REPORT TITLE:
Bingo; Nonprofit Organizations


DESCRIPTION:
Authorizes nonprofit organizations that are exempt from income
tax to conduct bingo games for the sole purpose of raising funds
that are to be used for lawful purposes only.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1189
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO BINGO GAMES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that bingo games are
 
 2 considered as lotteries by the Honolulu police department and are
 
 3 therefore illegal under section 712-1220, Hawaii Revised
 
 4 Statutes, although bingo itself is not specifically prohibited.
 
 5 Bingo games are legal in many other states as a means for
 
 6 nonprofit charitable organizations such as churches to raise
 
 7 funds.  Allowing these nonprofit organizations to conduct bingo
 
 8 games whereby they may raise funds from admission charges, card
 
 9 charges, a portion of the winnings, or a portion of the charges
 
10 for chances to win, or any combination thereof, could provide
 
11 them with a significant alternative income source to supplement
 
12 often inadequate monetary donations and interest income.  The
 
13 purpose of this Act is to allow charitable nonprofit
 
14 organizations to conduct bingo in Hawaii for the sole purpose of
 
15 fund-raising.
 
16      SECTION 2.  Chapter 712, Hawaii Revised Statutes, is amended
 
17 by adding a new section to part III to be appropriately
 
18 designated and to read as follows:
 
19      "§712-    Bingo games conducted by tax exempt nonprofit
 

 


 

Page 2                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1 organizations allowed; application; license and fees; lawful
 
 2 purpose.  (1)  Any nonprofit bona fide religious, charitable,
 
 3 service, fraternal, or veterans' organization that is tax exempt
 
 4 under the Internal Revenue Code of 1986, as amended, may lawfully
 
 5 conduct bingo games for the sole purpose of raising funds that
 
 6 are to be used for lawful purposes only.
 
 7      (2)  An organization listed under subsection (1) shall:
 
 8      (a)  Be incorporated in this State as a nonprofit
 
 9           corporation or organized in this State as a religious
 
10           or nonprofit organization;
 
11      (b)  Have at least fifteen members in good standing;
 
12      (c)  Conduct activities within this State in addition to the
 
13           conduct of bingo;
 
14      (d)  Be authorized by its constitution, articles, charter,
 
15           or bylaws to further a lawful purpose in this State;
 
16      (e)  Operate without profit to its members, and allow no
 
17           part of the net earnings of the organization to inure
 
18           to the benefit of any private shareholder or
 
19           individual;
 
20      (f)  Have been in existence for five years immediately
 
21           preceding its application for a license, and have had
 
22           during that five-year period a bona fide membership
 

 
Page 3                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1           actively engaged in furthering a lawful purpose; and
 
 2      (g)  Have received and used and continue to receive and use,
 
 3           for a lawful purpose, funds derived from sources other
 
 4           than from the conduct of bingo.
 
 5      (3)  Each organization wishing to conduct lawful bingo games
 
 6 pursuant to this section shall file with the department of
 
 7 commerce and consumer affairs an application for a license on a
 
 8 form prescribed by the department.  The application shall
 
 9 include:
 
10      (a)  The name and address of the nonprofit organization;
 
11      (b)  Sufficient facts relating to the incorporation or
 
12           organization of the organization to enable the
 
13           department to determine if the organization is eligible
 
14           for a license under this section;
 
15      (c)  The name and address of each officer of the
 
16           organization;
 
17      (d)  The place and date of each proposed bingo occasion to
 
18           be conducted during the effective period of the
 
19           license;
 
20      (e)  The name and address of the owner of the premises in
 
21           which bingo will be conducted and the approximate
 
22           capacity of the premises;
 

 
 
 
Page 4                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1      (f)  The name, date of birth, and address of each bona fide
 
 2           and active member of the organization acting as
 
 3           supervisor during each bingo occasion, one or more of
 
 4           whom shall be present and in immediate charge of and
 
 5           responsible for the conduct of each bingo occasion when
 
 6           bingo games are conducted;
 
 7      (g)  The specific lawful purposes to which the profits from
 
 8           the conduct of bingo are to be devoted; and
 
 9      (h)  Other information which the department deems necessary.
 
10      (4)  An application for an annual license to conduct bingo
 
11 games shall be accompanied by:
 
12      (a)  A sworn statement by each designated supervising member
 
13           that the member will be responsible for compliance with
 
14           this section and rules adopted under it for each bingo
 
15           occasion supervised by the member;
 
16      (b)  A sworn statement by the organization that all profits
 
17           shall be spent for a lawful purpose as provided under
 
18           subsection (5);
 
19      (c)  Proof of the organization's tax exempt status under the
 
20           Internal Revenue Code of 1986, as amended; and
 
21      (d)  A $25 annual bingo license fee for the organization; a
 
22           $10 license fee for each bingo occasion proposed to be
 

 
 
 
Page 5                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1           conducted and a $5 annual license fee for each
 
 2           designated supervising member.  The fees shall be paid
 
 3           to the department which shall deposit the fees in the
 
 4           state treasury to the credit of the general fund.
 
 5      (5)  All profits from bingo games conducted under this
 
 6 section shall be used entirely for lawful purposes.  For the
 
 7 purposes of this section, "lawful purposes" means one or more of
 
 8 the following:
 
 9      (a)  Benefiting persons by enhancing their opportunity for
 
10           religious or educational advancement, by relieving or
 
11           protecting them from disease, suffering, or distress,
 
12           by contributing to their physical well-being, by
 
13           assisting them in establishing themselves in life as
 
14           worthy and useful citizens, or by increasing their
 
15           comprehension of and devotion to the principles upon
 
16           which this nation was founded;
 
17      (b)  Initiating, performing, or fostering worthy public
 
18           works, or enabling or furthering the erection or
 
19           maintenance of public structures;
 
20      (c)  Lessening the burdens borne by government, or
 
21           voluntarily supporting, augmenting, or supplementing
 
22           services which government would normally render to the
 

 
 
 
Page 6                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1           people; or
 
 2      (d)  Maintaining, improving, building an addition to,
 
 3           repairing, or retiring the debt on existing buildings
 
 4           and real property used for purposes enumerated in
 
 5           paragraphs (a) to (c).
 
 6      "Lawful purpose" does not include the erection of a building
 
 7 or acquisition of any real property except as provided in
 
 8 paragraph (d), unless the department specifically authorizes the
 
 9 expenditures after a finding that the property will be used
 
10 exclusively for one or more of the purposes specified in
 
11 paragraphs (a) to (d).  It also does not it include any
 
12 activities consisting of an attempt to influence legislation or
 
13 participate in any political campaign on behalf of any elected
 
14 official or person who is or has been a candidate for public
 
15 office.
 
16      (6)  The department of commerce and consumer affairs may
 
17 adopt rules under chapter 91 to implement this section."
 
18      SECTION 3.  Section 712-1220, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§712-1220  Definitions of terms in this part.  In this
 
21 part, unless the context plainly requires a different meaning
 
22 [plainly is required, the following definitions apply.]:
 

 
 
 
Page 7                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1      [(1)  "Advance] "To advance gambling activity"[.  A] means
 
 2 an act in which a person "advances gambling activity" [if he
 
 3 engages] by engaging in conduct that materially aids any form of
 
 4 gambling activity[.]; except that bingo games conducted by tax
 
 5 exempt nonprofit organizations pursuant to this part shall not be
 
 6 considered gambling.  Conduct of this nature includes but is not
 
 7 limited to conduct directed toward the creation or establishment
 
 8 of the particular game, contest, scheme, device, or activity
 
 9 involved, toward the acquisition or maintenance of premises,
 
10 paraphernalia, equipment, or apparatus therefor, toward the
 
11 solicitation or inducement of persons to participate therein,
 
12 toward the actual conduct of the playing phases thereof, toward
 
13 the arrangement of any of its financial or recording phases, or
 
14 toward any other phase of its operation.  A person advances
 
15 gambling activity if, having substantial proprietary control or
 
16 other authoritative control over premises being used with [his]
 
17 the person's knowledge for purposes of gambling activity, [he]
 
18 the person permits that activity to occur or continue or makes no
 
19 effort to prevent its occurrence or continuation.  A person
 
20 advances gambling activity if [he] the person plays or
 
21 participates in any form of gambling activity. 
 
22      "Bingo occasion" means a single gathering or session at
 

 
 
 
Page 8                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1 which a series of successive bingo games is played.
 
 2      [(2)]  "Bookmaking" means advancing gambling activity by
 
 3 accepting bets from members of the public upon the outcomes of
 
 4 future contingent events. 
 
 5      [(3)]  "Contest of chance" means any contest, game, gaming
 
 6 scheme, or gaming device in which the outcome depends in a
 
 7 material degree upon an element of chance, notwithstanding that
 
 8 skill of the contestants may also be a factor therein[.]; except
 
 9 that bingo games conducted by tax exempt nonprofit organizations
 
10 pursuant to this part shall not be considered a contest of
 
11 chance.
 
12      [(4)]  "Gambling"[.  A] means an act in which a person
 
13 [engages in gambling if he] stakes or risks something of value
 
14 upon the outcome of a contest of chance or a future contingent
 
15 event not under [his] the person's control or influence, upon an
 
16 agreement or understanding that [he] the gambler or someone else
 
17 will receive something of value in the event of a certain
 
18 outcome.  Gambling does not include bona fide business
 
19 transactions valid under the law of contracts, including but not
 
20 limited to contracts for the purchase or sale at a future date of
 
21 securities or commodities, and agreements to compensate for loss
 
22 caused by the happening of chance, including but not limited to
 

 
 
 
Page 9                                                     
                                     S.B. NO.           1189
                                                        
                                                        

 
 1 contracts of indemnity or guaranty and life, health, or accident
 
 2 insurance.  Gambling also does not include bingo games conducted
 
 3 by tax exempt nonprofit organizations pursuant to this part.
 
 4      [(5)]  "Gambling device" means any device, machine,
 
 5 paraphernalia, or equipment that is used or usable in the playing
 
 6 phases of any gambling activity, whether that activity consists
 
 7 of gambling between persons or gambling by a person involving the
 
 8 playing of a machine.  However, lottery tickets and other items
 
 9 used in the playing phases of lottery schemes are not gambling
 
10 devices within this definition. 
 
11      [(6)]  "Lottery" means a gambling scheme; provided that
 
12 bingo games conducted by tax exempt nonprofit organizations
 
13 pursuant to this part are not considered to be lotteries, in
 
14 which: 
 
15     [(a)] (1)  The players pay or agree to pay something of value
 
16           for chances, represented and differentiated by numbers
 
17           or by combinations of numbers or by some other medium,
 
18           one or more of which chances are to be designated the
 
19           winning ones; [and 
 
20      (b)] (2)  The winning chances are to be determined by a
 
21           drawing or by some other method based on an element of
 
22           chance; and 
 

 
 
 
Page 10                                                    
                                     S.B. NO.           1189
                                                        
                                                        

 
 1     [(c)] (3)  The holders of the winning chances are to receive
 
 2           something of value. 
 
 3      [(7)]  "Mutuel" means a form of lottery in which the winning
 
 4 chances or plays are not determined upon the basis of a drawing
 
 5 or other act on the part of persons conducting or connected with
 
 6 the scheme, but upon the basis of the outcome or outcomes of a
 
 7 future contingent event or events otherwise unrelated to the
 
 8 particular scheme. 
 
 9      [(8)]  "Player" means a person who engages in gambling
 
10 solely as a contestant or bettor.
 
11      [(9)]  "[Profit] To profit from gambling activity"[.  A
 
12 person "profits from gambling activity" if he] means an act in
 
13 which a person accepts or receives money or other property
 
14 pursuant to an agreement or understanding with any other person
 
15 whereby [he] the person participates or is to participate in the
 
16 proceeds of gambling activity.
 
17      [(10)]  "Social gambling" is defined in section 712-1231. 
 
18      [(11)]  "Something of value" means any money or property,
 
19 any token, object, or article exchangeable for money or property,
 
20 or any form of credit or promise directly or indirectly
 
21 contemplating transfer of money or property or of any interest
 
22 therein, or involving extension of a service or entertainment."
 

 
 
 
Page 11                                                    
                                     S.B. NO.           1189
                                                        
                                                        

 
 1      SECTION 4.  Section 712-1223, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§712-1223  Gambling.(1)  A person commits the offense of
 
 4 gambling if the person knowingly advances or participates in any
 
 5 gambling activity[.]; provided that the playing of bingo games
 
 6 conducted by tax exempt nonprofit organizations shall not be
 
 7 considered an offense of gambling.
 
 8      (2)  Gambling is a misdemeanor."
 
 9      SECTION 5.  This Act does not affect penalties that were
 
10 incurred and proceedings that were begun, before its effective
 
11 date.
 
12      SECTION 6.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 7.  This Act shall take effect on July 1, 1999.
 
15 
 
16                              INTRODUCED BY:______________________