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<br /> . <br /> , <br /> . CITY OF ARDEN HILtS <br /> MIKRANOOM <br /> DM'E: June 26, 1992 <br /> 'IO: Mayor and City CoImcil <br /> ~:fJ <br /> Terry Post, Talporary City Accountant <br /> SUBJlOC:T : Charitable Gambling Regulations Review/Regulations <br /> At the June 15 Council Worksession, I was directed by Council to review <br /> the followin;1 subjects related to charitable gamblin;1: <br /> . Analyze the impact of reducin;1 the current 50 percent trade <br /> area spending requirement such that an organization would be <br /> "revenue neutral" by carq;>lyin;1 with the current 10 percent <br /> net profit contriJ::ution requirement. <br /> . Discuss the above natter and the issue of irrposin;1 a <br /> garnblin;1 tax with the City Attorney. <br /> . TRADE ARE/\. SPENDING RrollIREMENr <br /> A review of the supportin;1 documentation supplied by the organizations <br /> thus far this year indicates that, as a group, carq;>lyin;1 with ooth the <br /> 10 percent net profit contriJ::ution and the 50 percent trade area <br /> spending requirement of the present ordinance would be difficult for <br /> most and irrpossible for same. <br /> Specifically, organizations currently have approx.i1nately 15.6 percent of <br /> gross profit available for discretionary spending purposes. Assuming <br /> that all the organizations comply with the 10 percent net profit <br /> contribltion calculation and calculate the 50 percent (effectively 40 <br /> percent) trade area spending requirement in a similar manner, then only <br /> $30,000 (3.5 percent of gross profit) would be available for <br /> discretionary spendin;1 purposes. It appears that this level of <br /> discretionary spendin;1 would serve as a disincentive to the <br /> organizations - especially in relation to gamblin;1 receipts of <br /> $3,436,000 and gross profit (receipts less prizes) of $851,000. <br /> '!he impact of taxes paid to the state of Minnesota by the organizations <br /> for gross receipts, combined receipts, and pull tabs cannot be <br /> minimized . The review indicates that same $169,000 (19.8 percent of <br /> gross profit) of such taxes were paid durin;1 this ti1ne period. Simply <br /> put, the organizations generally would not have the cash to satisfy the <br /> 50 percent trade area requirement if the najority of it were already <br /> spent on tax payments. <br /> . <br />