CCP 06-15-1992 - Laserfiche WebLink

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. , CITY OF ARDEN HILLS . MEH:&mNIXlM D1lTE : JUne 12, 1992 TO: Mayor and city council FRCM: @ Terrance R. Post, Temporary City 1\ccountant SUBJECT: Charitable Gambling Update At the May 26, 1992, Council meeting, I was directed by Council to obtain additional information regarding charitable gambling. Following are the results of this data gathering: HOW 00 OI'HER CITIES CALCULATE NEr PROFIT CDNI'RIBUrION: I surveyed 15 cities and received replies from 11. Of the 11 respondents, 100 percent of them allowed charitable gambling and only 27 percent (3/11) required a net profit contr:ib.1tion to be remitted directly back to the City. 'Ihe method of calculation for the net profit contr:ib.1tion varied as follows : . 1. Gambling receipts less prizes less allowable expenses (Arden Hills, Little Canada). 2. Same as above plus subtractions for all, except local, taxes paid (Maplewood) . 3. Same as "1." above plus subtractions for all taxes paid (Roseville) . CDUID 'IHE CITY OF ARDEN HILlS JUSTIFY 'IHE IMPOSITION OF A GAMBLING TAX? It is interesting to note that 36 percent of the respondents (4/11) in my survey have bnplernented a gambling tax. 'Ihe gambling tax is corrq:>uted on the basis of gambling receipts less prizes times the tax rate (3 at 3 percent; 1 at .1 percent) . Using the City of Arden Hills first quarter 1991 as a baseline, the licensees are collecting approximately $650,000 per quarter ($2.5 million armually) in gambling receipts less prizes. If the city were to consider llnposing a gambling tax, the amount generated would be as follows for varying rates: 1/2% 1% 2% 3% (Max) $12,500 $25,000 $50,000 $75,000 . In tenus of estimating regulatory costs to monitor gambling activity within the City, I believe it would be reasonable to anticipate the following expenses: