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