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238.535 Licensing of charitable organizations conducting charitable gaming --
Exemptions -- Qualifications.
(1) Any charitable organization conducting charitable gaming in the Commonwealth of
Kentucky shall be licensed by the department. A charitable organization qualifying <br>under subsection (8) of this section but not exceeding the limitations provided in <br>this subsection shall be exempt from the licensure requirements when conducting <br>the following charitable gaming activities: <br>(a) Bingo in which the gross receipts do not exceed a total of twenty-five
thousand dollars ($25,000) per year;
(b) A raffle or raffles for which the gross receipts do not exceed twenty-five
thousand dollars ($25,000) per year; and
(c) A charity fundraising event or events that do not involve special limited
charitable games and the gross gaming receipts for which do not exceed <br>twenty-five thousand dollars ($25,000) per year.
However, at no time shall a charitable organization's total limitations under this <br>subsection exceed twenty-five thousand dollars ($25,000).
(2) Any charitable organization exempt from the process of applying for a license under
subsection (1) of this section, shall notify the department in writing, on a simple <br>form issued by the department, of its intent to engage in exempt charitable gaming <br>and the address at which the gaming is to occur. Any charitable organization <br>exempt from the process of applying for a license under subsection (1) of this <br>section, shall comply with all other provisions of this chapter relating to the conduct <br>of charitable gaming, except: <br>(a) Payment of the fee imposed under the provisions of KRS 238.570; and <br>(b) The quarterly reporting requirements imposed under the provisions of KRS
238.550(7), unless the exempt charitable organization obtains a retroactive <br>license pursuant to subsection (5) of this section.
Before the last day of each year, a charitable organization exempt from licensure <br>under the provisions of subsection (1) of this section shall file with the department a <br>financial report detailing the type of gaming activity in which it engaged during that <br>year, the total gross receipts derived from gaming, the amount of charitable gaming <br>expenses paid, the amount of net receipts derived, and the disposition of those net <br>receipts. This report shall be filed on a form issued by the department. Upon receipt <br>of the yearly financial report, the department shall notify the charitable organization <br>submitting it that its exemption is renewed for the next year. If the department <br>determines that information appearing on the financial report renders the charitable <br>organization ineligible to possess an exemption, the department shall revoke the <br>exemption. The organization may request an appeal of this revocation pursuant to <br>KRS 238.565. If an exemption is revoked because an organization has exceeded the <br>limit imposed in subsection (1) of this section, the organization shall apply for a <br>retroactive license in accordance with subsection (3) of this section.
(3) If an organization exceeds the limit imposed by any subsection of this section it
shall:
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(a) Report the amount to the department; and <br>(b) Apply for a retroactive charitable gaming license.
(4) Upon receipt of a report and application for a retroactive charitable gaming license,
the department shall investigate to determine if the organization is otherwise <br>qualified to hold the license.
(5) If the department determines that the applicant is qualified, it shall issue a charitable
gaming license retroactive to the date on which the exemption limit was exceeded. <br>The retroactive charitable gaming license shall be issued in the same manner as <br>regular charitable gaming licenses.
(6) If the department determines that the applicant is not qualified it shall deny the
license and take enforcement action, if appropriate.
(7) Once a retroactive or regular gaming license is issued to an organization, that
organization shall not be eligible for exempt status in the future and shall maintain a <br>charitable gaming license if it intends to continue charitable gaming activities, <br>unless the charitable organization has not exceeded the exemption limitations of <br>subsection (1) of this section for a period of two (2) years prior to its exemption <br>request.
(8) In order to qualify for licensure, a charitable organization shall:
(a) 1.
Possess a tax exempt status under 26 U.S.C. secs. 501(c)(3), 501(c)(4), <br>501(c)(8), 501(c)(10), or 501(c)(19), or be covered under a group ruling <br>issued by the Internal Revenue Service under authority of those sections; <br>or
2.
Be organized within the Commonwealth of Kentucky as a common <br>school as defined in KRS 158.030, as an institution of higher education <br>as defined in KRS 164A.305, or as a state college or university as <br>provided for in KRS 164.290;
(b) Have been established and continuously operating within the Commonwealth
of Kentucky for charitable purposes, other than the conduct of charitable <br>gaming, for a period of three (3) years prior to application for licensure. For <br>purposes of this paragraph, an applicant shall demonstrate establishment and <br>continuous operation in Kentucky by its conduct of charitable activities from <br>an office physically located within Kentucky both during the three (3) years <br>immediately preceding its application for licensure and at all times during <br>which it possesses a charitable gaming license. However, a charitable <br>organization that operates for charitable purposes in more than ten (10) states <br>and whose principal place of business is physically located in a state other <br>than Kentucky may satisfy the requirements of this paragraph if it can <br>document that it has: <br>1.
Been actively engaged in charitable activities and has made reasonable <br>progress, as defined in paragraph (c) of this subsection, in the conduct of <br>charitable activities or the expenditure of funds within Kentucky for a <br>period of three (3) years prior to application for licensure; and
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2.
Operated for charitable purposes from an office or place of business in <br>the Kentucky county where it proposes to conduct charitable gaming for <br>at least one (1) year prior to application for licensure, in accordance with <br>paragraph (d) of this subsection;
(c) Have been actively engaged in charitable activities during the three (3) years
immediately prior to application for licensure and be able to demonstrate, to <br>the satisfaction of the department, reasonable progress in accomplishing its <br>charitable purposes during this period. As used in this paragraph, "reasonable <br>progress in accomplishing its charitable purposes" means the regular and <br>uninterrupted conduct of activities within the Commonwealth or the <br>expenditure of funds within the Commonwealth to accomplish relief of <br>poverty, advancement of education, protection of health, relief from disease, <br>relief from suffering or distress, protection of the environment, conservation <br>of wildlife, advancement of civic, governmental, or municipal purposes, or <br>advancement of those purposes delineated in KRS 238.505(3). In order to <br>demonstrate reasonable progress in accomplishing its charitable purposes <br>when applying to renew an existing license, a licensed charitable organization <br>shall additionally provide to the department a detailed accounting regarding its <br>expenditure of charitable gaming net receipts for the purposes described in <br>this paragraph; and
(d) Have maintained an office or place of business, other than for the conduct of
charitable gaming, for one (1) year in the county in which charitable gaming is <br>to be conducted. The office or place of business shall be a separate and <br>distinct address and location from that of any other licensee of the Department <br>of Charitable Gaming; except that up to three (3) licensed charitable <br>organizations may have the same address if they legitimately share office <br>space. For the conduct of a raffle, the county in which charitable gaming is to <br>be conducted shall be the county in which the raffle drawing is to be <br>conducted. However, a charitable organization that has established and <br>maintained an office or place of business in the county for a period of at least <br>one (1) year may hold a raffle drawing or a charity fundraising event, <br>including special limited charity fundraising events, in a Kentucky county <br>other than that in which the organization's office or place of business is <br>located. For raffles, the organization shall notify the Department of Charitable <br>Gaming in writing of the organization's intent to change the drawing's location <br>at least thirty (30) days before the drawing takes place. This written <br>notification may be transmitted in any commercially reasonable means, <br>authorized by the department, including facsimile and electronic mail. The <br>notification shall set out the place and the county in which the drawing will <br>take place. Approval by the department shall be received prior to the conduct <br>of the raffle drawing at the new location. Any charitable organization that was <br>registered with the county clerk to conduct charitable gaming in a county on or <br>before March 31, 1992, shall satisfy this requirement if it maintained a place <br>of business or operation, other than for the conduct of charitable gaming, for <br>one (1) year prior to application in a Kentucky county adjoining the county in
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which they were registered. Any licensed charitable organization that qualifies <br>to conduct charitable gaming in an adjoining county under this paragraph, <br>shall be permitted to conduct in its county of residence a charity fundraising <br>event.
(9) In applying for a license, the information to be submitted shall include but not be
limited to the following: <br>(a) The name and address of the charitable organization; <br>(b) The date of the charitable organization's establishment in the Commonwealth
of Kentucky and the date of establishment in the county in which charitable <br>gaming is to be conducted;
(c) A statement of the charitable purpose or purposes for which the organization
was organized. If the charitable organization is incorporated, a copy of the <br>articles of incorporation shall satisfy this requirement;
(d) A statement explaining the organizational structure and management of the
organization. For incorporated entities, a copy of the organizations' bylaws <br>shall satisfy this requirement;
(e) A detailed accounting of the charitable activities in which the charitable
organization has been engaged for the three (3) years preceding application for <br>licensure;
(f) The names, addresses, dates of birth, and Social Security numbers of all
officers of the organization;
(g) The names, addresses, dates of birth, and Social Security numbers of all
employees and members of the charitable organization who will be involved <br>in the management and supervision of charitable gaming. No fewer than two <br>(2) employees or members of the charitable organization who are involved in <br>the management and supervision of charitable gaming, along with the chief <br>executive officer or the director of the applicant organization, shall be <br>designated as chairpersons;
(h) The address of the location at which charitable gaming will be conducted and
the name and address of the owner of the property, if it is owned by a person <br>other than the charitable organization;
(i) A copy of the letter or other legal document issued by the Internal Revenue
Service to grant tax-exempt status;
(j) A statement signed by the presiding or other responsible officer of the
charitable organization attesting that the information submitted in the <br>application is true and correct and that the organization agrees to comply with <br>all applicable laws and administrative regulations regarding charitable <br>gaming;
(k) An agreement that the charitable organization's records may be released by the
Federal Internal Revenue Service to the department; and
(l) Any other information the department deems appropriate.
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(10) An organization or a group of individuals that does not meet the licensing
requirements of subsection (8) of this section may hold a raffle if the gross receipts <br>do not exceed one hundred fifty dollars ($150) and all proceeds from the raffle are <br>distributed to a charitable organization. The organization or group of individuals <br>may hold up to three (3) raffles each year, and shall be exempt from complying with <br>the notification, application, and reporting requirements of subsections (2) and (9) <br>of this section.
(11) The department may issue a license for a specified period of time, based on the type
of charitable gaming involved and the desired duration of the activity.
(12) The department shall charge a fee for each license issued and renewed, not to
exceed three hundred dollars ($300). Specific fees to be charged shall be prescribed <br>in a graduated scale promulgated by administrative regulations and based on type of <br>license, type of charitable gaming, actual or projected gross receipts, or other <br>applicable factors, or combination of factors.
(13) (a) A licensed charitable organization may place its charitable gaming license in
escrow if: <br>1.
The licensee notifies the department in writing that it desires to place its <br>license in escrow; and
2.
The license is in good standing and the department has not initiated <br>disciplinary action against the licensee.
(b) During the escrow period, the licensee shall not engage in charitable gaming,
and the escrow period shall not be included in calculating the licensee's <br>retention rate under KRS 238.536.
(c) A charitable organization may apply for reinstatement of its active license and
the license shall be reinstated provided: <br>1.
The charitable organization continues to qualify for licensure;
2.
The charitable organization has not engaged in charitable gaming during <br>the escrow period; and
3.
The charitable organization pays a reinstatement fee established by the <br>department.
Effective: July 15, 2010 <br>History: Amended 2010 Ky. Acts ch. 24, sec. 540, effective July 15, 2010. -- Amended
2007 Ky. Acts ch. 120, sec. 7, effective June 26, 2007. -- Amended 2002 Ky. Acts <br>ch. 346, sec. 238, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 165, sec. 1, <br>effective July 14, 2000; ch. 374, sec. 8, effective July 14, 2000. -- Amended 1998 <br>Ky. Acts ch. 232, sec. 6, effective April 1, 1998; and ch. 434, sec. 4, effective July <br>15, 1998. -- Amended 1996 Ky. Acts ch. 331, sec. 7, effective April 10, 1996. -- <br>Created 1994 Ky. Acts ch. 66, sec. 8, effective March 16, 1994.
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