PEER reviewed regulation of charitable bingo in Mississippi to determine the societal risks associated with this form of legalized gambling, whether state law and Gaming Commission regulations adequately address these risks, and whether the commission effectively implements its legal mandate.
The principal risks associated with legalized bingo are that licensees might not meet their charitable obligations which they accept as a precondition to licensing, that games might not be conducted fairly, and that the competitive playing field for all charities might not be kept level so that all have opportunity to use charitable bingo as a means of raising funds.
Overview
State law does not adequately address the charity fraud risk in that it does not:
Additionally, Gaming Commission rules dealing with controls on the number of sessions a licensee may operate have not been in compliance with state law.
The weaknesses in law have allowed organizations which have not carried out significant charitable activities to become licensed to conduct charitable bingo. Further, these weaknesses have left the Gaming Commission without legal authority to require licensees to submit plans for the support of charitable activities and to audit for material compliance with these plans.
The commission's lack of authority over the methods used by appraisers in commercial leasing leaves the commission without a way of insuring that the methods used in appraising property give a landowner only a fair price and not an excessive price on the property.
With respect to operations of the Gaming Commission's Bingo Division, the division lacks the trained accounting personnel necessary to perform financial analysis tasks associated with gaming regulation, lacks proper financial documentation to carry out financial regulation of licensees, and does not comply with its own procedures relative to agents' reporting to management regarding work plans and achievements. Also, the commission's hearings procedures contain technical deficiencies relative to burden of proof and licensees making legal arguments before the entire commission when appealing decisions of the agency hearing's officer.
These conditions result in inconsistencies in the enforcement of agency rules. More importantly, the lack of trained accounting personnel to regulate the activities of bingo licensees leaves the agency without the staff needed to review financial reports of bingo licensees to insure that persons involved in the business are not owners of interests in other businesses such as lessors or suppliers.
Recommendations
The Legislature should amend the Charitable Bingo Law (MISS. CODE ANN. Section 97-33-50 et seq.) to provide the Gaming Commission with authority to restrict licenses to entities with a record of providing charitable services. The law should be amended to require that licensees submit plans of support for charitable activity which the commission can audit to insure that bingo charities are making material progress toward meeting their expressed purposes of supporting charities.
The Legislature should also amend the law to allow the commission to set standards for appraisals to be submitted for commercial leases. PEER also recommends that the Legislature change the bingo licensure cycle from one year to two, with staggered expiration dates to reduce the annual workload for agents involved in the review of license applications.
The Gaming Commission should adhere to its policy which requires agents' written plans of work and reports on accomplishments. The agency should review its current positions filled and vacant to determine if it has resources to carry out the financial accounting analysis needed by the Bingo Division. In the event that the commission cannot carry out this function with existing resources, it could request additional resources specifically for this purpose.
PEER also recommends that the commission amend its rules to allow attorneys representing licensees and the state to argue errors of law before the commission. Further, the commission should amend its rules to shift the burden of proof to the state in matters involving penalties.
Download Full Text Report in Acrobat Format - (168 K)
If you have questions about PEER, send e-mail to director@peer.ms.gov.