DE House Passes Temporary Non-Profit Slot Machine Bill

Veterans protesting the non-profit slot machine issue on Thursday, January 10, 2013 in front of Legislative Hall in Dover.
Veterans protesting the non-profit slot machine issue on Thursday, January 10, 2013 in front of Legislative Hall in Dover. Photo taken by Joseph Fulgham.

By Terry Rogers

On Wednesday, January 23, 2013, the Delaware House of Representatives passed House Bill 1 as a first step toward allowing non-profit organizations to continue using slot machines in their establishments as a means of revenue. The bill, which passed 34 to 4 with two not voting, now goes to the Senate for approval.

House Bill 1 amends Title 29 of the Delaware Code which relates to lotteries by providing language permitting “fraternal organizations with national affiliation, or an organization in existence as of January 1, 2013, whose membership consists primarily of veterans honorably discharged or active duty service members” to operate video lottery machines. This temporary solution will be in effect until June 30, 2013.

“The suspension of charitable gaming since November has hurt the dozens of non-profit organizations that have come to rely on this source of revenue to support their altruistic efforts,” stated Milford area Representative Jack Peterman, who voted for the bill. “This temporary measure will restore some of that funding. I’m hopeful a consensus can be hammered out over the next couple of months to resolve the issue.” Harvey Kenton, who also represents Milford in the House of Representatives, and voted in favor of the measure as well, agrees.

“The Elks, Moose, American Legion and other groups working to help their local communities need this legislation. Despite its imperfections, I supported House Bill 1 because it provides some small amount of relief to these non-profit organizations while work toward a permanent solution continues,” Kenton said.

However, some non-profit agencies feel the bill causes more problems than it corrects. Gerald Thompson, Commander of VFW Post 6483, located in Milford, says that the increase in taxes, a requirement that the machines be purchased from the state at a set interest rate, and the new application process will create significant red tape and make the revenue from the machines non-existent.

“It is nice that Representatives Kenton and Peterman voted in favor of this bill in an effort to help us out,” Thompson stated. “However, I still must question why they let this happen in the first place.” According to Thompson, Section 17B passed by referendum in 1986 included wording for non-profit organizations to have the right to conduct lotteries that are not under state control. Considering that the current law falls under other lottery legislation, Thompson fails to see why the state stepped in at all.

“We have had slot machines since 1984, and there has never been a problem,” Thompson said. “To make matters worse, this new law will actually make it more trouble to have slot machines than to take them out completely.” Thompson said that if this law remains in effect, as it is, VFW Post 6483 would remove the slot machines completely and find another way to raise revenue.

“The new law requires that we have all current machines removed and that we buy new machines from the state at an interest rate they will determine,” Thompson said. “In addition, the new law requires that almost half our profits be returned to the state, which is a ridiculously high amount.” As the law reads, Section 4819A(c) Proceeds returned to the State reads:

“Amounts remaining after all payments to players under paragraph (b) of this section, there shall be returned to the State 43½%.”

“The licenses, taxation and fees that we paid to bring our post up-to-date were horrendous,” Thompson said. “As of November 11, 2012, however, we had done what the state required and were free and clear. Then, on Veteran’s Day, we are handed this letter.” Thompson went on to question how a few government agencies, such as the Delaware State Police and Division of Homeland Security, were able to conduct an investigation and issue these letters without the knowledge of the legislators or the Governor’s office.

“Our vendors have paid a licensing fee to the state since 1984, and those fees were pretty high,” Thompson said. “So, how could the fact that we had slot machines be such a surprise to the state if they had been collecting these licensing fees all along?”

Thompson stated that even with the passage of this law, it still must pass the Senate, and then they must go through the approval procedure with the state. This means they will probably not be able to begin using slot machines in the post until after March 1, and by then, they will have had to find another source of revenue.

“We cannot keep losing $1200 a month as we have since November,” Thompson said. “We will more than likely remove the machines and find another way to cover our costs.”