Philanthropy

TAKING A GAMBLE: Charity poker fund-raisers risk running afoul of the law

June 13, 2005

When it comes to charity poker in Indiana, players and organizers alike need to know more than when to hold 'em and when to fold 'em.

They also need to know whether they're walking-or running-away from a legal game.

Poker's growing popularity has given rise to a veritable jackpot for aficionados nationwide. In Indiana, where wagering is only allowed at state-sanctioned riverboat casinos, many of those who want more than a home game are finding action at tournaments that benefit charitable causes.

But even welli n t e n t i o n e d game operators may be breaking the law.

"We get a lot of calls from for-profit organizations that want to have [poker] tournaments for one charity or another," said Diane Freeman, administrator of the state Department of Revenue's compliance division. The problem: Riverboats and state lottery aside, she said, "gambling really is illegal."

Indiana's charity gambling law makes an exception for qualified not-for-profits that obtain a license from the Department of Revenue, permitting them to hold periodic festivals or "game nights" where players pay to play for the chance to win cash or prizes.

Still, the rules are specific. Licensed agencies can't hire someone to run the games for them-so-called "contracting" is a Class D felony-and they must use proceeds to further their charitable purpose.

So the bar down the block advertising a $20 poker tournament to help the needy? It may need a lawyer before long.

The state Department of Revenue, Attorney General's Office, and Alcohol and Tobacco Commission published notices on the topic earlier this year, hoping to stem the tide of violations.

Poker-related calls to the Revenue Department have tripled in the last eight months, officials said, and the Indiana State Excise Police field 30 to 40 inquiries each day from ATC licensees.

"This has just exploded in the last three or four months," said Excise Police Capt. Robin Poindexter. "It took us by surprise."

That's only fair, since the law has surprised some organizers.

Local Texas Roadhouse marketing manager Nicole Gordy was hip-deep in plans for a June 7 Texas Hold 'Em tournament to benefit tsunami-relief efforts when she got the word that the planned $50 buy-in made it illegal.

Gordy shifted gears, allowing players to join the game for free but encouraging them to make donations to the restaurant chain's nationwide effort to raise $1 million for CARE and UNICEF. Proceeds from a silent auction and food sales also were earmarked for charity.

"We were already excited about the idea and had started advertising," she said during a break in tournament preparations. "We hope [players] understand we're trying to raise money here."

The Avon restaurant had hoped was to raise $5,000 at the event, held at the nearby 8 Seconds Saloon. About 35 players showed up and contributed $1,400.

With no entry fee and no cash bets-even charitable games must play with chips or fake money-tournaments like Texas Roadhouse's are OK, Poindexter said, because players aren't taking a financial risk.

"It's fine as long as there's no risk," he said. "If you require a donation or require players to buy chips, that's different. That's gambling."

Excise Police have cited a few poker games around the state and even arrested a player here and there, Poindexter said, without offering specifics. About 20 percent to 30 percent of the agency's activities involve reports of unauthorized wagering.

But even the legal games are raising ethical questions here and elsewhere.

New Hampshire legislators introduced a number of measures this spring to regulate charity poker nights, for example, and other states are looking into the issue, according to the Alexandria, Va.-based Association of Fundraising Professionals.

One of the biggest problems, AFP President Paulette V. Maehara told the Chronicle of Philanthropy for a story published this month, is many tournaments are run by third parties that share in the proceeds.

Although Indiana's law eliminates that concern, others remain-like whether charities should benefit from a potentially addictive activity.

"That's an issue you have to deal with whenever an addiction is legal," said Dwight F. Burlingame, associate executive director of the Center on Philanthropy at Indiana University, citing wine tastings that raise money for a charitable cause. "The question is, does this support your mission or detract from it? You have to balance one against the other."

And as with any special event, organizations also must weigh the cost of such activities against the benefit. That becomes more of an issue when proceeds are depleted to provide prizes for participants, as is typical in games of chance.

"It will raise some money, obviously," he said. "The question is, will it raise enough? How much is it really bringing in?"

Poker tournaments in particular also have another drawback, Burlingame said: They don't generally have a long-term effect, neither drawing attention to the charity itself nor drawing in participants likely to become supporters.

"People play poker because they enjoy playing poker, not because they believe in the organization," he asserted. In most cases, "you're not going to convert those players into regular annual donors, which is really what you want to do."

Even so, some charities have decided it's worth the gamble.

Indianapolis-based Walther Cancer Institute hosted a Texas Hold 'Em tournament-and buffet dinner-March 19, attracting 62 players who paid $200 to play. After expenses and prizes for the winners, Walther raised $3,000.

Organizer Sharyl Hamblen has high hopes for next year's event, now that all the cards are on the table.

"This was our first time, and we had to buy all the supplies," said Hamblen, assistant director of development for the agency. "Now we know what to expect."

And the event delivered its intended audience-young adults. As its donors age, the research institution is working to develop a new generation of supporters.

A couple of poker players already have done some volunteer work for the agency, Hamblen said, and all of them will be included in Walther mailings and eventually fund-raising appeals.

"We want them to know us better," she said. "Maybe we'll get 'em hooked."

Players certainly kept the spirit of the event in mind. Near the end of the March tournament, the final two players agreed to split a $5,000 first prize and donate the $1,000 second prize to Walther. At least one other prize winner followed suit.

Walther's first tournament won't be its last, Hamblen said.

"At this point, we're planning for it to be an annual event," she said. "We'll keep doing it until someone says we can't."
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