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<br />~ <br />- <br />. CITY OF ARDEN HILIB <br /> MEHlR1lNDllM <br /> DATE: J\me 26, 1992 <br /> TO: @J Mayor and City Co1mcil <br /> Terry Post, TEIIIporary city Acco1mtant <br /> FRCH: I <br /> SUllJEC'l': Charitable Gambling Regulations Review/Regulations <br /> At th,,, June 15 Council Worksession, I was directed by COlmcil to review <br /> the following subjects related to charitable gambling: <br /> , Analyze the inpact of reducing the current 50 percent trade <br /> area spending requirement such that an organization would be <br /> "revenue neutral" by complying with the current 10 percent <br /> net profit contr:iJ::ution requirement. <br /> . Discuss the above matter and the issue of inqx>sing a <br /> gambling tax with the city Attorney. <br />. TRADE AREA SPENDING REOUIREMENT <br /> A review of the supporting doctnnel1tation supplied by the organizations <br /> thus far this year indicates that, as a group, complying with both the <br /> 10 percent net profit contr:iJ::ution and the 50 percent trade area <br /> spending requirement of the present ordinance would be difficult for <br /> most mn impossible for some. <br /> Specifically, organizations currently have approximately 15.6 percent of <br /> gross profit available for dis=etionary spending purposes. Assuming <br /> that all the organizations comply with the 10 percent net profit <br /> contritution 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 spending purposes. It appears that this level of <br /> discretionary spending would serve as a disincentive to the <br /> organizations - especially in relation to gambling receipts of <br /> $3,436,000 and gross profit (receipts less prizes) of $851,000. <br /> 'The :iJnpact of taxes paid to the state of Minnesota by the organizations <br /> for gross receipts, combined receipts, and pull tabs cannot be <br /> min:iJnized. 'The review indicates that some $169,000 (19.8 percent of <br /> gross profit) of such taxes were paid during this time period. Simply <br /> put, the organizations generally would not have the cash to satisfy the <br /> 50 percent trade area requirement if the majority of it were already <br /> spent on tax payments. <br />. <br />