Office of Statewide Prosecution

Report of the Twelfth Statewide Grand Jury

The Operation of Commercial Bingo Halls in the State of Florida
October 25, 1995
IN THE SUPREME COURT OF THE STATE OF FLORIDA -- CASE NUMBER 83,964
(This document has been re-formatted for the Internet)

INTRODUCTION

We, the members of the Twelfth Statewide Grand Jury, have investigated the activities of twelve commercial bingo halls in the State of Florida. We heard testimony and reviewed evidence concerning numerous violations of Florida law. As a result, we issued indictments charging nine individuals and ten business entities with Racketeering, Conspiracy to Commit Racketeering, Maintaining An Illegal Gambling House, Illegal Operation of Lottery, and Failure to Collect Sales Taxes. We are aware that the Attorney General will be pursuing civil injunctions and other remedies to disrupt the illegal commercial bingo businesses we investigated. It is our considered opinion that the commercial bingo operations under investigation have demonstrated total disregard for the laws enacted to prevent illegal gambling in this State. 

After investigating the facts of these cases and studying the statutes pertaining to the operation of bingo in this State, it appears to us that there is no limit to the ways in which the bingo laws can be skirted, to the detriment of the charitable interests they were designed to protect. We issue this report to bring this matter to the attention of the Legislature, and we call for reform in the law.

STATUTES

Lottery gambling is prohibited in the State of Florida, with statutory and constitutional exceptions, including the Florida Lottery and charitable bingo operations. 

Section 849.0931, Florida Statutes (1993), authorizes the conduct of bingo games by charitable, non-profit and veterans' organizations engaged in charitable, civic, community, benevolent, religious or scholastic works and other similar activities, (hereinafter referred to as "charitable organizations") provided the entire proceeds derived from the conduct of the bingo games are donated to such endeavors, less actual business expenses for articles designed for and essential to the operation, conduct, and playing of bingo. 

Section 849.0931(2)(a), Florida Statutes (1993), prohibits the net proceeds from bingo games from being used for any purpose other than charitable, non-profit and veterans' organizations engaged in charitable, civic, community, benevolent, religious or scholastic works and other similar activities. 

Section 849.0931(2)(b), Florida Statutes (1993), provides that, "It is the express intent of the Legislature that no charitable, non-profit or veterans' organization serve as a sponsor of a bingo game conducted by another, but such organization may only be directly involved in the conduct of such a game as provided in this act." 

Section 849.0931, Florida Statutes (1993), contains various other provisions intended to assure that the primary benefactors of the authorized bingo games are actually the charitable, non-profit and veterans' organizations, and not private persons. These include requirements that the operators must be bona fide members of the organization conducting the bingo game, must not be compensated for the operation of the bingo game, and must be residents of the community where the organization is located. The protective statutory provisions also include requirements that the property upon which the bingo games are held must either be owned by the worthy organizations or leased by worthy organizations for not less than one year, provided that the rent is not unreasonable for the location.

FINDINGS

A high degree of commercialization exists in the even-day-per-week bingo halls, and they operate, in effect, as mini-casinos. Our investigation revealed that in these commercial bingo halls, the charitable organizations did not control the conduct of the bingo games. Instead, the commercial operators controlled the games through their own paid employees who are at most only "enrolled" in the charity whose name is being used, to give the appearance that the charity is conducting the bingo game. These employees were often paid directly from the bingo proceeds by the hall manager, who placed cash into tip jars or gave out direct cash payments. 

In the halls we investigated, the commercial operators routinely deducted extremely high rental rates and charged the charities inflated or nonexistent expenses, cheating them out of money belonging to them. The commercial operators, not the charities, were in direct control of the procedures and monies at all times. 

The most significant fact presented to us concerned the vast amount of money made by the commercial bingo halls in comparison to the relative crumbs they remitted to the charities. After prize payouts, the commercial bingo hall operators typically received $1,000 to $2,000 per day from the bingo receipts while the charity or charities in whose name the bingo was operated received $100 to $200 from the day's bingo receipts. In a seven-day-per-week operation, this amounts to $365,000 to $730,000 per year for the commercial operator and a total of $36,500 to $73,000 for all of the charities involved. It is quite clear to us that the commercialization of bingo and the resulting diversion of bingo proceeds to private persons and commercial operators results in a significant reduction of bingo proceeds which are actually donated to benefit charitable, civic, community, benevolent, religious or scholastic works and other similar activities in the communities. This is unacceptable, given the express intent of the Florida Legislature and the people of the State of Florida. 

In addition to the evidence in the case under investigation, we learned that a Texas corporation recently purchased three commercial bingo halls in Florida, for 1.8 million dollars. The press release announcing this purchase declared that "the favorable bingo regulations combined with the unique demographic composition will result in Florida being one of the more important states in [the corporation]'s overall plan to become a major factor in the operation of U.S. Charity bingo centers over the next several years. The Company intends to use these first three Florida acquisitions as the springboard for an aggressive growth program within that state. The Company is in various stages of active negotiations to acquire other bingo halls in Florida."

RECOMMENDATIONS

The ease with which the bingo laws were violated in the case under investigation, as well as the variety of violations which were committed, prompted us to review the effectiveness of the regulatory provisions in state law. In this analysis we studied a number of county and municipal ordinances designed to regulate bingo at the local level. These various ordinances, among other things, require licenses, prohibit cash payments, require detailed record keeping of all transactions, and require that all bingo games be video and audio taped. 

These regulations allow law enforcement to more easily detect illegal bingo activities and in some instances have reduced the illegal conduct. They have failed, however, to eliminate the abuses noted above. 

It is our opinion that the most effective way to eliminate the abuses is to prohibit more than one charity from conducting bingo at any one location in a given day and limit the operation of bingo to two days per week in any one location. This type of restriction would in no way affect the leasing, rental or other legitimate use of the premises. Similar regulations have been enacted in other jurisdictions and have effectively taken the huge profits out of the hands of commercial bingo hall operators and returned the conduct of bingo and any profit therefrom to qualified non-profit organizations as intended by F.S. 849.0931. 

This grand jury has considered and recommends the following additional suggestions for effective regulation of bingo operations: (1) all proceeds from the operation of bingo shall be deposited into a bank account bearing the name of the charitable organization conducting the bingo, and which shall be limited to the proceeds and expenses pertaining to the operation of bingo; and (2) all
expenses including prizes shall be paid out of this account. This grand jury also recommends that consideration be given to a requirement that the charitable organizations acknowledge an understanding of their obligations to operate bingo as prescribed by law.

CONCLUSION

The people of the State of Florida have repeatedly and overwhelmingly rejected the introduction of casino gambling into our State, and the Legislature should implement this unambiguous public intent and act to eliminate the bingo "mini-casinos" that are now flourishing. 

There are hundreds of commercial bingo halls in the State of Florida. Some of them no doubt operate in an ethical and legal manner according to the laws currently in effect. However, unscrupulous commercial operators have flaunted the law in the most offensive means possible: by preying on the good will of the citizens of this State and diverting revenues from legitimate charities. This grand jury believes that such behavior will continue unless reforms are enacted and vigorously enforced by law enforcement agencies throughout the State. If bingo were operated in this State as intended, there would remain sufficient opportunity for charitable organizations to access technical expertise, facilities, and equipment without being exploited.  

The Twelfth Statewide Grand Jury strongly urges the Legislature of the State of Florida to take these or similar approaches to the regulation of bingo in this State and amend F.S. 849.0931 as recommended herein. 

THIS REPORT IS RESPECTFULLY SUBMITTED to the Honorable Ray E. Ulmer, Presiding Judge of the Twelfth Statewide Grand Jury, this day of October, 1995. 


WILLIAM CASE 
Foreperson
Twelfth Statewide Grand Jury
of Florida


I, MELANIE ANN HINES, Statewide Prosecutor and Legal Adviser to the Twelfth Statewide Grand Jury of Florida, hereby certify that I, as authorized and required by law, have advised the Grand Jury which returned this Report, this day of October, 1995.


MELANIE ANN HINES
Statewide Prosecutor 
Legal Adviser
Twelfth Statewide Grand Jury
of Florida


I, RICHARD B. BOGLE, Chief Assistant Statewide Prosecutor and Assistant Legal Adviser to the Twelfth Statewide Grand Jury of Florida, hereby certify that I, as authorized and required by law, have advised the Grand Jury which returned this Report, this day of October, 1995.


RICHARD B. BOGLE
Chief Assistant Statewide
Prosecutor
Assistant Legal Adviser
Twelfth Statewide Grand Jury
of Florida


THE FOREGOING Report of the Twelfth Statewide Grand Jury was returned before me in open court this _______ day of October, 1995, and is hereby sealed until further order of this Court, upon proper motion of the Statewide Prosecutor.