NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Regulation and Licensing Department (RLD)

Gaming Control Board (GCB)

Department of Public Safety (DPS)

SUMMARY

Synopsis of Bill

The bill would repeal Sections 60-2B-1 though 60-2B-14 (the Bingo and Raffle Act) and enact a Charitable Gaming Act. Under the bill, any charity organized under 501(c) of the Internal Revenue Code that has been in existence for three years, has bona fide members and exists solely for "charitable, community, educational, fraternal or religious purposes" is eligible to apply for a license. The bill would also permit political parties or election campaigns to apply for licensure.

The bill would permit eligible charities to conduct six bingo, pull-tab, and raffle sessions weekly and casino nights twice a year. The bill prohibits eligible organizations from conducting electronic gaming, except for bingo equipment. Those nonprofit organizations licensed under the Gaming Control Act would not be permitted to conduct weekly charitable gaming sessions but would be allowed to conduct casino nights.

Eligible charities would be subject to a 0.25 percent tax on gross receipts, must generate a minimum net profit and would be allowed to spend the net profit on charitable purposes of the licensee.

According to RLD, the regulatory conditions are both more comprehensive and also simplified and streamlined to reduce the amount of reporting and to assure that a certain percentage of the gross receipts from the charitable gaming actually go to the charitable purposes. Licenses will be required for the sponsoring organization to conduct charitable games; for manufacturers, suppliers or distributors of equipment and supplies and providers of business services to the sponsoring organization. Game managers and workers must also obtain permits to conduct games. More specific compliance and enforcement measures are included.

Significant Issues

According to the RLD and GCB, the provisions in this bill which would allow casino nights could jeopardize New Mexico's revenue sharing agreements with tribal casinos. In particular, the agreement (Laws 1997, Chapter 190) states that, in return for making revenue sharing payments , the tribes will have "exclusive right within the State to provide all types of Class III Gaming described in the Indian Gaming Compact, with the sole exception of the use of Gaming Machines, which the State may permit on a limited basis for racetracks and veterans' and fraternal organizations." This bill appears to permit Class III gaming at casino nights, including roulette, craps, blackjack and other card games.

According to RLD, the current Bingo and Raffle Act is outdated and difficult to administer because of its often vague and incomplete language. It requires information that is not necessary to determine compliance and has no mechanism to ensure that the sponsoring organization actually contributes profits from games to its charitable purpose.

FISCAL IMPLICATIONS

The State might lose a projected $32 million in tribal revenue sharing if the casino night provisions of this bill are interpreted to conflict with the revenue sharing agreement in the Indian Gaming Compact.

Additionally, RLD anticipates a potential $47.5 reduction in revenues from charitable gaming taxes.

DPS indicated that requirements for fingerprinting and background checks of licensees under this bill could require additional resources for that agency and indicated that RLD should set a rule to reimburse DPS for this cost. DPS anticipates a significant fiscal impact from this bill.

ADMINISTRATIVE IMPLICATIONS

According to the RLD, the proposed bill may reduce that agency's workload by prohibiting bingo and raffle from nonprofit organizations which are licensed to operate gaming machines under the Gaming Control Act. At the end of 1998, there were 182 bingo/raffle license holders, of which 97 are eligible to operate gaming machines. If all eligible veteran and fraternal organizations apply for and receive licenses from the Gaming Control Board to operate video gaming machines and if this bill were passed, the RLD would regulate about half as many organizations as it did in 1998.

TECHNICAL ISSUES

RLD recommended that paragraphs on pages 21 and 22, beginning on line 19, be re-lettered consecutively. There is no paragraph G.

DH/gm