THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Friday, February 21, 1997 TAG: 9702210810
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY MATTHEW DOLAN AND JUNE ARNEY, STAFF WRITERS
LENGTH: 102 lines
Weeks after the Virginia Charitable Gaming Commission seized records in its first major investigation into alleged bingo fraud, the General Assembly may now pull the plug on the commission.
The Virginia Senate and House of Delegates are considering different versions of legislation that would give localities the choice of opting out of the state's regulatory system and would disband the commission entirely in 1999.
Lawmakers have until Saturday, when the General Assembly adjourns, to work out differences.
The seven-member Gaming Commission, which has governed bingo operations statewide since July, is under attack for being too heavy-handed and requiring too much paperwork - especially for small charitable organizations.
But this week, Jerry W. Rowe, the commission's executive secretary, detailed an ongoing investigation of the alleged embezzlement of as much as $1 million worth of instant bingo tickets by the former bingo manager of a Chesapeake youth baseball league.
The timing of the investigation was not lost on those in Richmond who were debating the commission's future.
Del. Glenn R. Croshaw, D-Virginia Beach, who has opposed efforts to gut the commission, said the Deep Creek investigation is exactly what the commission was intended to do.
Gov. George F. Allen said Thursday that the Chesapeake case points out the need to keep the commission intact until at least 1999.
``They are the ones that investigated it,'' Allen said. ``Whether someone else would have looked into it, I don't know. But they did their job very well.''
Others, including Sen. Mark L. Earley, R-Chesapeake, argued that Chesapeake's commissioner of the revenue had regulated the city's bingo operations well before the commission - and better than a distant state agency in Richmond. He voted Wednesday to allow localities to opt out of the state regulations.
George West, who managed the bingo operation until he was dismissed last week, allegedly diverted funds from Deep Creek Baseball Association to his use through the sale of instant bingo tickets, according to court documents.
Calls for a statewide commission were prompted in part after a corruption investigation led to a 17-year conviction of a Henrico County bingo manager in 1995.
But the Chesapeake auditor who used to monitor bingo operations said Thursday he has reservations about giving regulatory powers back to the cities.
``I would suspect that should this fall back in the laps of the cities, the state would have to mandate local audits and some controls over the (bingo) suppliers, especially if they're out of state.'' said Chesapeake City Auditor James H. Gibbs.
Proposed bills on charitable gaming still under consideration in the General Assembly would:
Repeal the commission in 1999. This is a compromise between those who want to abolish it right away and those who want to give it time to prove its worth.
Exempt organizations with small games - the Senate version is gross sales of $15,000 a year, down from $25,000 - from most regulations.
Exempt organizations with small games - the Senate threshold is $25,000 gross sales - from having to pay annual permit fees.
Charitable gaming, including bingo, instant bingo tickets and raffle, generate annual sales of about $215 million statewide each year, Rowe said.
In the southeastern Virginia area alone, charitable gaming organizations collected more than $58 million. But after paying out expenses and prize awards, the groups - from Elks lodges to PTAs - spend an average of 8 percent of the total money collected on their charitable activities, according to 1996 financial reports collected by the commission.
Critics have cited reporting requirements and audit fees, which must be paid to the commission, as reasons to curtail or abolish its regulatory powers. Others have said that bingo corruption is isolated and could be rooted out by the cities if they had enforcement power and resources.
James Fillion, Portsmouth's commissioner of the revenue, said although the state commission took away a regulatory headache for the cities, ``we lose a little bit of money.''
``Just in this city alone, it's a $10 or $12 million business,'' Fillion said. ``It's just that they're up in Richmond and naturally we could do it better. . . . It's a pain in the butt, but we want it back.''
For the small bingo operators, the new state regulations can be burdensome. Harry E. Pfifferling, 55, said his Chesapeake Moose Lodge 1940 on Smith-Douglass Road only sold some $44,000 worth of bingo games and instant bingo tickets. But that didn't make him exempt from time-consuming financial reports to the state.
``I'm worried about whether we can even continue holding bingo,'' Pfifferling said Thursday.
Rowe, the commission's executive secretary, said he supports most of the proposed changes in bingo regulations, including lowering the state-mandated audit fee on bingo sales.
But Rowe said the General Assembly should drop proposed amendments that would give individuals, cities and counties the opportunity to exempt themselves from state regulations.
Officials said the difference between the House and Senate bills is the opt-out provision. The House amendment to the Senate bill would allow local governments to apply for local regulations, subject to the commission's approval. The Senate amendment to a House bill would allow local governments to opt out at will. MEMO: Staff writer David M. Poole contributed to this story.
KEYWORDS: BINGO INVESTIGATION GAMING GAMBLING