the 7
department and complies with the regulatory requirements in this 8
chapter, including but not limited to the quarterly reporting requirements 9
of KRS 238.550(7), the retention requirements of KRS 238.536, and 10
payment of the fee imposed by KRS 238.570; 11
2. The organization possesses a tax-exempt status under 26 U.S.C. sec. 12
501(c)(7); 13
3. The organization holds no more than twelve (12) raffles per year; 14
4. Each raffle complies with the department's raffle standards in KRS 15
238.545 and administrative regulations promulgated thereunder and is 16
approved by the department in writing prior to the sale of the first raffle 17
ticket; 18
5. The gross receipts of each raffle do not exceed five hundred thousand 19
dollars ($500,000); and 20
6. One hundred percent (100%) of the net receipts of each raffle shall be 21
distributed to a charitable organization licensed by the department 22
pursuant to subsection (12) of this section to conduct charitable gaming 23
as follows: 24
a. All distributed net receipts shall be maintained by the recipient 25
licensed charitable organization in a separate account to be 26
designated as the "raffle recipient account"; 27 UNOFFICIAL COPY 23 RS BR 840
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b. All distributed net receipts shall be expended by the recipient 1
licensed charitable organization to further the charitable purpose of 2
the recipient licensed charitable organization as required by KRS 3
238.550(4); and 4
c. All distributed net receipts, and the expenditure thereof, shall be 5
reported to the department and be subject to the department's 6
auditing and investigative authority consistent with the provisions 7
of this chapter. 8
(c) An applicant qualifying under paragraph (b) of this subsection shall submit an 9
application for a special event raffle license, and the information to be 10
submitted shall include but not be limited to the following: 11
1. The name and address of the organization; 12
2. The date of the organization's establishment in the Commonwealth of 13
Kentucky and the date of the organization's establishment in the county 14
or counties in which charitable gaming is to be conducted; 15
3. A statement of the purpose or purposes for which the organization was 16
organized and identification of the licensed charitable organization to 17
which the applicant will distribute its net receipts. If the organization is 18
incorporated, a copy of the articles of incorporation shall satisfy this 19
requirement; 20
4. A statement explaining the organizational structure and management of 21
the organization. For incorporated entities, a copy of the organization's 22
bylaws shall satisfy this requirement; 23
5. The names, addresses, dates of birth, and Social Security numbers of all 24
officers of the organization; 25
6. The names, addresses, dates of birth, and Social Security numbers of all 26
employees and members of the organization who will be involved in the 27 UNOFFICIAL COPY 23 RS BR 840
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management and supervision of charitable gaming. No fewer than two 1
(2) employees or members of the organization who are involved in the 2
management and supervision of charitable gaming, along with the chief 3
executive officer or the director of the applicant organization, shall be 4
designated as chairpersons; 5
7. The address of the location at which charitable gaming will be 6
conducted and the name and address of the owner of the property, if it is 7
owned by a person other than the organization; 8
8. A copy of the letter or other legal document issued by the Internal 9
Revenue Service to grant tax-exempt status; 10
9. A statement signed by the presiding or other responsible officer of the 11
organization attesting that the information submitted in the application is 12
true and correct and that the organization agrees to comply with all 13
applicable laws and administrative regulations regarding charitable 14
gaming; 15
10. An agreement that the organization's records may be released by the 16
federal Internal Revenue Service to the department; and 17
11. Any other information as determined by the department through the 18
promulgation of administrative regulations. 19
(15) The department may issue a license for a specified period of time, based on the type 20
of charitable gaming involved and the desired duration of the activity. 21
(16) The department shall charge a fee for each license issued and renewed, not to 22
exceed three hundred dollars ($300). Specific fees to be charged shall be prescribed 23
in a graduated scale promulgated by administrative regulations and based on type of 24
license, type of charitable gaming, actual or projected gross receipts, or other 25
applicable factors, or combination of factors. 26
(17) (a) A licensed charitable organization may place its charitable gaming license in 27 UNOFFICIAL COPY 23 RS BR 840
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escrow if: 1
1. The licensee notifies the department in writing that it desires to place its 2
license in escrow; and 3
2. The license is in good standing and the department has not initiated 4
disciplinary action against the licensee. 5
(b) During the escrow period, the licensee shall not engage in charitable gaming, 6
and the escrow period shall not be included in calculating the licensee's 7
retention rate under KRS 238.536. 8
(c) A charitable organization may apply for reinstatement of its active license and 9
the license shall be reinstated provided: 10
1. The charitable organization continues to qualify for licensure; 11
2. The charitable organization has not engaged in charitable gaming during 12
the escrow period; and 13
3. The charitable organization pays a reinstatement fee established by the 14
department. 15
Section 5. KRS 238.545 is amended to read as follows: 16
(1) A licensed charitable organization shall be limited by the following: 17
(a) In the conduct of bingo, to one (1) session per day, two (2) sessions per week, 18
for a period not to exceed five (5) consecutive hours in any day and not to 19
exceed ten (10) total hours per week: 20
1. No licensed charitable organization shall conduct bingo at more than 21
one (1) location during the same twenty-four (24) hour period; 22
2. No licensed charitable organization shall award prizes for bingo that 23
exceed ten thousand dollars ($10,000)[five thousand dollars ($5,000)] 24
in fair market value per twenty-four (24) hour period, including the 25
value of door prizes; and 26
3. No person under the age of eighteen (18) shall be permitted to purchase 27 UNOFFICIAL COPY 23 RS BR 840
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bingo supplies or play bingo unless he or she is playing for noncash 1
prizes and is accompanied by a parent or legal guardian and only if the 2
value of any noncash prize awarded does not exceed ten dollars ($10); 3
(b) 1. A licensed charitable organization may provide card-minding devices 4
for use by players of bingo games. 5
2. If a licensed charitable organization offers card-minding devices for use 6
by players, the devices shall be capable of being used in conjunction 7
with bingo cards or paper sheets at all times. 8
3. The department shall have broad authority to define and regulate the use 9
of card-minding devices and shall promulgate an administrative 10
regulation concerning use and control of them; 11
(c) Charity game tickets shall be sold only at the address of the location 12
designated on the license to conduct charitable gaming; 13
(d) Charity game tickets may be sold, with prior approval of the department: 14
1. At any authorized special charity fundraising event conducted by a 15
licensed charitable organization at any off-site location; or 16
2. By a licensed charitable organization possessing a special limited 17
charitable gaming license at any off-site location; and 18
(e) An automated charity game ticket dispenser may be utilized by a licensed 19
charitable organization, with the prior approval of the department, only at the 20
address of the location designated on the license to conduct charitable gaming. 21
The department shall promulgate administrative regulations regulating the use 22
and control of approved automated charity game ticket dispensers. 23
(2) (a) No prize for an individual charity game ticket shall exceed five hundred 24
ninety-nine dollars ($599) in value, not including the value of cumulative or 25
carryover prizes awarded in seal card games. 26
(b) Cumulative or carryover prizes in seal card games shall not exceed two 27 UNOFFICIAL COPY 23 RS BR 840
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thousand four hundred dollars ($2,400). 1
(c) Information concerning rules of the particular game and prizes that are to be 2
awarded in excess of fifty dollars ($50) in each separate package or series of 3
packages with the same serial number and all rules governing the handling of 4
cumulative or carryover prizes in seal card games shall be posted prominently 5
in an area where charity game tickets are sold. A legible poster that lists prizes 6
to be awarded, and on which prizes actually awarded are posted at the 7
completion of the sale of each separate package shall satisfy this requirement. 8
(d) Any unclaimed money or prize shall return to the charitable organization. 9
(e) No paper charity game ticket shall be sold in the Commonwealth of Kentucky 10
that does not conform to the standards for opacity, randomization, minimum 11
information, winner protection, color, and cutting established by the 12
department. 13
(f) No electronic pulltab device representation of a charity game ticket shall be 14
sold in the Commonwealth of Kentucky that does not conform to the 15
construction standards set forth in an administrative regulation promulgated 16
by the department. Electronic pulltab devices shall only be used for charitable 17
gaming. 18
(g) No person under the age of eighteen (18) shall be permitted to purchase, or 19
open in any manner, a charity game ticket. 20
(3) (a) Tickets for a raffle shall be sold separately, and each ticket shall constitute a 21
separate and equal chance to win. 22
(b) All raffle tickets shall be sold for the price stated on the ticket, and no person 23
shall be required to purchase more than one (1) ticket or to pay for anything 24
other than a ticket to enter a raffle. 25
(c) Raffle tickets and tickets for charity fundraising raffle games approved by the 26
department which are offered exclusively at charity fundraising events and 27 UNOFFICIAL COPY 23 RS BR 840
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special limited charity fundraising events are not required to be sold 1
separately and may be sold at discounted package rates. 2
(d) Raffle tickets shall have a unique identifier on each ticket. 3
(e) Winners shall be drawn at random at a date, time, and place announced in 4
advance or printed on the ticket. 5
(f) All prizes for a raffle shall be identified in advance of the drawing and all 6
prizes identified shall be awarded. 7
(4) With respect to charity fundraising events, a licensed charitable organization shall 8
be limited as follows: 9
(a) No licensed charitable organization shall conduct a charity fundraising event 10
or a special limited charity fundraising event unless they have a license for the 11
respective event issued by the department; 12
(b) No special license shall be required for any wheel game, such as a cake wheel, 13
that awards only noncash prizes the value of which does not exceed one 14
hundred dollars ($100); 15
(c) The department may grant approval for a licensed charitable organization to 16
play bingo games at a charity fundraising event. Cash prizes for bingo games 17
played during a charity fundraising event may not exceed ten[five] thousand 18
dollars ($10,000)[($5,000)] for the entire event. No person under the age of 19
eighteen (18) shall be permitted to play bingo at a charity fundraising event 20
unless accompanied by a parent or legal guardian; 21
(d) The department may grant approval for a licensed charitable organization to 22
play special limited charitable games at a charity fundraising event authorized 23
under this section. The department shall not grant approval for the playing of 24
special limited charitable games under the provisions of a charity fundraising 25
event license unless the proposed event meets the definition of a charity 26
fundraising event in Section 1 of this Act and is held for community, social, 27 UNOFFICIAL COPY 23 RS BR 840
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or entertainment purposes apart from charitable gaming[ in accordance with 1
KRS 238.505(8)]; 2
(e) Except for state, county, city fairs, and special limited charity fundraising 3
events, a charity fundraising event license issued under this section shall not 4
exceed seventy-two (72) consecutive hours. A licensed charitable 5
organization shall not be eligible for more than eight (8) total charity 6
fundraising event licenses per year, including two (2) special limited charity 7
fundraising event licenses. No person under eighteen (18) years of age shall 8
be allowed to play or conduct any special limited charitable game. The 9
department shall have broad authority to regulate the conduct of special 10
limited charity fundraising events in accordance with the provisions of KRS 11
238.547; and 12
(f) Charity fundraising events may be held: 13
1. On or in the premises of a licensed charitable organization; 14
2. In a licensed charitable gaming facility, subject to restrictions contained 15
in KRS 238.555(7); or 16
3. At an unlicensed facility which shall be subject to the requirements 17
stipulated in KRS 238.555(3), and subject to the restrictions contained in 18
KRS 238.547(2). 19
(5) Presentation of false, fraudulent, or altered identification by a minor shall be an 20
affirmative defense in any disciplinary action or prosecution that may result from a 21
violation of age restrictions contained in this section, if the appearance and 22
character of the minor were such that his or her age could not be reasonably 23
ascertained by other means. 24
Section 6. KRS 238.550 is amended to read as follows: 25
(1) All adjusted gross receipts from charitable gaming shall be handled only by 26
chairpersons, officers, or employees of the licensed charitable organization. 27 UNOFFICIAL COPY 23 RS BR 840
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(2) Except as provided in subsection (11) of this section, within two (2) business days 1
after the completion of a charitable gaming event or session, all gross receipts and 2
adjusted gross receipts shall be deposited into one (1) checking account devoted 3
exclusively to charitable gaming. This checking account shall be designated the 4
"charitable gaming account," and the licensed charitable organization shall maintain 5
its account at a financial institution located in the Commonwealth of Kentucky. No 6
other funds may be deposited or transferred into the charitable gaming account. 7
(3) All payments for charitable gaming expenses, payments made for prizes purchased, 8
and any charitable donations from charitable gaming receipts shall be made from 9
the charitable gaming account and the payments or donations shall be made only by 10
bona fide officers of the organization by checks having preprinted consecutive 11
numbers and made payable to specific persons or organizations. No check drawn on 12
the charitable gaming account may be made payable to "cash," or "bearer," except 13
that a licensed charitable organization may withdraw start-up funds for a charitable 14
gaming event or session from the charitable gaming account by check made payable 15
to "cash" or "bearer," if these start-up funds are redeposited into the charitable 16
gaming account together with all adjusted gross receipts derived from the particular 17
event or session. Checks shall be imprinted with the words "charitable gaming 18
account" and shall contain the organization's license number on the face of each 19
check. Payments for charitable gaming expenses, prizes purchased, and charitable 20
donations may be made by electronic funds transfer if the payments are made to 21
specific persons or organizations. The department may by administrative regulation 22
adopt alternative reporting requirements for charitable gaming of limited scope or 23
duration, if these requirements are sufficient to ensure accountability for all moneys 24
handled. 25
(4) A licensed charitable organization shall expend net receipts exclusively for 26
purposes consistent with the charitable, religious, educational, literary, civic, 27 UNOFFICIAL COPY 23 RS BR 840
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fraternal, or patriotic functions or objectives for which the licensed charitable 1
organization received and maintains federal tax-exempt status, or consistent with its 2
status as a common school, an institution of higher education, or a state college or 3
university. No net receipts shall inure to the private benefit or financial gain of any 4
individual. 5
(5) Accurate records and books shall be maintained by each organization exempt from 6
licensure under KRS 238.535(1) and each licensed charitable organization for a 7
period of three (3) years. Department staff shall have access to these records at 8
reasonable times. Licensed charitable organizations and exempt organizations shall 9
maintain their charitable gaming records at their offices or places of business within 10
the Commonwealth of Kentucky as identified in their license applications or 11
applications for exempt status. An exempt organization shall submit a yearly 12
financial report in accordance with KRS 238.535(2), and failure to file this report 13
shall constitute grounds for revocation of the organization's exempt status. 14
(6) All licensed charitable organizations that have annual gross receipts of two hundred 15
thousand dollars ($200,000) or less and do not have a weekly bingo session shall 16
report to the department annually at the time and on a form established in 17
administrative regulations promulgated by the department. 18
(7) All other licensed charitable organizations shall submit reports to the department at 19
least quarterly at the time and on a form established in administrative regulations 20
promulgated by the department. 21
(8) Failure by a licensed charitable organization to file reports required under this 22
chapter shall constitute grounds for revocation of the organization's license or 23
denial of the organization's application to renew its license in accordance with KRS 24
238.560(3). Reports filed by a licensed charitable organization shall include but 25
shall not be limited to the following information: 26
(a) All gross receipts received from charitable gaming for the reporting period, 27 UNOFFICIAL COPY 23 RS BR 840
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classified by type of gaming activity; 1
(b) The names and addresses of all persons who are winners of prizes having a 2
fair market value of six hundred dollars ($600) or more; 3
(c) All expenses paid and the names and addresses of all persons to whom 4
expenses were paid; 5
(d) All net receipts retained and the names and addresses of all charitable 6
endeavors that received money from the net receipts; and 7
(e) Any other information the department deems appropriate. 8
(9) No licensed charitable organization shall incur charitable gaming expenses, except 9
as provided in this chapter. No licensed charitable organization shall be permitted to 10
expend amounts in excess of prevailing market rates for the following charitable 11
gaming expenses: 12
(a) Charitable gaming supplies and equipment; 13
(b) Rent; 14
(c) Utilities; 15
(d) Insurance; 16
(e) Advertising; 17
(f) Janitorial services; 18
(g) Bookkeeping and accounting services; 19
(h) Security services; 20
(i) Membership dues for its participation in any charitable gaming trade 21
organization; and 22
(j) Any other expenses the department may determine by administrative 23
regulation to be legitimate. 24
(10) No licensed charitable organization shall expend receipts from charitable gaming 25
activities nor incur expenses to form, maintain, or operate as a labor organization. 26
(11) For the purposes of deposits under subsection (2) of this section, a licensed 27 UNOFFICIAL COPY 23 RS BR 840
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charitable organization conducting charitable gaming events or sessions shall 1
only be required to deposit its gross receipts and adjusted gross receipts one (1) 2
time per week if the following conditions are met: 3
(a) The charitable gaming involves only games using charity game tickets; 4
(b) The charitable gaming is not part of a charity fundraising event; and 5
(c) The licensed charitable organization's deposits of gross receipts and 6
adjusted gross receipts from charitable gaming total less than two thousand 7
five hundred dollars ($2,500) in the week prior to the deposit. 8