Purpose

Establishes regulations for raffles conducted by nonprofit organizations where gambling devices are used and requires the Department of Gaming to register gambling devices to be used by nonprofit organizations in raffles. Defines gambling device.

Background

The regulation of gambling in Arizona is generally under the jurisdiction of the Arizona Department of Gaming (Department). Raffles conducted by nonprofit organizations are currently authorized under state gaming laws. One popular type of raffle is a “casino night” raffle that allows the nonprofit to conduct gambling-type games for the purpose of raising money. Two separate Attorney General opinions have ratified this type of gambling as being legal and not subject to the general regulatory prohibitions and restrictions on gambling (1987 Ariz. Op. Atty. Gen. 161 and 1990 Ariz. Op. Atty. Gen. 57).

Some manufacturers of gambling devices have recently developed devices that look nearly identical to slot machines but are promoted as “electronically formatted” raffles. These types of gambling devices are not specifically prohibited under current state law as it pertains to raffles conducted by nonprofit groups. The use of these devices in nonprofit organization raffles and for charitable bingo have cropped up in other areas of the country as well as here in Arizona. In the State of Ohio, the State Supreme Court ruled in 1997 that liquor establishments could sell instant bingo tickets for nonprofit organizations. As a result, a number of charity-sponsored gambling facilities have begun offering video bingo across the state.

The issue of gambling device use in nonprofit raffles came up in Arizona when a Phoenix restaurant owner installed six pull-tab style slot machines for the purpose of conducting a raffle for a nonprofit organization early in 2000. This incident, coupled with the experience in Ohio, has elevated concern for the uncontrolled and unlimited use of these devices in Arizona.

The proposed strike everything amendment to S.B. 1296 proposes to establish regulations for raffles conducted by nonprofit organizations where gambling devices are used and requires the Department of Gaming to register gambling devices to be used by nonprofit organizations in raffles. The amendment also defines gambling device.

There is no anticipated fiscal impact to the state general fund.

Provisions

1. Establishes the following requirements to be met by nonprofit organizations that use gambling devices for a raffle:

· The raffle must be conducted at a location owned or leased by the nonprofit organization and the organization holds, for that premises, a liquor license issued by the Department of Liquor Licenses and Control.

· The nonprofit organization shall use only gambling devices that are registered by the Department of Gaming.

· Players in the raffle may only receive noncash prizes and any winnings returned to a player are to be used in the raffle only.

2. Defines “gambling device” to mean any mechanical, electromechanical or electronic device or its components that either:

· Plays or operates mechanically, electrically or automatically as a result of inserting a coin, bill or other manner of placing a bet, where through any element of hazard or chance the player receives or becomes entitled to receive anything of value, whether or not the device also dispenses, delivers or presents other merchandise, entertainment or product.

· Reports or dispenses winnings to a player from gambling.

3. Requires the Department to register gambling devices used in nonprofit organization raffles if the devices meet device specifications and other Department registration requirements. Allows the Department to charge a fee for this registration and grants emergency rulemaking authority to the agency for implementing the registration requirement.

4. Specifies that gambling devices registered by the Department for use by nonprofit or charitable organizations are not subject to penalties for illegal possession of gambling devices.

5. Specifies that this act is to be known as the Arizona Gambling Control Act.

6. Makes technical and conforming changes.

7. Provides for a general effective date.

SA/jas