An administrative complaint filed this week by Attorney General Drew Wrigley shows the risks involved in charitable gambling.
It’s a complicated case, but basically the complaint alleges the Wall of Honor nonprofit was used as an “enticement” to get bars to use electronic pull tab machines provided exclusively by three companies.
Allegedly the Wall of Honor offered to pay additional rent to the bars if they used Wall of Honor billboards. The bars also had to use just the three distributors and switch their charitable organization to an American Legion Post.
The Wall of Honor is an indoor digital billboard that honors veterans, active military personnel and emergency responders. The nonprofit isn’t formally accused in the complaint, which is directed only at the three companies. Wall of Honor Executive Director Tammy Ibach maintains the nonprofit did nothing wrong.
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Wrigley wants to fine the e-tab machine distributors — Western Distributing Company, Plains Gaming Distributing Inc., and Midwest Gaming Distributing Inc. — $120,000. He wants an additional fine of $5,000 on Western Distributing for allegedly loaning gambling startup money to an American Legion Post. He also wants to pull their distributor licenses.
The three companies have 20 days to respond to the complaint.
The case shows the potential pitfalls of charitable gambling, which has become a nearly $2 billion industry in the state. Charitable gambling was approved in 1977, and the Legislature approved electronic pull tab machines in 2017.
The machines have become a favorite of the public, providing 90% of the gross proceeds in 2022 from charitable gambling. There are more than 4,400 devices at more than 1,000 sites in the state. You don’t have to go far to find a machine.
Manufacturers made more than $69 million and distributors nearly $700,000 from e-tabs in fiscal year 2022.
The Gaming Division of the North Dakota Attorney General’s Office is responsible for regulating the industry. Director of Gaming Deb McDaniel has six auditors, three gambling tax specialists and two gambling investigators. The investigators have to cover 1,000 sites in the state along with the American Indian reservation casinos.
Gambling has been tremendously helpful to charitable organizations, many of which would be limited in what they do without the revenue. So there’s a big upside to charitable gambling.
It’s too early for the Tribune editorial board to judge the merits of Wrigley’s case. There’s no doubt, however, that the amount of money generated by charitable gambling has to be tempting to those willing to bend the law.
This session the Legislature rejected a proposal to legalize sports betting in the state. The Tribune has little doubt that sports betting will eventually be approved. It’s probably best to wait until the state is comfortable with the regulation of the present gambling before sports betting is approved.
Wrigley’s complaint shows his office has been monitoring gambling. It’s a big task for the present staff, and more investigators will be needed as gambling expands. If North Dakotans want this amount of gambling, they need to provide the needed regulation.